HSBC joins Alibaba to offer Hong Kong’s online merchants quick loans
HSBC has partnered with Cainiao Network Technology, a logistics arm of Chinese ecommerce giant Alibaba, to offer quick trade finance approvals to online merchants, the Alibaba-owned South China Morning Post reports.
Cainiao supports cross-border solutions for Alibaba’s international ecommerce business, including Tmall Global, AliExpress and Lazada.
This is the first time HSBC will use third-party data to approve trade finance loans
Using Alibaba’s Tmall platform in Hong Kong, HSBC will offer seven-day approvals for trade financing loans of up to $500,000.
Roughly 1,800 Hong Kong online merchants which use Tmall are eligible to apply, and can get a 1% discounted interest rate before the end of June.
Cainiao will proof applicants based on “customer background, real-time inventory and operation status”, sending these criteria to HSBC for credit assessment.
This is the first time HSBC, Hong Kong’s largest bank, will use third-party data to approve trade finance loans. It is also the first sign of a local lender using big data with a technology company to drive trade finance lending.
“We see big data and other emerging technologies as a huge opportunity to offer innovative solutions that make financing easier for our customers,” says HSBC Hong Kong and Macua head of global trade and receivables finance, Jeanny Ip.
“The partnership with Cainiao could support new economy enterprises by using big data to simplify the approvals process,” she adds.
Currently Hong Kong is seeing the advent of virtual banks, including Standard Chartered’s Mox, Livi Virtual Bank, Insight Virtual Bank, and Fusion Bank. This move to work with a Chinese Big Tech could be a bid by HSBC to compete in this space.
Read more: Standard Chartered unveils new Hong Kong challenger bank Mox
“Eight virtual banks are starting operations this year. The competition will be keen. HSBC and other traditional lenders will need to offer more digital banking products and services to compete for a tech-savvy younger generation of customers,” says MD of VC Asset Management Louis Tse Ming-kwong.
And as the coronavirus worsens, quick loans will likely rise in demand as the country struggles to battle a new wave of the virus.
Initially considered a model for how to contain it, Hong Kong has now seen the number of confirmed Covid-19 cases almost double in the past week.
“As merchants go through a challenging period due to the Covid-19 outbreak, Cainiao Network is dedicated to driving the recovery of retail businesses and assisting businesses to resume normal operations by using our expertise in smart supply chain,” says Cainiao’s general manager of network supply chain finance, Zhao Wei.
The Hong Kong Monetary Authority (HKMA) has been trying to encourage lenders to engage with new technology which helps them cut costs and time spent.
In October 2018, the HKMA launched blockchain-based banking trade finance platform eTradeConnect, which combined the services of 12 major banks, including HSBC, to improve cross-border trade.
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