HSBC has linked up with Alibaba’s logistics arm Cainiao Network Technology to provide a new digital trade finance solution for e-commerce sellers without the need for collateral or financial documents.

The new initiative will allow Hong Kong merchants on the Alibaba-owned TMall Global e-marketplace to apply for financing of up to US$500,000, in what an HSBC spokesperson tells GTR is the bank’s “first trade finance solution to use real-time third-party data for loan approval”.

HSBC will use metrics provided by Cainiao, such as business background, primary brands, real-time inventory and receivables information in order to carry out credit assessments, which the bank says will make finance more accessible for these so-called new economy enterprises.

“We see big data and other emerging technologies as a huge opportunity to offer innovative solutions that make financing easier for our customers,” says Jeanny Ip, head of global trade and receivables finance (GTRF) for Hong Kong and Macau at HSBC. “There is a clear need to match the rapid evolution of the market with new solutions, and we believe the new scheme will provide adequate support to online merchants.”

The solution is initially being made available to the 1,800 Hong Kong-based sellers registered on the TMall Global marketplace, while the bank’s spokesperson says that HSBC will “continue to explore opportunities with all e-commerce platforms”.

This isn’t the first time e-commerce data has been used to facilitate the flow of trade finance to online suppliers. In 2017, Currenxie, which is partly owned by the Chinese internet giant Tencent, rolled out inventory and logistics financing to vendors based on their Amazon trading history. Indeed, Amazon itself has ventured into supplier financing, as have other online marketplaces such as eBay.

These schemes are attractive to e-commerce vendors because they are often sole traders, without a physical store, which makes meeting the collateral and documentary requirements for large banks’ multinational supply chain finance programmes challenging at best.

By collateralising their trading history and their stock holdings, small businesses can gain access to the sort of financing required to beat expansive payment cycles and expand at a faster rate – particularly in straitened times.

“As merchants go through a challenging period due to the Covid-19 outbreak, Cainiao Network is dedicated to driving the recovery of retail business and assisting businesses to resume normal operations by using our expertise in smart supply chain,” says Zhao Wei, general manager of Cainiao Network Supply Chain Finance. “Through this digital financing solution, more merchants can easily obtain rapid loans. We will continue to deepen our cooperation with HSBC to help our merchants and consumers through this difficult time.”