The IFC is using its new financial innovation division to invest in trade finance “disrupters” as a means of bridging the gap between the technology and banking sectors.
In an interview with GTR, Giri Jadeja, who will become global head of financial innovation at the World Bank’s commercial arm on March 1, said that its investment activity will bring more customers into traditional banking channels, at a time when banks are looking for ways to compete with new players.
The IFC has invested both debt and equity in a number of high-profile, non-traditional financial players in recent years. The financial innovation unit, based in Bangkok, has invested US$100mn in 13 technology companies over the past 12 months, with an aim of increasing this to around US$500mn.
Since 2014, the IFC has issued a number of high-profile loans to the Chinese company Ant Financial, a member of the AliBaba Group, for lending to Chinese businesses. Among these was a US$160mn facility and a US$80mn facility, with the specific objective of supporting female entrepreneurs in China.
Jadeja hopes that its relationship with Ant Financial will allow it to work with the traditional banking sector to transform SME lending through the use of Big Data.
“Rather than using the traditional bank channels to provide funding to SMEs, here’s another way to meet SME needs. Ant Financial buys data from AliBaba, one of the largest buyer-seller portals that exists. It uses the flow of goods and money between these SMEs to make sound credit decisions.
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http://www.gtreview.com/news/asia/ifc-sees-technology-as-the-future-of-trade-finance/
