RainFin.com, a Fintech innovator and South Africa’s first and leading credit marketplace, today announced a strategic partnership with ABSA, a member of Barclays Africa.
The partnership will see ABSA incorporate the RainFin offering – of which Barclays Africa Group Limited is a 49% equity holder – into its suite of products, effectively offering SMEs unsecured competitively priced working capital term loans within 48 hours after application.
“In so doing, it gives Absa’s business bankers the opportunity to offer clients a very efficient digital mechanism to complement their present SME customer value proposition, while RainFin can significantly scale the volumes on its credit marketplace,” says Sean Emery, RainFin Chief Executive Officer.
It also addresses the challenges that have traditionally faced SMEs when acquiring finance.
“Accessing unsecured working capital at cost effective rates has been very challenging – especially for those in their early years of growth,” says Emery.
As a consequence they often resort to higher cost alternatives such as invoice factoring and merchant cash advance services which can have effective interest rate charges of over 60% per annum.
The partnership has been accelerated by Barclay’s global innovation programme – Rise – of which RainFin is a member.
“The RainFin story is a great example of Barclays’ Rise Africa mandate which is to connect, co-create and scale tomorrow’s products and services, faster and cheaper. After the initial Barclays Seeker fund investment in RainFin in 2014, spearheaded by Eugene Booysen, Chief Innovation Officer, Barclays Africa CIB, the two companies worked closely together to refine the original RainFin.com credit marketplace offering, its supporting operations, credit scoring methodology, and collections capability, to align to the regulatory framework. This enables Barclays Africa to scale the RainFin offering by making it available across its operations,” explains Paul Nel Head of Open Innovation at Barclays Africa Group.
For the past two years RainFin.com has been at the forefront of the Fintech revolution which sees disruptive start-ups use software to provide solutions to everyday financial service problems.
“We have seen an increasing number of South African consumers and businesses adopt online services to overcome the past challenges of accessing financial services, especially debt products,” says Nel.
“When RainFin.com launched in 2012, it entered the lending market alongside incumbent financial institutional lenders with an innovative business model i.e. connecting lenders directly with borrowers. Their objective: reduce all the costs associated with borrowing.”
By using RainFin’s online application process, the intelligent SME specific credit scorecard that reviews not only an applicant’s transactional history and financial health but also includes additional non-traditional data points such as procurement history and social media – a credit-profile for SMEs can be determined.
Thereafter they can be presented to lenders on the marketplace as an attractive asset class.
“This significantly reduces the effective cost of finance for SMEs, which speaks to both the value proposition of RainFin and Absa,” says Emery.
In two years RainFin has grown organically, connecting well over R1m per day of lenders and borrowers through the credit marketplace.
“This has created a new financial ecosystem, something which only 18 months ago was considered highly improbable,” concludes Emery.
For more information visit www.rainfin.com.