The bank owns 49% of RainFin and sees an opportunity for cheaper and faster loan advances through RainFin's online credit marketplace as an alternative to the costly Absa branches.
Financial service providers face competition from financial technology companies with innovative offerings. Barclays Africa has partnered with RainFin to gain revenue from the rise of financial technology companies and also enhance its service.
RainFin is an online platform that facilitates unsecured lending. It allows people or businesses looking for better returns to lend their money to other parties, including small businesses, through the online platform. In this marketplace, lenders connect with borrowers and compete on offering the best interest rates for a loan. Barclays Africa competes with 300 other lenders on the platform.
Paul Nel, the head of open innovation at Barclays Africa, said Absa had about 350,000 business banking clients in SA who would be able to apply for loans quickly through the platform. The RainFin platform is not limited to Absa clients, and could be used by other parties. Absa clients would be able to access loans from other lenders too.
The Barclays Africa-owned Absa will refer its small and medium-sized enterprise clients to RainFin for unsecured working capital term loans of R10,000-R750,000.
Sean Emery, the cofounder and CEO of RainFin, said the company had built a platform that allowed small to medium-sized enterprises to obtain working capital loans that could be approved within 48 hours if all documents were submitted.
Since the partnership started in 2014 Barclays Africa has set aside R150m for lending through the platform. The banking group had also provided R40m for the technological infrastructure development at RainFin in order to make the platform "robust and more compliant to their (the bank's) internal regulations", Emery said.
Source: Business Day
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