Sean Emery. Picture: ROBERT TSHABALALA
Sean Emery. Picture: ROBERT TSHABALALA

BARCLAYS Africa is looking to cut the costs it incurs when advancing loans to small medium enterprises by using the online platform of its financial technology partner RainFin.

Barclays Africa owns 49% of RainFin and sees an opportunity to advance loans in a cheaper and faster manner through the RainFin online credit market place as an alternative to the costly traditional Absa branches.

Financial services companies are facing some competition from disruptive financial technology companies with innovative offerings. Barclays Africa’s partnership with RainFin is part of a strategy to gain revenue from the rise of financial technology companies and also enhance its service.

RainFin is a platform that facilitates unsecured lending online.

The platform allows people or businesses looking for better returns on their cash to lend the money to other parties, including small businesses, through the online platform.

In this online credit market place, lenders connect with borrowers directly and compete on offering the best interest rates for a loan.

On the RainFin platform Barclays Africa competes with 300 other lenders.

Paul Nel, head of open innovation at Barclays Africa Group, said Absa had about 350,000 business banking clients in SA who would be able to apply for loans quickly through the RainFin platform.

The RainFin platform, however, was not just limited to Absa clients, and could be used by other parties and businesses.

Barclays Africa clients would also be able to access loans from other lenders, other than the banking group.

Barclays Africa-owned Absa will refer its small and medium enterprises clients to RainFin for unsecured working capital term loans of between R10,000 and R750,000.

"We want to be able to take financial services to a different level from where we have been," Mr Nel said. "It’s really is about bringing something innovative to the market."

Sean Emery, the co-founder and CEO of RainFin, said the company had built a platform that allowed for small to medium 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 RainFin 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 internal regulations", Mr Emery said.

"Given the result we got, they (Barclays Africa) said it clearly meets a demand and now let’s scale up ... Let’s make a product available to SMEs.

"It’s clearly cheaper and quicker than the manual process," Mr Emery said.

He said that as a shareholder Barclays Africa wanted RainFin to be successful so that they could gain more revenue.

On the other hand, Barclays Africa had an opportunity to market some of its complex business product to a readily available small medium enterprise market on-line.