HSBC has teamed up with Cainiao Network Technology, a logistics unit of Chinese e-commerce giant Alibaba Group Holding, to offer quick trade finance approvals to online merchants using the company’s Tmall platform in Hong Kong, according to a report in the South China Morning Post.

As part of the partnership, the bank will work with Cainiao to offer seven-day approvals for trade financing loans of up to US$500,000. In the region of 1,800 Hong Kong online merchants use Tmall, Alibaba’s e-commerce platform, and all are qualified to apply. Merchants can also get a 1% interest rate discount before June 30.

To secure the trade financing, merchants will not be required to provide any collateral or financial documents. Rather, they must agree to let Cainiao pass on comprehensive information - customer background, real-time inventory and operation status - to HSBC for credit assessment. This is the first time HSBC will use third-party data to approve trade finance loans.

“We see big data and other emerging technologies as a huge opportunity to offer innovative solutions that make financing easier for our customers,” said Jeanny Ip, head of global trade and receivables finance, Hong Kong and Macau, HSBC. “The partnership with Cainiao could support new economy enterprises by using big data to simplify the approvals process.”

Cainiao processed 1.3 billion orders involving a record 535 million packages on Alibaba’s “Singles’ Day” shopping festival on 11 November last year. It is also, along with other parties, delivering masks, medical equipment and other necessities amid the Covid-19 outbreak.

“Through this digital financing solution, more merchants can easily obtain rapid loans,” said Zhao Wei, general manager of Cainiao Network Supply Chain Finance at the company. “As merchants go through a challenging period due to the Covid-19 outbreak, Cainiao Network is dedicated to driving the recovery of retail businesses and assisting businesses to resume normal operations by using our expertise in smart supply chain.”

“HSBC is the first local lender to launch such a partnership with a technology company, to use big data to approve trade finance lending. It will have first-mover advantage,” said Louis Tse Ming-kwong, managing director of VC Asset Management. “Eight virtual banks are starting operations this year. The competition will be keen. HSBC and other traditional lenders will need to offer more digital banking products and services to compete for a tech-savvy younger generation of customers.”

The South China Morning Post, where this report originates, is owned by Alibaba.