In a pioneering move aimed at bolstering small and medium enterprises (SMEs) in Hong Kong, financial technology platform FundPark has teamed up with the Hong Kong Export Credit Insurance Corporation (HKECIC). The collaboration integrates advanced data analytics with credit insurance to provide crucial support and protection to SMEs engaged in cross-border trade.
Hong Kong, renowned for its global trade prowess, ranked 10th in merchandise trade and 21st in commercial services according to the World Trade Organisation’s 2023 report, boasting a total merchandise trade value of HK$8.82 trillion (US$1.13 trillion). Despite this economic prominence, SMEs often face significant challenges securing adequate financing from traditional lenders, resulting in a notable funding gap.
FundPark, through initiatives such as its recent partnership with HKECIC, aims to bridge this gap by leveraging innovative financial solutions. Since launching its first structured asset-backed security in early 2022, FundPark has quadrupled its loan distribution volume, surpassing $2.6 billion in total loans, with a substantial portion disbursed in the past 18 months alone.
“Our focus is squarely on supporting SMEs, particularly those navigating the complexities of cross-border commerce,” stated Hay Yip, Chief Strategy Officer and Chief of Staff at FundPark. “We’ve facilitated over $2.5 billion in facilities and secured $500 million in asset-backed securities financing, underscoring our commitment to sustaining growth momentum.”
The collaboration extends beyond traditional boundaries, targeting not only domestic markets but also bolstering SMEs involved in import-export activities across Greater China and beyond. FundPark’s strategic alliances, including a recent $250 million partnership with HSBC aimed at supporting digital SMEs in the Greater Bay Area, further highlight its expansive reach and dedication to fostering sustainable business growth.
In tandem with global trade trends, the trade credit insurance market is expected to see robust growth, projected to reach $17.48 billion by 2028 with a compound annual growth rate (CAGR) of 9.3%. The Asia-Pacific region, characterized by increasing trade volatility and digital trade finance, is poised to be the fastest-growing market segment.
The HKECIC, traditionally known for safeguarding exporters against payment risks, has adapted its role to incorporate fintech innovations. “Our collaboration with FundPark marks a significant evolution in integrating insurance solutions into cross-border e-commerce financing,” explained HKECIC Commissioner Terence Chiu.
Central to this partnership is the utilization of alternative data for credit assessments, a departure from conventional financial statement-based methods. FundPark’s proprietary underwriting models, driven by real-time transactional data and behavioral analytics, offer a forward-looking approach to assessing creditworthiness, crucial for SMEs navigating dynamic market conditions.
With strategic reinsurance support from SCOR Reinsurance, the partnership enhances financial stability and risk resilience, bolstering confidence in credit insurance policies tailored for digital SMEs. This collaborative framework not only mitigates financial risks but also fosters a conducive environment for SMEs to thrive and expand their market footprint.
Looking ahead, the partnership plans to explore new markets and sectors, leveraging their combined strengths to further support SMEs in diverse geographies. Key performance indicators, including model predictability in default scenarios and scalability across new sectors, will guide their expansion strategy.
“As we expand, maintaining robust credit risk assessment models remains paramount,” emphasized Yip. “Our agile approach, infused with machine learning and AI capabilities, ensures our solutions evolve with market dynamics, paving the way for sustainable SME growth.”
The FundPark-HKECIC partnership exemplifies a transformative synergy between fintech and insurance, poised to redefine SME financing landscapes in Hong Kong and beyond.
