HSBC Taps Alt Lender To Strengthen Middle-Market Footprint

HSBC is looking toward the alternative finance sector to strengthen its position in the middle market, the financial institution said.

Announced Tuesday (Feb. 26), HSBC U.S. Commercial Banking revealed its partnership with Neptune Financial (NepFin). Through the link-up, middle-market firms that use NepFin to access financing will be able to connect to HSBC commercial banking services.

HSBC said the partnership will support mid-market companies, even in geographic markets in which the bank does not have a presence.

“This partnership will enable HSBC to extend its global capabilities and international network to benefit more U.S. businesses,” said HSBC Head of Digital Banking EJ Achtner in a statement. “We’re excited to leverage NepFin’s platform to help more middle-market businesses efficiently source capital.”

NepFin targets companies with between $10 million and $100 million in revenue. The company deploys machine learning to analyze business credit demand, and said its collaboration with HSBC will strengthen its analytics capabilities.

The firm’s CEO and Co-founder Albert Periu spoke with PYMNTS’ Karen Webster last year about the market.

“There is a lot of interesting technology in the small business segment, but my earlier time in commercial lending, followed by four years at Funding Circle, opened my eyes to the white space that was the middle market,” he said. “There weren’t many FinTech or digital solutions for this segment.”

HSBC cited its own research, which found that middle-market firms account for $7.3 trillion in turnover in the U.S., employing 20.7 million professionals. Achtner described the business segment as “a major contributor to economic growth in the U.S.”

HSBC had previously announced the launch of its Digital Partner Platform, the FI’s initiative to collaborate with providers to enhance its corporate financial services for businesses of all sizes.

Other initiatives in the corporate financial services space include HSBC’s blockchain foreign exchange transaction solution. Earlier this year, reports in the Financial Times said HSBC has been using the solution internally, and plans to open up the tool to its corporate customers later this year.