In a significant move to boost business financing for small and medium-sized enterprises (SMEs), HSBC has partnered with Tradeshift to launch SemFi—a platform dedicated to embedded finance. This joint venture aims to provide seamless access to financial tools for businesses directly within the e-commerce platforms they use daily, starting with Tradeshift’s own business-to-business (B2B) network. With the rise of digital payments and the increasing demand for integrated financial solutions, SemFi is poised to fill a critical gap by offering enhanced access to financing options for growing businesses.
Overview of SemFi
SemFi by HSBC is a technology-driven embedded finance solution designed to cater to the financial needs of SMEs through easy integration into e-commerce platforms. Embedded finance refers to integrating financial services like payments, lending, and insurance into non-financial digital platforms. SemFi seeks to streamline processes like digital invoice financing, liquidity management, and virtual card payments, all within the digital environments where companies already operate.
Initially launching in the UK, SemFi’s goal is to offer businesses access to critical financial services without the friction often associated with traditional banking. By embedding HSBC’s payment, trade, and financing options directly into the business flow of e-commerce, SMEs can access necessary capital with fewer obstacles, allowing them to focus on growth and scaling their operations.
Features and Benefits of SemFi
The primary feature of SemFi is the seamless integration of financial services into e-commerce and B2B networks, helping SMEs manage their financial needs where they conduct business. Through the Tradeshift platform, SemFi offers a streamlined process for digital invoice financing, virtual card payments, and cash flow management. This direct access simplifies the financing process, making it easier for businesses to acquire funds when needed.
HSBC’s leadership in global finance and Tradeshift’s extensive B2B network—which processes over $260 billion annually—are critical components of SemFi’s strength. By merging HSBC’s financial tools with Tradeshift’s digital commerce capabilities, SemFi is positioned to help SMEs thrive in an increasingly competitive market environment. HSBC also plans to expand SemFi beyond the UK, making it a global solution to support the evolving demands of businesses around the world.
This strategic partnership represents a significant step for HSBC and Tradeshift in shaping the future of embedded finance, giving SMEs a flexible and secure way to manage their financial transactions and support their growth potential.
Impact on SMEs
SemFi is designed to significantly impact small and medium-sized enterprises (SMEs) by offering simplified access to critical financial services directly integrated into their existing business processes. With the integration of HSBC’s digital payment, trade, and financing services into e-commerce and marketplace platforms such as Tradeshift’s B2B network, SemFi helps SMEs overcome traditional financial barriers. By providing solutions like digital invoice financing and virtual card services, SMEs can now efficiently manage cash flow and liquidity, which are often major challenges for smaller businesses.
A key aspect of SemFi’s value proposition is its ability to enable faster financing and payments. SMEs can obtain invoice financing through a seamless process that occurs within their e-commerce environment, eliminating the need to access separate financial systems. This significantly reduces the friction and time delays that typically occur in financial transactions, enabling SMEs to focus on growing their businesses rather than managing complex financial processes. HSBC’s leadership in banking and Tradeshift’s digital commerce expertise have enabled them to create an ecosystem where SMEs can grow and compete more effectively within the global marketplace.
SemFi also allows SMEs to utilize HSBC’s virtual card solutions, which provide enhanced flexibility and security in spend management, allowing businesses to gain more control over their financial activities without additional administrative burdens. This integrated approach allows SMEs to access necessary financial services “when and where they need them,” according to Vinay Mendonca, CEO of SemFi. The flexibility that SemFi offers is crucial for supporting SMEs that are often burdened by limited working capital, thereby fostering a supportive environment for business growth.
Industry Context
The launch of SemFi is part of a broader trend of embedded finance, where financial services are integrated directly into non-financial platforms. The global embedded finance market was valued at $82.48 billion in 2023 and is expected to grow at a rate of 35% annually over the next five years. This trend is driven by businesses, particularly SMEs, demanding more integrated, seamless financial solutions that meet their needs without disrupting their existing workflows.
By partnering with Tradeshift, a global B2B network that facilitates over $260 billion in gross merchandise value annually, HSBC is well-positioned to lead this transformation. Embedded finance streamlines various aspects of trade, reducing friction points such as lengthy paperwork, slow funding processes, and high costs. The ability for businesses to access embedded financial tools directly within the platforms they use enhances efficiency and reduces costs, which are critical for SMEs looking to expand their operations.
The industry is seeing a shift from traditional banking models to more integrated, technology-focused approaches, and SemFi represents HSBC’s commitment to staying ahead in this evolving landscape. This move is particularly strategic given the growing importance of e-commerce and digital trade, where businesses are increasingly reliant on swift and accessible financial solutions. By embedding these services into the Tradeshift network, HSBC aims to enable SMEs to manage their entire supply chain finance journey in one place, providing a major boost to efficiency and growth opportunities.
Future Expansion
Although initially launching in the United Kingdom, HSBC plans to expand SemFi globally to cater to businesses worldwide. The venture is structured to operate more like a technology company than a traditional banking entity, reflecting the startup mindset that SemFi aims to embody. This approach helps SemFi to be more agile, with an emphasis on customer-centric product development that meets the needs of businesses across diverse industries.
HSBC’s broad network and Tradeshift’s established digital commerce platform provide the foundation for SemFi’s planned expansion. As HSBC continues to onboard clients globally, it aims to leverage its balance sheet for financing while offering embedded financial services through a seamless technology platform. This global expansion will allow HSBC to offer embedded finance solutions in various regions, where SMEs can greatly benefit from integrated financial services that help manage working capital and enhance supply chain resilience.
Barry O’Byrne, CEO of Global Commercial Banking at HSBC, emphasized that SemFi represents a natural extension of HSBC’s long-standing commitment to enabling global trade. By providing businesses with embedded financial solutions that are easy to access and integrated into the tools they already use, HSBC aims to support the digital transformation and global growth of SMEs. Tradeshift’s CEO, James Stirk, also highlighted the potential for scale, noting that SemFi will help tackle key challenges for businesses, including cash flow management and liquidity, which are vital for supporting business continuity and expansion efforts.
Conclusion
HSBC and Tradeshift’s launch of SemFi represents a major milestone in the evolution of embedded finance, particularly in supporting SMEs. By integrating HSBC’s payment, trade, and financing tools directly into e-commerce platforms, SemFi aims to offer seamless financial solutions that reduce friction, enhance efficiency, and foster growth for small and medium-sized businesses. As the global embedded finance market continues to grow, ventures like SemFi are likely to play an increasingly important role in providing businesses with the tools they need to thrive in the digital age.
SemFi’s combination of HSBC’s financial expertise and Tradeshift’s digital capabilities promises to provide a unique, integrated solution that could redefine how SMEs manage their finances, both today and in the future.
