A New Sort of Finance
March 07, 24
Banks don't like risk . . . and they don't like diamonds.
Their view, right or wrong, is that diamonds and diamond-based jewelry are a risky business, and they'd rather stick with safer bets.
None of that will come as a big surprise if you're reading this. If you haven't struggled to secure finance for your own jewelry business, then the chances are you know people who have.
Lack of liquidity has long been one of the leading challenges for the diamond and jewelry industries.
A turning point came in the wake of the 2008 financial crisis when a new set of rules (Basel III) forced banks to toughen up their credit and risk strategies.
Lending decisions now are typically made by banks' compliance departments rather than by bankers themselves, even though the latter have long-standing, trustful relationships with businesses and people from the industry.
The default position thus became "don't trust" rather than "trust". It was now a case of "don't lend" rather than "lend".
In 2013, commercial banks allocated $16bn to the diamond trade, according to Bloomberg. By 2020 that figure was down to $6bn. And then Covid hit.
Today, brick-and-mortar jewelers, jewelry e-commerce players and diamond retailers all need a reliable, sustainable source of financing, not just to purchase diamond inventory, but for their overall business needs.
Having experienced our customer needs first hand, IDEX Online is addressing these issues with the launch this week of an innovative financing infrastructure, IDEX Financing.
It provides much-needed funds for our customers to manage and grow their businesses, be it by renovating premises, marketing their business, investing in new product lines or for ongoing diamond procurement.
"IDEX Financing is designed to open up new opportunities for long-term business growth in an industry where it can be challenging to find finance," said Anish Kuriakose, IDEX Online EMEA managing director.
"We understood that customers are not looking just for financing their diamond transactions.
"Accordingly, we have created an ecosystem of financing solutions that enables our customers to finance their long-term growth and to redefine the way businesses engage in diamond trading."
Businesses need financing to thrive, especially in an industry as capital intensive as ours. Welcome to IDEX Financing. Welcome to the future.
Have a fabulous weekend.