There is a significant need for smart and technological financial solutions in the diamond industry
MDPS, the Israeli start-up Fintech company from the Mazalit Group is gearing up to enter the diamond industry soon.
Zeev Maimon, the CEO of MDPS is also the Founder / CEO of MAZALIT, a B2B payment platform designed and dedicated to the global diamond and jewellery industry. He is a former diamond dealer, having in-depth knowledge of the global diamond industry.
Here, in an exclusive interview with Rough&Polished, Zeev Maimon spells out the new company’s plans, which include financing the Israeli diamond industry initially and later spreading its wings to other countries.
Some excerpts:
Please tell us how MDPS came to be incorporated; the company’s profile including ownership structure, etc.?
The company MDPS (Mazalit Digital Payment Solutions) was established in 2019 with the help of investments from leading international companies in the diamond industry. Among the company’s investors are Malca Amit, NBS Diamonds, MID, Novel Collection.
In which aspects does MDPS intend to help diamantaires with their finance requirements? What steps will be taken to safeguard itself on industry credit? It is said that companies use loopholes to misuse and build up their bank credit? Your take on this?
There is a significant need for smart and technological financial solutions in the diamond industry, the way the industry receives credit from financial entities and the way traders give each other very outdated credit. The combination of financial services, logistics, and marketing with the help of technology produces new and unique solutions that enable tighter risk management.
In which countries do you plan to operate? And what would be the profiles of your clients? What collateral will MDPS ask for lending to the clients?
We launched the services in the Israeli market in the first phase, I estimate that in 2022 we will open at least one more market in Belgium or the United States. It is clear to us that one of the benefits we can bring to the market as a fintech company is the ability to serve multiple markets simultaneously. This is one of our goals.
What’s your general philosophy of financing the industry? Does it go in tandem with the strategies of the financial sector? Or, have you formulated any specific strategies for the diamond industry, given that the diamond business is rather unique?
One of our advantages is the ability to treat diamond inventory as collateral but the product we want to create for the industry is credit technology that ranks the business or merchant and provides business credit based on data and credit score only.
What changes have you have seen in the Finance sector of late… as Investors and non-bank financial institutions are also now entering the scene? Does it mean more lenders and therefore Finance will be available easily?
We are seeing banks reduce their exposure to the diamond industry around the world, in the last decade in Israel alone, credit lines to the diamond industry cut from 3B to less than 500m [US dollars]. This is part of the business opportunity for financial institutions to enter the industry.
Recent news in the media says that ‘ABN AMRO to halt all finance for ‘high risk’ diamond industry’. So, is it a warning for private financing companies to be wary or an opportunity to enter the industry?
I think the high risk that banks attribute to the diamond industry relates mostly to the issue of money laundering, especially banks that use a correspondent bank to transfer US dollars. In my opinion, if we look at the bankruptcy rates in other industries, we will find that the diamond industry is one of the safest in the world but of course, it has other unique risks.
There’s ample discussion of ‘Blockchain Technology’, Bitcoin/Dogecoin, and so on … What’s your take on this? Do they fit into the diamond industry scenario in any way?
Blockchain technology can certainly help when it comes to transparency and tracking of a diamond from mine to ring, I think the issue of cryptocurrency payment for diamonds can still consist of money laundering and taxation aspects.
Do you plan to serve the diamond clients as a stand-alone company? If so, what is the philosophy behind it; and how does it make more business sense for a fintech company?
Fintech has a huge opportunity in the diamond industry. Several revolutions have already happened in the world during the last decade that has not yet reached us. To this day, we have no option to pay in the diamond B2B trading platforms. We do not have an e-wallet dedicated to the industry; diamond merchants still give each other credit based on gut feeling but not based on credit score. And the most striking thing is that there is no “Malca Amit” of financial services to the industry… and that is precisely what we want to change.
As an industry leader and market watcher, what is your opinion about the current global G&J industry? Will it boost itself and be back to its robust self soon, having faced numerous challenges in recent times?
I think the Corona crisis has shown us how strong and stable our industry is. If we look at what has happened in the past year to airlines, restaurants, hotels, commercial real estate, oil prices, and other commodities, we can momentarily say ‘Thank God we are in the diamond and jewellery industry’.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished
Text source: MCC.EXCHANGE
