Hong Kong is widely seen as lagging far behind rivals such as Shenzhen and Singapore when it comes to fintech development. But that may be about to change, as local authorities step up efforts to boost local innovation and technology startups. In its recent budget, the government set aside more than HK$500 million for development of financial services, which should give a fillip to fintech. Among other initiatives, the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, recently rebooted its policy to prepare for virtual banking.
The Hong Kong Economic Journal recently sat down with Simon Loong, founder and CEO of WeLab, a Hong Kong-based fintech “unicorn” (private startup company with a valuation above US$1 billion) to discuss the government’s latest push for fintech in the city.
Excerpts from the interview:
HKEJ: WeLab, founded in 2013, has gone from strength to strength in raising capital and expanding its business. Would you like to give us an update on your operations?
A: At WeLab, we are reinventing traditional financial services by creating seamless mobile lending experiences. We currently operate Wolaidai, one of China’s largest mobile lending platforms, and WeLend, Hong Kong’s leading online lending platform.
The company has broken even, and we are excited about the potential growth. Last year, we saw a three- to four-fold increase in our business in both Mainland China and Hong Kong.
Hong Kong government has been supportive in helping further develop the city’s fintech. Last year, the HKMA announced seven measures to drive fintech development. With the government’s push, banks in the city are now more interested in fintech; some firms approached us with inquiries about technical support.
Q: As fintech development has got the government’s attention, what do you expect with regard to related policies in coming years?
A: As the leading global financial center, Hong Kong cannot be stuck in the past and limit itself to old ways and old thinking in financial and banking service. Fintech development requires a combination of efforts from the government, banks and fintech companies, as well as from the legal and accounting sector. It is a whole ecosystem that needs to be built.
For the authorities and regulator, they need to be progressive and forward-looking, also maintain effective communication with all interested parties.
Among other examples, we have seen an improvement on HKMA’s Fintech Supervisory Sandbox scheme, which allows banks and their partnering tech firms to conduct pilot trials of their fintech initiatives. In its enhanced Sandbox 2.0, technology firms like us can directly contact HKMA and provide feedback via the platform, which greatly enhances efficiency.
Banks in Hong Kong are putting account opening, lending, wealth management and other services online. I expect the next big thing would be virtual banking.
Q: With regard to WeLab, the company has been growing at a fast pace. Does it face any challenge and competitive pressures in the market?
A: One of the challenges we face is the difficulty in merging tech and banking professionals to maximize the innovation opportunity that fintech will deliver.
The professionals have come from different background and with different culture sets. And one of the solutions we found is to literally arrange them to sit together; by working closely every day, they will find a compatible working style to collaborate.
Moreover, in WeLab, we hire talents with working experience in banking, and try to inspire them to develop new fintech products. Next, we push them to use the new product to solve existing problems in banking and financial service. That is how we attempt to streamline the technology commercialization process, and avoid the common pitfalls of fintech innovation – developing innovative technology but being unable to find any real use case for it.
Q: Looking forward, what is the next expansion target for WeLab?
A: Our B2B business in China is well established, with about 40 financial institutions signed in partnership. And adoption of our fintech solutions in Mainland China and Hong Kong is going well.
WeLab’s main product targets young customers, who range in age 20 to 35, familiar with online and mobile technology. We intend to expand the business to new locations where they have insufficient banking service due to geographical distance from a local branch, or prohibitive cost of opening bank accounts.
One of the locations with great potential would be the Southeast Asia countries, say, Indonesia. Accounting for about 60 percent of the population in Southeast Asia region, Indonesia has a young population aged around 28. Mobile phone density rate of the country is high, people there each use 1.4 SIM cards on average, according to reports. That is one of the promising markets with a remarkable growth potential in mobile banking.
This article appeared in the Hong Kong Economic Journal on March 9
Translation by Ben Ng with additional reporting
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