Held in Hong Kong in late March, the GREAT Festival of Innovation offered a series of keynotes and masterclasses involving industry leaders, entrepreneurs, and futurologists from the United Kingdom, Hong Kong, mainland China and elsewhere in Asia.
Among the guests, Alex Kong Hing-yan, founder and chief executive of Hong Kong-based fintech startup and e-wallet provider TNG, sat down with the Hong Kong Economic Journal to share his thoughts on the company’s expansion to the UK and other challenges in his journey.
HKEJ: Can you share with us the recent experience of TNG entering the UK market?
Alex Kong: Last September, Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor visited the UK to encourage British investment in Hong Kong. We were among the representatives of the Hong Kong enterprises who joined the trip and TNG signed a cooperation agreement with a fintech firm in the UK, with the two governments also signing a fintech bridge agreement to encourage cooperation between the governments, regulators, and businesses in Hong Kong and Britain.
And we have recently acquired a digital wallet provider in the UK, applying for the license in the UK for a virtual bank, and looking forward to the meeting with the Financial Conduct Authority, the UK financial watchdog.
Q: As a Hong Kong-based fintech firm, why is TNG going to the UK?
A: Hong Kong, a former British colony, has historical ties with the country. We inherited the British common law system as well as the market infrastructure, making it easier for Hong Kong-based enterprises to copy their successful business models to the UK.
The UK has an important role to play in the future development of both China and Hong Kong. In China’s ambitious Belt and Road Initiative, there will be a new Silk Road that goes from mainland China to the UK, while Hong Kong serves as a long-haul stop-off point. Following the initiative, TNG plans to get a foothold in both the starting point and the destination, paving the way for us to enter markets along the route.
We did well in the Hong Kong market and we made a profit last year, so the next step would be to expand our business abroad.
We found that our service offerings are more appealing to the unbanked population (people with no access to financial services). Foreign domestic helpers account for over 70 percent of TNG’s users in Hong Kong. There are also many foreign pilots, construction workers, engineers, and other highly-paid individuals. These foreign users help bring our brand name and services abroad, giving us an edge in entering foreign markets.
Compared with Hong Kong, there is a relatively larger base of foreign workers in the UK, like the Indians and Chinese. They remit part of their earnings regularly to their home countries. In addition, there are lots of Hongkongers sending their children to study in the UK, leading to a further demand for transferring money to the UK.
We are able to thrive in such a highly competitive market like Hong Kong, and this gives us the confidence to seek growth in the UK. And with similar characteristics, the UK market is conducive to a higher profit margin than Hong Kong. The population in the UK is around ten times more than that of Hong Kong, with profit margins three times that in Hong Kong. We estimate our business in the UK can be over ten times larger than that in Hong Kong.
Q: Is TNG targeting the unbanked population mainly?
A: We are not passing on the people with bank accounts, but from our past experience, we would face a resistance from banking customers as it incurs a so-called “switching cost”. In contrast, there are not many options available for the unbanked population. Thus. they have a higher acceptance of our service offerings.
The unbanked rate is high among low-income populations. However, banks are more intended to serve the high-income population. The world’s two billion unbanked do need financial services. And we found the uncontested market space that free of bloody competition. We are set to launch our service to corporate accounts, bringing financial services, like payments, to unbanked business owners.
Q: Looking back at the past in the journey of TNG, is there anything that you would like to change about the company?
A: The journey is full of challenges coming in many forms, but I don’t want to change anything about the company. The challenges we face make us stronger. I always say: “You are either part of the solution or part of the problem.” Innovation always disrupts the old system, which is also generally unfavorable to those in the old system. There are always obstacles along the way, except when you are not stepping forward.
Q: What has been one of the most difficult challenges you had to overcome in the journey?
A: I would say the biggest challenge is hiring quality talent. Hong Kong people are in general short-sighted; they tend to switch to large corporations to take advantage of the employee benefits. For a startup, problems and issues frequently crop up. Having a person in the team who says, “I do not do work when I am off-duty” is something we cannot afford.
Young people seeking better salaries tend to change jobs fast. But for those citing better salaries to switch, there’s a question you should ask yourself: Do you want to grow and develop your career with the company? Or you just want a fatter salary?
This article appeared in the Hong Kong Economic Journal on March 30
Translation by Ben Ng
[Chinese version 中文版]
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