How Visa enables open innovation with fintech partners

August 04, 2020 06:00

In recent years, financial technology, or fintech, has experienced rapid development in Hong Kong with many startups launched. The granting of eight virtual banking licenses last year by the Hong Kong Monetary Authority (HKMA) further accelerates fintech innovation in the city, bringing consumers and corporates brand new financial services and payment experiences.

As one of the largest payment technology companies in the world, Visa helps fintech startups scale with its global network and through partners’ networks. At the same time, Visa extends its solutions and consulting services to help these new players find the right product-market fits and drive growth.

Visa advocates for an open, interoperable network. By partnering with fintech players, Visa ensures that innovation will happen at the global level as the network evolves. An open and interoperable ecosystem means payments are standardized across channels and geographies. For example, consumers do not have to download a different app or learn a new payment method every time they use a new app or travel to a different country or region. They can use solutions from any of the networks that are interconnected. Interoperability brings consistency in payment experiences and security, in a flat and hyper-connected world.

The Hong Kong Economic Journal talked to two upcoming Hong Kong-based fintechs on how they work with Visa to bring to life new financial solutions.

Build great products with clearly defined objective

ZA Bank is one of the strategic fintech partners of Visa. Since obtaining a virtual banking license from the HKMA in March 2019, ZA Bank has been developing new products and has become the first virtual bank to launch its trial operations in Hong Kong.

Such quick progress is made possible thanks to the team’s strong focus, said Calvin Ng, Co-Head of Retail Banking, ZA Bank.

“Hong Kong has not had a new bank for years. [For ZA Bank to introduce a new banking product] is literally a matter of subtraction. It is impossible to put all functions into one product. There has to be a tradeoff. Our team set a clear objective when designing a new product. We prioritize by looking into customers’ pain points and understand what functions they most desire. Having set the direction, this leads to more effective communication among team members and enables efficient launch of services that are relevant and suitable for customers.”

Last year, ZA Bank launched its pilot trial in Hong Kong on December 18. It was officially opened for business, a year after receiving the license, on March 24.

The growth of customer base has been encouraging, Mr. Ng said. “70% of users are born after the 1980s. But there are also elderly customers; the oldest is 93 years old. It means we need good user experience for customers of all age groups.”

Yet, designing easy-to-use products is by no means a simple job.

“ZA represents a reverse of the alphabetical order from Z to A, symbolizing a reverse of the tradition. Our goal is not just about digitalizing banking services, the whole design is a project of reverse engineering. For example, we noticed that users reset their internet banking passwords every time when they switch to a new mobile phone, we improved on that step by removing the friction. Also, our average account opening time is only five minutes, while the fastest record is 2 minutes and 8 seconds. That is how important customer experience is to ZA Bank to differentiate ourselves from traditional banks and even other virtual banks,” Mr. Ng said.

In short, Mr. Ng believes that the secret to success is the bank’s ability to truly understand customer needs. And it is often just simply by asking them directly that banks can learn more.

“After obtaining the license last year, we immediately started to recruit users in our seed plan. The management talked to them face to face to understand what their ideal bank is like. Our team have long work experience in the industry, and can be vulnerable to conventional thinking. By co-creating a virtual bank with customers, we can truly reverse the tradition and ensure our products and services truly serve customers’ needs.”

Visa supports ZA Bank with payment technology

Having carefully studied the needs and feedback from ZA Bank’s customers, Mr. Ng pointed out that payment and money withdrawal are top of mind, which became the focus before launch.

“This is precisely why we partner with Visa. They have extensive experience in payment, and robust technology infrastructure in payment security and risk management. Visa empowers fintech startups like us with their expertise and scale,” said Mr. Ng.

Payment needs has always been an integral part of ZA Bank’s product roadmap, and the strategic partnership with Visa has complemented its outlook.

“Visa has been a leader in payment technology, and has been actively promoting financial technology in recent years. We share a similar mindset and I believe that with Visa’s support, we will be able to develop more innovative solutions and technology to redefine the future of banking services,” Mr. Ng added.

Opening an SME bank account made easy

Opening a business account with a local bank has always been a daunting task for many small and medium enterprises (SMEs), especially for startups that may not be able to show a business track record.

Having witnessed how this sets back many ambitious entrepreneurs from being able to run their businesses, David Rosa, who had over 16 years of experience in international banking, decided to quit his job five years ago and set up Neat, a fintech startup with a vision to enable the entrepreneur economy.

Neat is focused on SMEs that trade between Europe and Asia and is now offering easy-to-use, multi-currency accounts, supporting cross-border payments across 35 countries around the world. It only takes 15 minutes to complete the online application process. The account opening can be approved in as fast as 48 hours, and it will be up and running for sending, receiving and transferring money internationally.

“Currently, 60% of our clients are from overseas, and 40% are local. The majority of our overseas customers are from the UK, Germany and France. Our customers can be largely divided into two groups, those who need to buy products from and those who provide services to the Asian market. Neat can help serve their needs for digital solutions that can simplify cross-border payments,” Mr. Rosa said.

To streamline the process and elevate the user experience, Neat has been continuously adding new features in recent years, making the application process more automated, convenient and timely.

For instance, Neat’s system is directly connected to government company registries in more than 20 jurisdictions. It allows Neat to extract original data directly from the sources of truth, while saving their customers’ time by removing unnecessary steps in the application.

Neat has also recruited more technical specialists with best-in-class experience in global banks, in a bid to strengthen and speed up their corporate governance.

Amid the coronavirus pandemic, demand for Neat’s services has actually increased.
“Overall business volume surged by 40% in March. As people cannot travel to Hong Kong, or be physically present in a bank to open an account, they need a truly digital, remotely accessible solution without the need to meet face to face.”

Partnership with Visa gives Neat an edge

In early April, Neat announced the completion of its US$11 million (HK$85.8 million) series A funding round, led by Pacific Century Group. Visa also participated and formed a strategic partnership with Neat. In the next few months, Neat will be issuing Visa commercial credit cards tailored to SMEs.

Mr. Rosa highly values the collaboration with Visa. “Our target customers not only face the difficulty of opening bank accounts, it is equally hard for them to get a commercial credit card. As a startup, we are happy to work with Visa to jointly provide financial products and services to SMEs. ”

“In addition to being fast and convenient, security is of utmost importance in financial services. Visa is known for its technology and experience in payment security. They can offer substantial advice to heighten the security standard of Neat. Additionally, our products will raise customers’ confidence through Visa’s authentication. ”

Plenty of payment solutions in the market are consumer focused, Mr. Rosa pointed out. There are very few that can optimize cross-border payment experience like Neat does, and the partnership with Visa can further boost the business of Neat.

“Visa’s global network has induced more fintech companies and platforms to collaborate and build a more solid payment ecosystem. As a fintech startup with business around the world, by tapping into this ecosystem, I believe we will be able to get a lot of inspiration and develop more innovative solutions with Visa,” said Mr. Rosa.

In sum, Visa’s Network of Networks strategy focuses on enabling the movement of money for everyone, everywhere, by being a single point of connection for any transaction, whether it’s on the Visa network or beyond the Visa network. In this regard, fintechs play an important role by expanding the number of endpoints (access points that senders and receivers use to move money) to facilitate a greater number of ways in which money can move – simply and securely.

(Information provided by Visa)

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Hong Kong Economic Journal