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Benjamin Robertson

It's taken a while but Hong Kong is finally playing catch up when it comes to consumer finance. And like other markets, it's the newcomers who are leading the charge.
"Old school financial institutions are in danger of becoming obsolete if they don't start innovating," said Simon Squibb, founder of Nest, an incubator firm that helps tech start-ups.
In recent years, financial markets have woken up to the powers of crowd funding, peer-to-peer lending, and cheap online investment and insurance platforms.
Most of these innovations have passed Hong Kong by.
"Go to your bank and sit in front of your manager and there are some serious inefficiencies," said Mathias Helleu, founder of brokerage firm 8 Securities.
The force behind a new index tracker portfolio aimed at retail investors, Helleu likes "disruptive technologies" that shake up an industry prone to high fees and sales-driven advice.
Local regulators last year baulked at relaxing rules to allow equity crowd funding - a form of capital raising where online investors pool resources - while banks and insurance firms employ around 80,000 licensed agents, a number that's barely changed in recent years, rather than adopt technologies that might reduce sales teams.
In part that's because institutions fear change, and their valuations are linked to their sales force, says David Halley, managing director of Capstone Financial, a financial advisory group that includes insurance quote engine sites expatinsurer.com and mymoney.com.hk
These sites compare over 180,000 local price variables, more than any agent could do, said Halley, whose firm saw a 15 per cent increase in revenue after the sites went live.
Industry experts say Hong Kong's population of 7.2 million makes it tough to achieve economies of scale when selling low-cost services.
Practitioners would agree. Halley's websites, like others on the market, now target a regional audience, while 8 Securities did a dual launch in Japan.
Known as a "robo-adviser", automated index tracker portfolios like 8 Securities' remain a novel concept, but one forecast to grow from US$14 billion in 2014 global assets under management to US$255 billion by 2019, according to research firm MyPrivateBanking.
Though sales and asset management are handed to a computer programme, on the plus side, investors forgo the front-end charges and contractual commitments common with many products in Hong Kong, argues Helleu. Even so, the firm's annual fee, at 0.88 per cent, is more than double what some US based robo-advisers charge.


Hong Kong playing catch up in tech-driven consumer finance industry

Financial markets have woken up to the powers of crowd funding, peer-to-peer lending, and cheap online investment and insurance platforms. Photo: Bloomberg

Business

Banking & Finance