Hong Kong fintech firm 8 Securities targets Japan’s millennials with mobile investing apps

The company will work with Nomura Asset Management to develop products for what it sees as an under-served market

PUBLISHED : Monday, 09 April, 2018, 8:03am
UPDATED : Monday, 09 April, 2018, 8:03am

Hong Kong fintech firm 8 Securities is targeting the younger generation of Japanese investor with the development a new set of artificial intelligence-driven stock trading apps for mobile phones, seeing an opportunity in what it said was an under-served market.

The company has just raised US$25 million from a shareholder, Japan’s Nomura Asset Management, in its latest series C funding round, and will work with Nomura on so-called robo-advisory products – automated financial planning services – targeting people born between the early 1980s and the mid 1990s.

Chief executive Mikaal Abdulla, a former senior executive at US online broker E*Trade, founded 8 Securities in 2012 when he realised people of that generation tended to prefer trading through an algorithm on the go rather than sitting in front of a broker’s terminal, presenting a market opportunity for 8 Securities.

“Banks and securities brokers, due to their leading market shares in retail stock trading volume, have not yet been incentivised to develop robo-advisory or other automated retail trading solutions to cater to such demand,” he said.

He added that Nomura also saw the declining average age of retail stock investors in Japan, and its investment in 8 Securities was part of it plan to be prepared for this new generation with products and services catering specifically to their needs.

“The strategic rationale for Nomura Asset Management is to move into robo-advisory. We will be spending half of the recent US$25 million funding specifically for product development for the Japanese market,” said Abdulla. The focus would be on portfolio and single stock notification and analytical tools to be delivered through mobile phones, he said. The notification tool will, for example, tell the subscriber the level of buy or sell interest on a stock based on data gathered from 8 Securities’ own user base.

8 Securities already has a subsidiary in Japan that offers robo-advisory services for trading Japanese exchange traded funds.

Including the latest investment, the company has now raised a total of around US$55 million from several family offices and other venture investors in Japan, the US, the UK, China, the Netherlands and Hong Kong.

Its robo-advisory service, named Chloe, was launched in 2016. It helps users to invest in a diversified portfolio of Hong Kong-listed ETFs. Last October, it launched its second mobile app, Tradeflix, which offers automated stock trading service for over 15,000 US- and Hong Kong-listed stocks.

The stock trading service is free of charge, so 8 Securities will seek to launch a margin lending service and other subscription-based services later this year to get revenue from its existing users, Abdulla said.

He declined to say how many users the platform has, but said he expected around half of them to sign up for the margin lending service, which would allow an investor to trade stocks on borrowed money by using other stock holdings or cash as security.

He also said that outside Japan, 8 Securities would license the Chloe service and Tradeflix mobile apps to other banks and insurance companies in the region. The company planned to spend the other half of the US$25 million from Nomura to expand its 30-strong technology team, and to market its brand.

It will expand into “two to three” new markets in 2019, he said.