[Sponsored Article] HKUST has a growing reputation for nurturing the entrepreneurial and technical talent fueling the FinTech revolution. Here, four alumni share insights on the tech, from blockchain to AI and from robo-advisory services to digital payments, they have harnessed in their businesses. Mike GAULT and Guardtime Kellogg-HKUST EMBA alumnus Mike GAULT is the founder and CEO of Guardtime, a blockchain startup based in Tallinn, Estonia, that employs a team of over 150 cryptographers, developers and security architects. Guardtime’s blockchain-based solutions can potentially be used to ensure the integrity and security of information across most areas of economic and societal activity, with the insurance, health and defense sectors among those currently targeted. The application of blockchain technology to improve efficiency and guarantee authenticity in international trade and cross-border manufacturing has garnered a lot of headlines in recent years, and Gault can understand why. “Blockchain provides a mechanism for verification throughout the entire supply chain, from the first part that’s created, all the way to the consumer. We estimate the efficiency savings businesses get through using blockchain as between 5 and 20 per cent.” Guardtime has offices in six locations around the globe but Gault chose Estonia for his HQ as he believes it is the world’s first truly digital society. “You can vote online in Estonia, and you can file your taxes — and find out how much you need to pay — in three minutes. This is because all the databases in Estonia are connected.” Blockchain technology can take a great deal of credit for Estonia’s successful digitization, Gault says, with its impact on the health sector particularly noteworthy. He compares the health sector in the US — citing losses there due to inefficient processes of hundreds of billions of dollars — with Estonia, where, he says, the figure is zero. “In Estonia, citizens own their health care records and give permission for doctors and family members to access them. Everyone can verify the processes, without having to trust all the people in between.” The demands of building the Guardtime business meant that Gault had to extend his studies across three Kellogg-HKUST EMBA cohorts. But, in fact, these delays proved very fortuitous, allowing him to connect with an even wider range of executives — and recruit three of them for leading positions in his company. Jian TAN, now Guardtime’s General Manager, China, and James KOO, the company’s President, Singapore, were both in KH12 with Gault, while the company’s President, Tim FITZPATRICK, was a classmate in KH13. “Tim, our President, was a general counsel of a Chinese company located in Shenzhen, so he was really experienced in legal and managing risk,” Gault says. Tan, who completed a doctorate in Computational Genomics in Beijing, brought with him a deep knowledge of the Mainland. “He came to me during a class one day and said, ‘Hey, Mike, I love your technology. Let me help you build a business in China’.” Bianca HO and Clare.AI In recent years, digital assistants have leveraged the latest developments in AI technology to engage users in ever more convincing and useful conversations via speech and text. Bianca HO, who graduated from HKUST BBA in Global Business, co-founded Clare.AI with YEUNG Chi-kwong, also an HKUST alumnus. She is the co-founder and COO of Clare.AI. Clare.AI builds software for industry-specific, conversational digital assistants that are capable of understanding more than ten Asian languages. Ho points to the manner in which customer expectations have been rising — with them expecting quicker responses delivered in a more user-friendly and useful form — as being a key driver behind the rapid adoption of FinTech in the banking and financial services sector. The goals of Clare.AI are to create effortless communication experiences. To achieve these objectives, the business strives to remove the barriers that prevent enterprises communicating effectively with their end-users. “We see those barriers as languages, channels and costs,” she says. As it has grown, Clare.AI has attracted larger and more complex clients, with 50 per cent now coming from the banking and finance sector. “The common points I see [among Clare.AI’s clients] are that they are large traditional enterprises and organizations, who want to find a more innovative way of communicating and understanding their clients,” says Ho. In HKUST’s 2017 One Million Dollar Entrepreneurship Competition, the Clare.AI team won a GF Securities Award, worth HK$200,000. The awarding of that cash prize is just one of the ways in which the HKUST community has played an important role in supporting the development of the business, notes Ho. She is also in regular touch with the HKUST Entrepreneurship Center, which was established to support innovation and entrepreneurship on the campus, and cultivate a risk-taking value-creation mindset. The Entrepreneurship Center has given Clare.AI exposure to investors and clients, and Ho sees its work as indicative of the real-world relationship the University has with startups. When it comes to the performance of Hong Kong in general, in terms of FinTech innovation and adoption, Ho says it has a lot to do with its current and past strengths. “Hong Kong is strong because of regulation, but it’s also not strong because of regulation. It’s very much a double-edged sword. Hong Kong’s robustness comes from its regulatory framework, but this can also stifle innovation.” What’s more, success can diminish a certain type of hunger. “Hong Kong does not evolve as quickly as other hubs because the businesses here are so profitable. It’s ironic that many large banks make their decisions here, but because Hong Kong is so profitable for them, it’s usually not the first market they innovate in.” However, she does see evidence of a desire to catch up, and this is partly driven by an acknowledgment that lagging behind is starting to have an impact on the bottom line. As for investor interest, Ho believes venture capitalists are excited the most by large markets, and so are looking to new FinTech services in areas such as virtual insurance and virtual banking. Greater awareness of the economic direction of travel is also reflected in the career choices Hong Kong graduates are now making. When she completed her own studies at HKUST, Ho says most of her classmates were looking to join investment banks or major consultancies, while startups and new tech companies were seen as too risky a bet. Today, to a large degree that paradigm has been turned on its head. Don HUANG and Magnum Research’s AQUMON Also harnessing the growing powers of AI is AQUMON, a robo-advisory service developed by Magnum Research, which aims to make the wealth management process more accessible. “A robo-advisory service is a type of automated wealth management service that is based on quantitative investment strategies and is customized to clients’ needs,” explains Don HUANG, Co-founder of Magnum Research. Based on the investor's risk profile and investment preferences, AQUMON’s algorithm engine suggests a tailor-made investment portfolio. “The portfolio will then be automatically constructed and monitored for re-balancing needs as the financial market fluctuates. The experience can be fully online, facilitated by AQUMON’s mobile and web platform,” says Huang. The thesis he wrote for the doctorate he completed at the School of Science of HKUST focused on the pricing of exotic derivatives. “Some results of my research can be directly applied in our quantitative-based investment strategies,” Huang notes. Now, having obtained the requisite licenses and funding, AQUMON serves both individual investors and financial institutions and is currently partnering with over 30 financial institutions across Mainland China, Hong Kong, and Taiwan. “We obtained Hong Kong SFC Licenses 1 and 4 to service Hong Kong citizens, and the US SEC RIA License to service non-Hong Kong citizens. We closed the Series A++ round of financing in September 2018. Our major investors include Bohai XingWang, L.P., managed by BOC International, and Alibaba Hong Kong Entrepreneurs Fund (AEF), a not-for-profit initiative by Alibaba Group.” Huang says Magnum Research has had to overcome a number of obstacles to establish itself in Hong Kong. These go beyond the high cost of office space in the city. “AQUMON closely integrates IT and AI, but the relevant talents are rare in Hong Kong. Additionally, there are strong regulatory requirements placed on financial services providers, so we had to go to great lengths to obtain the related licenses as a startup.” But one element of the local startup eco-system has had only a positive impact on the company’s development. Huang says the HKUST Entrepreneurship Center has offered Magnum Research a huge range of resources on an ongoing basis, including, at an early stage, office space. “We were also invited by HKUST Entrepreneurship Center to different financial technology events that helped raise awareness of our brand. “In addition, we have partnered with professors from the Department of Mathematics and from the Business School on many research projects. An AI laboratory is also being set up at HKUST, dedicated to research and application of AI and investment.” But since talent is his company's most valuable asset, Huang is particularly keen to express his gratitude to HKUST for nurturing the outstanding graduates who now work with Magnum Research. Ken LO and ZhongAn Entrepreneurship is more than the process of starting a company. It is a combination of attitude and a skill-set applicable to pursuing innovation in business and career. Having graduated from HKUST BBA Program (Marketing and Management and MSc in Investment Management), Ken LO is now a founding member of ZhongAn International, a wholly-owned FinTech subsidiary of mainland giant ZhongAn Online P&C Insurance. Despite having such powerful backing, he still believes in the importance of retaining a startup mentality. “No matter how big or small your company, you have to retain a ‘day one’ mindset.” Many established businesses in the finance sector are now looking for ways to change a corporate culture that may have been successful in the past, Lo notes. “This is a critical moment for a lot of traditional financial institutions who are wondering how to spur innovation when they know ‘winter is coming’. Increasingly we are seeing them partner with FinTech companies and digital platforms, as they start to orientate their company to be more customer - not product-centric.” ZhongAn Online P&C Insurance was founded jointly by Ant Financial, Tencent and PingAn in 2013 and was the first Chinese online insurer. “We are also the first licensed financial institution in China to put our core systems in the cloud,” adds Lo. “In 2017 alone, we served more than 340 million customers in China, and we sold more than 5.4 billion policies.” Established in 2017, ZhongAn Technologies International Group is based in Cyberport, in Hong Kong, and in Shenzhen. “We supply insurance tech solutions for traditional insurance companies to accelerate their digital transformation, and we are co-creating insurance related products and solutions for our international partners,” Lo says. Current international collaborations include those with SoftBank and a long-established insurer in Japan. The company’s Shenzhen operation focuses on IT engineering, coding, system development and product management, while the Cyberport office concentrates on marketing and risk, leveraging on Hong Kong’s established business acumen. “Its cross-border operation leverages the talents, cultural and product knowledge in both the Mainland and Hong Kong to accelerate the company’s growth and development.” The argument that Hong Kong is lagging behind the Mainland, particularly in areas such as digital payments, is one that Lo believes needs to be put into context. “In Hong Kong, the payment market is very mature,” he points out. Hongkongers have, for example, an average of, two to three credit cards per person, whereas on the Mainland the comparable figure is well under one. Developments in technology, and its growing reach, led to an inflection point at which it was possible for mainland companies to explore other payment options. In Hong Kong, there is something of a legacy problem for established financial institutions, who are having to decide whether to keep on improving existing systems or write off years of investment. Long renowned as an international financial center, Hong Kong now also has the ambition to be a leading FinTech hub, Lo notes. This, however, requires talent as well as technological understanding and business smarts, and Lo’s alma mater, HKUST, is a place where he believes these talents can be blended together.