This week, DigFin is all about smart banking in Hong Kong, and the new business models it is enabling. Today we look at a fintech's use of open APIs. Later this week we track the arrival of virtual banks, and how HSBC is leveraging faster payments. You can also check out our introductory video here and our breaking news about JETCO APIX here.
A Hong Kong-based fintech, Gini, says it is leveraging Hong Kong’s new open-banking standards to quickly scale a local consumer-budgeting app into a cross-border finance platform.
Having officially launched a year ago, the startup is now in the process of making it possible for Hong Kong users to connect with as many as 3,000 overseas banks.
Ray Wyand, CEO and co-founder, says the ambition is to turn the app into a financial-services hub for Hong Kongers with overseas bank accounts, letting people aggregate their assets globally.
The business is racing to hire engineers to turn its consumer app into a complete service that can serve as a one-stop shop for global financial services. It got a boost in December with an equity investment from Hong Kong-based venture capital firm Vectr Ventures, which has a dedicated fintech fund. The parties did not disclose the amount or valuation metrics.
The relationship got off to a dramatic start. “It was the hardest meeting,” Wyand recalled. When he and his team visited Vectr’s offices this past summer, the elevator failed, along with the air conditioning. It was a long, sweaty wait inside the lift.
“The fire brigade had to get us out,” Wyand said. There was no respite for the Gini team, though. “And then [Vectr] wanted us to go through our pitch deck.”
Vectr liked what it saw. Mark Munoz, one of its partners (and former CEO of Contineo), liked the fintech’s ability to tap into the city’s emerging smart-banking ecosystem.
He says Vectr is not keen to invest in companies seeking a virtual banking license, which he thinks will prove difficult for startups (be sure to see tomorrow’s story on virtual banks). But such developments are creating new opportunities for other companies: “Gini’s an infrastructure play around virtual banking.”
Wyand says virtual banking is helpful to the extent it’s advancing a broader smart-banking shift in Hong Kong. But for his business, the issue is about banking, whether it’s online or not: “We say to users in Hong Kong, you don’t need a virtual bank to get a good experience: you need a good banking product.”
A Netflix for consumer finance
Wyand, an ex-Citi trader, wants to create a platform for financial services akin to Spotify for music or Netflix for movies: not creating a new bank, but a way to connect lots of banks to lots of customers. The idea spun out of seeing lots of finance businesses launching their own apps and expecting people to download them all.
Wyand says the first consumer-finance apps helped people set budgets and financial objectives, but users drift away because few stick to their goals.
App developers have responded with gamification tricks, but these can backfire: in Hong Kong, most young people’s dream is to buy an apartment, but who wants to follow an app’s program if it’s going to take 50 years to save for a down payment?
People don't want a daily budget; they want a deal
Wyand says Gini’s goal is to become an advisor that can make recommendations based on people’s spending and saving habits. “People don’t want a daily budget; they want a deal,” he said. “This is where Gini is going.”
That means providing product comparisons, like a CompareAsia or GoBear offering, although Wyand says Gini would not be about sending users to a partner bank’s website but helping them consume services in a broader, goals-based context.
Race to connect
The fintech went live in Hong Kong in March 2018. Since then the company claims to have enabled $5 billion worth of transactions. Wyand declined to say how many people are using the app.
Gini is now racing to let its users connect to up to 3,000 banks and companies overseas, which Wyand says will happen by the end of this coming March.
This means Gini’s platform will be compatible with banks in jurisdictions with open-API rules or practices. “The legal position is that a customer’s data belongs to the customer, not the bank,” he noted. In places where there is no such legislation, Gini and other aggreg
Gini's an infrastructure play around virtual banking
This is a slow process. Even in Europe, where legislation is meant to compel banks to make such data available, most banks have failed to comply. But in Hong Kong, at least, he says new initiatives such as JETCO APIX should make such integrations quick and easy. (See our related story on JETCO’s API ambitions.)
Once these pipes are built, users see not just their bank account details, but all of the corporate services they have a payments account with, from Uber to Deliveroo to Spotify.
“Banks face low consumer satisfaction with their apps because they can’t tell you what you spent money on,” Wyand said. “They can show your bank balance, but not broader patterns to help you manage decisions, like how much you spent on Uber last month.”
Consumers must give consent in order for the app to pull such information from companies. Gini uses U.S.-based eWise to collect the data from banks.
If they come, you will build it
For Gini’s model to take off, it needs Hong Kong residents to use it to connect to their financial services in other places. But Wyand’s immediate challenge is finding enough talent to enhance the platform.
“There are few engineers in Hong Kong with B2C experience,” Wyand said. Ensuring the app meets the security requirements of a bank is vital and time-consuming.
Success also comes down to seeing how people use the app, especially with regard to interacting with banks and other financial providers abroad. Once Gini has more user data, the company is likely to seek a Series A funding round.
Wyand doesn’t plan to go after overseas users, however. There are already Gini-like apps in other markets, such as Mint.com, Plaid and Yodlee in the U.S., or Bankin’ in France. Those companies are more focused on exploiting their much larger domestic markets.
Gini, on the other hand, aims to become a cross-border specialist, based on the combination of cosmopolitan Hongkongers and the advent of smart banking in the city.