Hong Kong- and Singapore-based digital comparison platform operator MoneyHero went public on Nasdaq in October 2023. Its share price performance has been terrible. Does its price reflect the company’s prospects?
No, says Shravan Thakur, who runs the Hong Kong and Taiwan legs of the business. He argues the fintech business is becoming so embedded in its various markets that it is here to stay.
MoneyHero went public via a SPAC, effectively being acquired by an existing listed company (a Special Purpose Acquisition Company) rather than going through the pains of an initial public offering.
It listed at $3.35 a share; it’s been on rollercoaster since: in November it became a penny stock and then surged to $4.03 within a fortnight, but it’s since slid into gentle mediocrity since, and today trades at $1.17 per share.
Making the case
In this regard MoneyHero’s experience is similar to other Asian tech companies that have gone public via SPACs, such as Grab: their stocks have all performed badly.
One reason is that by sidestepping the usual book-building process, these businesses didn’t focus enough on what matters to public shareholders: profitability.
But there’s more to it than that, argues Thakur, who joined in 2021 as country manager for Hong Kong and was named group head of commercial in July 2023, as part of a restructuring to prepare for the listing.
“There’s a lot of work to be done because as a SPAC, investors and analysts don’t know you,” he said. The group CEO, Prashant Aggarwal, now spends a lot of his time courting stakeholders and building the group’s profile.
Meanwhile it’s up to the next tier of executives such as Thakur to deliver the performance that will, over time, make the company’s case and, they hope, support the stock price. So what is the state of play for MoneyHero and what does that say about digital finance in Asia’s consumer markets?
The business was established in 2014 as Hyphen Group (and later CompareAsia Group) to operate financial comparison sites in Hong Kong, Singapore, Philippines, Taiwan and Thailand (which have their own brands in different markets). The group exited Thailand last year as it restructured, but also entered Malaysia.
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It is the largest comparison and aggregation fintech platform for consumers in Asia, having outlived erstwhile competitors such as GoBear and MoneyOwl, thanks in part to its strong backing. Major stakeholders include telecom PCCW and insurer FWD Group, both controlled by tycoon Richard Li, as well as Goldman Sachs.
That firepower extended to the listing: the SPAC was Bridgetown Holdings, set up by Li and Peter Thiel, the venture capitalist and former cofounder of PayPal.
MoneyHero’s business model was, and remains, straightforward. Its platform attracts consumers through a constant content-media campaign. It hires journalists to write about financial products, investment tips, and other money and lifestyle issues. Its journalists are meant to be independent, which garners trust for when they offer readers access to loans, credit cards, or insurance products. Thakur says the group gets up to 10 million individuals reading its content each month.
These are supplied by banks and insurance companies (MoneyHero has an insurance broker license). These institutions pay MoneyHero for a pre-cleared customer, and they’re willing to pay a premium because of the lifetime value of new leads.
There’s an offline component that is like the platform’s glue: gifts. Banks and insurers have always offered rewards to new customers. In the credit card business, this could be air miles. Gifts may be digital or they could be offline, such as earbuds or other electronic gizmos.
Gifts are a hassle for financial institutions to manage, particularly if there’s inventory to manage; nor are banks adept at the constant tweaking of websites to make the toaster look shiny. MoneyHero convinced its first institutional suppliers to outsource their gifts program, and then applied a lot of data analytics to work out what gifts were most effective with which products or customer segments.
This in turn helped its institutional partners sell more, although Thakur says the business learned that some financial products don’t do well with rewards. Credit cards are a good match but someone shopping for a personal loan needs the money, not the iPad.
But as part of the gifts promotions, MoneyHero invested in data analytics, and has made this the backbone of its recommendation engine.
The company hasn’t been profitable. Like most startups, its early years were marked by a constant need for capital and a race for growth. This began to change with the prospect of a Nasdaq listing. The money raised from being acquired by Bridgetown would give MoneyHero plenty of capital. But it would need to satisfy public shareholders, which meant it would need to convince the market it was a viable business.
In 2022 the company began to restructure. It cut costs by reducing headcount across the region by about 20 percent. The senior executives were also reorganized. In Hong Kong, the team moved into PCCW’s headquarters in Causeway Bay, where they could enjoy low rents.
Meanwhile the business has been expanding how it reaches consumers, how it works with institutions, and its preferred product sets.
On the consumer side, MoneyHero targeted the creator economy, finding KOLs (key opinion leaders, eg YouTubers and bloggers) who had followings but lacked the tools to monetize them. MoneyHero built a Software-as-a-Service platform to connect product to their content, paying KOLs for leads that converted.
Probably the most important move has been data partnerships with third parties such as Transunion that can offer more first-party data (that is, data collected directly from an audience). This goes into MoneyHero’s analytics to help it refine offers and develop leads.
“Our business is shifting more to partnerships and proprietary data,” Thakur said.
Lastly, the group has been expanding the product set. It began with cards and moved to loans. Now the emphasis is insurance. By some metrics, the unit revenue per product is declining – a stat that may be off-putting to shareholders. But Thakur says this reflects a big expansion of product type, which will lead to more cross-selling.
He says insurance is just at the beginning and has a lot of potential. “If someone is searching online about insurance, that means they’re interested already, and there aren’t many platforms like ours,” Thakur said.
Moreover, insurance companies typically aren’t experienced at selling digitally, so they are more open to creating a channel through a fintech such as MoneyHero. In fact, Thakur says insurers are more likely to connect their products by API than banks, which means a customer can not just comparison shop or be directed to an institution’s salesperson – they can purchase the offer automatically on MoneyHero’s website.
As for banks?
“If open banking ever happens in Hong Kong, it will open this space a lot,” Thakur said.
Add these up and he says the company has improved its EBITDA (earnings before interest, tax, depreciation and amortization) by 90 percent from 1H 2022 to 1H 2023. That means it’s close to breaking even but the team wants to remain in growth mode. The SPAC money will help with hiring, building out more technical capabilities, and entering new Asian markets.
No decisions on new markets have been made, although it’s looking at large markets such as Indonesia and Vietnam. MoneyHero pulled out of Thailand because if found the authorities weren’t pushing digital infrastructure aggressively and local banks lacked incentives to try new channels. Similar considerations of regulatory priorities, drivers of innovation, and the strength of local competition will shape MoneyHero’s decision on where to open next.
Thakur says adding up the data partnerships, longstanding relationships with banks, strong capital backing, and a track record of consumer engagement gives MoneyHero an established presence. It’s gone from a startup forming beachheads to a fintech incumbent that would be difficult for a peer to dislodge.
If there were ever a major competitor, it would have to come from a large, deep-pocketed bank or tech group that made a strategic decision to own this space. For example, HSBC’s PayMe, its rewards app, and its digital banking app offers everything from gifts to financial education. It has such a hold on the local market that, while it does list its products on the MoneyHero website, including in Hong Kong and in other markets, it doesn’t need to work with aggregators. Similarly, a company such as Ant Group or Tencent’s WeChat could seize a huge market share, if it were inclined and if the regulators allowed it.
But that type of competitor seems content, or limited, to serving their own customer bases rather than trying to eat MoneyHero’s lunch. This leaves it competing against other, smaller fintechs, such as Hong Kong/Singapore group MoneySmart, insurtech 10Life, and embedded-finance player Planto (and their ilk in each market), or jostling with banks that favor keeping their digital offerings in-house.
“Now’s our chance to scale,” Thakur said, adding he thinks the current stock price doesn’t reflect the durability of the business model. MoneyHero is entering a new phase, no longer a startup, now an established business, but one that still needs to grow quickly. The combination of capital, data, analytics, content, and institutional relationships suggests that, at the very least, MoneyHero has proven that fintech consumer aggregation works.