Fin­tech FRONTIER

With in­no­va­tions such as blockchain cre­at­ing an en­tirely new seg­ment in the fi­nance in­dus­try, Johnny Hon re­veals how the Global Group is tap­ping into the new in­vest­ment op­por­tu­ni­ties

Hong Kong Tatler - - Tatler Focus -

Dis­rup­tion of the fi­nan­cial ser­vices in­dus­try is long over­due. While sec­tors such as en­ter­tain­ment, news and re­tail have been pro­foundly af­fected by tech­nol­ogy dur­ing the past two decades, the ways we bank, buy in­surance or use le­gal ser­vices have largely stayed the same. But that is set to change.

In­no­va­tions such as blockchain are open­ing the door for dis­rup­tive star­tups to chal­lenge the sta­tus quo with ser­vices that con­sumers ac­tu­ally want, as well as many more they don’t yet know they want. And that means there are sig­nif­i­cant op­por­tu­ni­ties for in­vestors to take part in the evo­lu­tion of an en­tirely new fi­nan­cial land­scape.

“The cur­rent state of play with blockchain is like the in­ter­net in 1998,” says Johnny Hon, founder and chair­man of the Global Group. “There’s so much more that peo­ple can do—the tech­nol­ogy can create re­ally im­por­tant in­no­va­tions for con­sumers. It’s go­ing to change the world, and this is only the be­gin­ning.”

Op­er­at­ing from its base in Hong Kong, the Global Group has al­ways sought to act as a bridge between East and West, help­ing in­vestors and en­trepreneurs in Main­land China and the rest of the world to ac­cess op­por­tu­ni­ties. But Hon also seeks to bridge new fron­tiers of tech­nol­ogy, par­tic­u­larly where they help to break down bor­ders and fa­cil­i­tate global trade.

Fin­tech fits the pro­file per­fectly. Just as the in­ter­net cre­ated a global com­mu­ni­ca­tions net­work that al­lows peo­ple around the world to in­ter­act with each other, blockchain will en­able them to trans­act—im­me­di­ately, ef­fort­lessly and se­curely.

The power of this type of in­no­va­tion is al­ready vis­i­ble in the mo­bile pay­ments world, where rev­enue is fore­cast to sur­pass US$1 tril­lion this year. Just one com­pany, the global pay­ments plat­form Adyen, pro­cessed al­most US$150 bil­lion last year—a US$60 bil­lion year-on-year in­crease.

“Peo­ple in de­vel­op­ing coun­tries are skip­ping past credit cards and us­ing tech­nol­ogy to trans­act,” says Hon. “The sec­tor is evolv­ing very quickly.”

But the pos­si­bil­i­ties ex­tend far be­yond se­cure pay­ments. Blockchain is be­ing used to create smart con­tracts that are turn­ing once-ex­pen­sive le­gal doc­u­ments into com­modi­tised prod­ucts. To this end, the Global Group is in the process of ac­quir­ing a Euro­pean-based law firm with a view to bring­ing to­gether lawyers and tech­nol­ogy spe­cial­ists, fos­ter­ing ex­per­tise in this de­vel­op­ing area of law.

The in­surance in­dus­try has been sim­i­larly slow to em­brace new tech­nol­ogy. Smart­phones, wear­ables and the in­ter­net of things are cre­at­ing masses of data that could help un­der­writ­ers to an­a­lyse risk far more ef­fec­tively than in the past, but much of the in­dus­try still re­lies on tra­di­tional ac­tu­ar­ial tech­niques in­stead of lever­ag­ing big data, ar­ti­fi­cial in­tel­li­gence and the blockchain. Dis­rup­tion is there­fore in­evitable.

Cryp­tocur­ren­cies are also up­end­ing the ways that early-stage busi­nesses fi­nance them­selves, with ini­tial coin of­fer­ings (ICOS) al­ready start­ing to ri­val ven­ture cap­i­tal in terms of fundrais­ing.

Main­land China will be a key mar­ket for the de­vel­op­ment of fin­tech, ac­cord­ing to Hon.

“The Chi­nese govern­ment is plac­ing a lot of em­pha­sis on de­vel­op­ing fin­tech,” he says. “Main­land China is quite for­ward-think­ing in the us­age of blockchain and mo­bile pay­ments, and is more used to adapt­ing the law to new in­no­va­tions. That’s more of a chal­lenge in coun­tries where there is a long-es­tab­lished le­gal code.”

The key to crack­ing the Chi­nese mar­ket, says Hon, is to find a part­ner that un­der­stands its needs and nu­ances. For­eign en­trants in Main­land China too of­ten un­der­es­ti­mate the im­por­tance of lo­cal cul­ture and etiquette. Main­land China is open for busi­ness, but prod­ucts need to be gen­uinely in­no­va­tive and so­phis­ti­cated, and fo­cused on con­sumer con­ve­nience.

By the same to­ken, Chi­nese star­tups look­ing to ex­port their busi­ness ideas of­ten lack the man­age­ment ex­per­tise and knowl­edge to help them crack for­eign mar­kets. The Global Group is po­si­tioned to help both sides take ad­van­tage of this emerg­ing fin­tech op­por­tu­nity.

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