Essential financial products and services made easy.
HelloFinance (rebranding from “HelloGold”) is on a mission to democratize financial products and services for the unbanked and underserved in Malaysia, as well as other emerging markets. We started in 2017 with selling Shariah-compliant, investment-grade gold for as low as USD 0.25, and are in the process of bringing to market gold-backed micro-loans and -insurance. Gold is one of the 3 most favoured financial products with over $70 billion saved in emerging markets (2018). It is also popular among our key 18-38 year-old demographic, with 80% showing interest in gold investment.
For our efforts, HelloFinance was 1 out of 5 FinTechs globally selected to present our solution at the UN Secretary General Task Force in New York during last year’s General Assembly.
As of July 2020, HelloFinance has onboarded almost 350,000 customers in Malaysia and Thailand. We have transacted more than USD 20 million in gold—in the midst of Covid-19, we have seen a growth in transaction value of 3x in 2020 vs 2019.
Due to this pandemic and weakening local currencies against the USD, gold savings have returned more than 20%. With the expectation for a protracted period of heightened uncertainty, the growth potential for gold products remains high.
We operate a B2B2C business model and have an active partnership pipeline with major brands in Malaysia, other parts of Southeast Asia (SEA), and the Middle East. This is in line with our goal to be a leading financial inclusion platform for financial and non-financial partners in emerging markets. We invite you to join us in making a difference globally as an investor.
Main financial issues that most people in emerging markets face:
- An overreliance on savings products that generate below-inflation returns
Emerging market individuals tend to be risk-averse with their savings. In SEA, the average person keeps 42% of his/her savings in cash products, often receiving a typical return of less than 3% which leaves him/her exposed to local inflation—the rising cost of living in the region generally requires a return in excess of 6%.
- Assets are in local currencies while most of our staples are traded in US dollars
Taking Malaysia as an example, many of us earn in ringgit, own our homes locally, and for those who are able, place our savings in KWSP, ASB, Tabung Haji, etc. As a result, most of our assets are in ringgit. However, most of our daily goods (oil, rice, petrol, etc.) are traded not in ringgit but in US dollars. This can have an adverse impact on our cost of living when the ringgit devalues against the US dollar. In the last 6 months, the ringgit lost 5% against the US dollar.
- Lack of easy, affordable access to life insurance
SEA’s life insurance penetration sits at 2.4%, still lagging behind developed Asian economies such as Japan (5.8%) and Taiwan (5.6%). Malaysia’s hovers around 2.8%. As with other financial products, affordability and accessibility are two of the biggest challenges facing many people who end up “self-insuring” through the informal family network.
- Lack of easy and affordable access to personal credit
In SEA, less than 20% of loans granted to individuals are typically from banks or non-banking financial institutions. In contrast, more than 25% of individuals borrowed from friends and family, private lenders, and employers. Despite Malaysia’s position as one of the more advanced emerging economies, “more than 75% of Malaysians find it difficult to raise even RM1,000 of immediate cash for emergencies”. Where unsecured bank loans are available, the financing costs for Malaysians are extremely high with an effective lending rate of 15% to 25%
Our launch product, HelloGold, is the world’s first Shariah-compliant digital application for investment-grade gold. As a financial product that is generally unregulated, gold enables us to launch our platform quickly into many countries as no licensing application is typically required. In addition, gold requires little or no financial education—a reality substantiated by the fact that it is one of the top 3 most popular financial products with over $70b saved in 2018 in emerging markets. Gold also unlocks access to affordable asset-backed financing without the need for credit assessments.
Given gold’s traditional role as a means to preserve purchasing power, it has a very relevant role in protecting savers in emerging markets from the effects of both inflation and currency depreciation. For example, the 10-year return for gold vs. the ringgit was 100%, equating to an annualized return in excess of 7% against the annual interest of 0.4% or less that is typically offered by most bank savings accounts in Malaysia. This performance is repeated in other markets i.e. 50% vs. Thai baht and 150% vs. Indonesian rupiah. In 2020, because of the pandemic and a weakening ringgit, savings in gold have yielded more than 20%. With the expectation for a protracted period of heightened uncertainty, the growth potential for gold-based savings products like HelloGold remains high, as evident from the continued growth in transaction volumes we have experienced in the last 12 months.
- Simple, Affordable, Accessible
HelloGold’s product features are designed to satisfy customer needs while also making it easier for people to transact. It helps by letting people think about gold in local monetary terms rather than having to think in an alternative currency or in the weightage of gold. To facilitate this, HelloGold has been designed with these features in mind (please click on the video for a brief demo):
- B2B2C Model
We operate a B2B2C business model that leverages our partners’ existing customer base and brand equity so that customer acquisition cost is low enough to ensure a profitable customer lifetime value. Our growing partnership pipeline comprises major consumer-facing brands from SEA and the Middle East. More importantly, partner-driven customer acquisition cost is tracking below our modelled cost of US$1.50 and the share of wallet is significantly above our modelled transaction value of US$200; thus not only validating our B2B2C strategy but also reaffirming our path to customer profitability.
In Malaysia, our payment partners are currently Boost (Axiata’s e-wallet) and Touch ‘n Go eWallet. In Thailand, our first partner is the One Card (Central Group, the largest loyalty program in Thailand), and in the Middle East, we are in advanced discussions with a multinational UAE-based mobile operator.
- White Labelling
With the recent completion of our web app, we are in the process of enabling strategic partners in Malaysia to white label and market our products directly to their installed customer base via API integration. To this end, we expect to be fully integrated with at least one e-wallet operator by Q4 2020.
We are also currently in other white labelling discussions with other partners outside Malaysia with the confidence that we will execute at least one additional integration by Q4 2020.
- Product Pipeline
HelloLife: We are in the process of working with potential partners to launch a gold-backed micro-life insurance product for our customers. The product specifications, already tested with a market survey of our customers, include a monthly cost of RM2 for life coverage of RM10,000, with immediate/same day payment for RM1,000. Our customers can put their HelloGold savings toward a monthly subscription for this product. We expect to launch this in Q4 2020.
HelloCredit: We are also working with potential partners to offer our customers access to personal credit at competitive fees. The financial partner can lend the user about 70% Loan-To-Value when they pledge their HelloGold savings as collateral. Due to our operational setup, we will be able to offer these loans at much lower rates in comparison to traditional Ar-Rahnu (Islamic pawnbroking) products that are available in the market. The loan tenor will be fixed at a range of 12 to 24 months.
HelloRinggit: We intend to apply for a capital market license to launch a retail micro-money market fund (MMF). This is to enable our customers to earn a quasi-Fixed Deposit return on unused balances in our partners’ e-wallets, starting with RM1. We will enable our customers “instant access” to their MMF savings by allowing them to borrow against their funds on a matched basis. Due to the Covid-19 outbreak, we have deferred submission for the license application to 2021.
Regular Savings Feature
- A minimum monthly commitment of RM30 / THB 300
- Dollar-cost averaging
- Gold bought at the lowest price of every business day
- Can be cancelled with one month’s notice
Unique Voucher Codes
- A voucher generation system for partners to sell $ amounts of gold for redemption on the HelloGold App
- Can be used to partner marketing, redemption for jewellery, etc.
Launching 2021 (in progress)
- Round-up payment transactions e.g. in Malaysia to nearest RM1, RM5, or RM10
- Balance gets automatically invested in gold
- Total transaction value (H1 2017-H1 2020): ≈USD20 million
- Transaction value growth (H1 2020 vs. H1 2019): 3.0x
- Gold under management (H1 2020): USD3.8 million
- Gold under management growth (H1 2020 vs. H1 2019): 3.3x
- Active customer growth (H1 2020 vs. H1 2019): 2.2x
In spite of the pandemic, we continue to bullish on the outlook for Malaysia. Based on our H1 2020 performance, we expect to record RM80 million of bullion transactions for 2020 and RM270 million in 2021.
- 46% of our customers are 30 years old or younger
- 37% are between 30 and 40 years old
- 54% Malay, 33% Chinese, 6% Borneo, 5% Indian
- 81% Klang Valley; 7% East Malaysia
On an annualized average, our customers buy RM1,000 of bullion from our platform with more than 1/3rd saving regularly through our SmartSaver subscription plan.
Customers of our platform are those who do not have easy and affordable access to financial products and services—the underserved and the unbanked. In Malaysia alone, that is about 75% of the adult population; they do not have the necessary net worth or disposable income to be able to access the simplest of financial products—the fixed deposit. The potential target market size in SEA and China alone is around 447 million consumers and is expected to grow to just under 585m over the next 10 years. We are able to access this large customer group through the partnerships that we are building.
Examples of what our target customer profile may contain are:
- a high propensity to save with the additional expectation that any growth in income would be directed towards further savings
- lives in the city with a young family
- wants better financial means to mitigate against job insecurity and to have health coverage
- will have internet access and a smartphone
- owns a second-hand car and has a home mortgage
- is an office executive e.g. accounts clerk, mid-level engineer; is involved in sales; or has a vocation e.g. nurse, teacher
Our initial target market of the underserved is made up of the consuming and emerging middle households with an average annual income of RM48,000, and a range of RM24,000 – RM120,000 in the context of the Malaysian market. While HelloFinance does not target the mass affluent or high net worth segments, experience in the developed market indicates that a small but highly valuable portion of these segments is likely to utilize the convenience of the HelloFinance platform over their current options.
We partner with corporations who have existing customer bases that fit our defined End Consumer Profiles outlined above. These corporations include banks, non-bank financial institutions, online retailers, telecom operators, and companies in other sectors that cater to similar end consumer profiles. We are currently in discussions with several companies with mass market products and services in SEA and the Middle East. As for the longer term, potential partners in China, South Asia, and the Commonwealth of Independent States have already initiated preliminary discussions with us.
Current revenue streams:
- income from bid-ask spread;
- annualized management fee
With the upcoming launch of our additional products and services, we will also have the following revenue streams:
- licensing fee for the white labelling of our platform which will be based on transaction value;
- fees and commissions from our gold-backed micro-financing and -insurance products.
In general, we believe that the underserved market is large enough for several providers—in part, due to the lack of relevant, affordable, and accessible products such as what HelloFinance provides. We believe that the customer traction that we have generated over the last 3 years demonstrate that we have a value proposition recognized by the end-customer model. Just as importantly, our institutional partner pipeline that still continues to grow is indicative of the value that potential partners see in white labelling our platform.
That said, specifically with regard to gold, Asian consumers have limited and inefficient choices available to them when it comes to gold savings as available options are often unwieldy and expensive. The buyer of traditional forms of gold typically pays too much for gold compared to wholesale spot rates, especially at very small transaction sizes e.g. a purchase of only US$30 results in buying gold that is actually only worth about US$20. As a result, the consumer often decides not to invest, leaving significant latent demand untapped. The consumer currently has two main options to purchase gold products in the market. Each of these options poses problems for our target market.
1. Competitive Element: Physical gold
Issue: Excessively high premiums
Anyone can purchase physical gold through retailers, jewellers, or banks. The products offered are tangible in that they are physical and portable. They are also simple to understand and use. However, physical gold investments tend to be expensive relative to the spot price of gold for purchases under US$500. The mark up on coins priced under $100 can be between 10% to 50%, while for jewellery, it is 10% to 15%. Also, in the case of jewellery, the absence of well-established assaying practices can also leave the consumer exposed to under-caratage in less mature markets.
In many markets, because the quality of gold varies so widely, it can only be resold to the firms that sold the product initially, making the investment less liquid.
Issue: Storage is difficult
Physical gold is at danger from theft if it is unprotected. Protection in the form of safe deposit boxes is expensive for small quantities of gold.
2. Competitive Element: Gold-based financial products
Issue: High entry ticket and inaccessible to the emerging market consumer
There are many well-designed, gold-backed financial products. However, these remain relatively inaccessible to the mass market Asian individual due to the subscription being exclusive to those who can afford higher ticket purchases.
Issue: Suitability is geared more toward the accredited or sophisticated investor
Gold-based financial products tend to be designed for western investors, and typically only educated and wealthy Asian investors will use them. Investors usually have to be accredited before they are allowed to buy gold-based Exchange Traded Funds (ETFs) as these are complicated financial instruments. In addition, there are no options to redeem the physical gold represented by these financial instruments.
The target raise for this Equity Crowd Funding round is RM8m.
The use of the funds raised in this period will be allocated as follows:
- marketing (45%);
- people (35%);
- operations (10%);
- working capital (10%).
This will enable us to: (i) achieve cash flow breakeven in the next 12 months for our existing operations in Malaysia and Thailand; and (ii) opportunistically onboard partners outside these two countries onto our web app.
The amount of money people have in their wallets should not be a barrier to their ability to access financial products they need. Yet today, too many basic financial products and services remain unaffordable and inaccessible to all.
We are a retail financial services mobile platform that aims to serve mass-market consumers in emerging markets. We want to address affordability and accessibility through the democratisation and digitisation of essential financial products— starting with gold. We are a startup that creates simple and accessible financial products for everyone.
Our investors include 500 Startups, Majuven, the Finlab, and a number of Malaysian family offices.
Robin Lee, CEO and Co-founder, is the former CFO of the World Gold Council and brings a wealth of knowledge and contacts about the gold market. He was the principal accounting officer for SPDR Gold Trust (‘GLD’), the world’s largest ETF, which held over US$80billion in assets under management. He supported the Singapore government in developing a gold hub strategy which led to the launch of the world’s first exchange traded, wholesale kilo gold contract. Robin developed a new sovereign gold-backed bond concept to enable countries to lower sovereign debt yields through securitization of central bank gold reserves. He has also worked with the Industrial and Commerce Bank of China to introduce a gold savings program which generated annual sales of $6.5b.
Ridwan Abdullah, Business Development and Co-founder, spent 7 years with AEON Group Malaysia in the retail and financial services industry. He is the former Head of Special Projects at AEON Credit Service (Malaysia) Bhd. where he spent most of his time in strategy and partnership development. Prior to AEON Credit, Ridwan spent several years in the retail sector for AEON Co. (M) Bhd., where he worked in supply chain management and set up the project team for AEON’s first retail store expansion into Indonesia. Ridwan has an Executive-MBA from Columbia Business School & London Business School.
Ita Jalaluddin, Head of Malaysia, has worked in digital marketing and communications strategies for Bursa Malaysia, Tourism Malaysia, OSK, Standard Chartered and Ministry of Finance Malaysia. As Digital Director at TBWA, she developed a stock market simulation exercise that harnessed 200,000 young urban professionals, engaging them to invest in Bursa Malaysia. She was responsible for launching Tourism Malaysia’s Truly Asia global online consumer media campaign, which raised tourism arrivals by 19.5%, surpassing the 20.1 million target in 2007 2008. While at Boston-based multi-platform web retailer Karmaloop, she established a wide range of media and brand relationships through the creation of a proprietary affiliate program that produced over 1,000 cobranded partnerships. More recently at GDP Architects, Ita designed and implemented a grassroots CSR program, focusing on the rollout of urban libraries and affordable student housing in Kuala Lumpur. This is in partnership with Think City, Khazanah Nasional’s urban regeneration initiative. Ita holds a Bachelors in International Relations from Boston University and an MA in Design History from the Royal College of Art.
Siripat Patrangul, Head of Thailand, has over 25 years of experience in management, government & customer relationship management, branding, integrated marketing communications, and sales. She has held leading positions in Alpha FinTech, BlueStacks, BlackBerry, CompTia, Business Software Alliance, Microsoft and J. Walter Thompson (JWT). Siripat is based in Bangkok and oversees the Thai HelloFinance operations, partnership & sales. She has a Bachelors in Philosophy and minor in Psychology from Bradley University, USA.
Hachem Mohanna, Head of MENA, has collaborated with a large number of start-ups and ecosystem players on market expansion, strategic partnerships, and operational setup. Hachem is based in Dubai and oversees the expansion of HelloFinance in the MENA region. He has previously deployed solutions for Telecom Operators with Ericsson in 30+ countries., and has worked in management consulting with A.T.Kearney in the MENA region. Hachem has a Bachelors in Physics, a Master of Engineering, and an MBA from INSEAD.
Andras Kristof, CTO, has 20+ years of IT experience building robust, scalable systems. Andras was previously CTO of Yojee in Singapore, a distributed logistics platform. After a successful exit from viki.com, he founded Tembusu Systems in late 2013 where he started working with blockchain technology. Andras is the co-author of the “Handbook of Digital Currency” and has provided consulting services for governments, international organisations, and companies on blockchain topics including digital currencies, implementation feasibility, and security. In addition to a Masters in Computer Science from the Maharishi University of Management, Andras is a Fellow at SIM University.
Nawal Ismail, General Counsel, has worked with various organisations ranging from large MNCs to startups over the last 13 years. She joins HelloFinance with emerging markets experience gained as the Chief Legal Officer of a startup telecommunications company in Myanmar. During her time there, she successfully negotiated and secured a large landmark contract, the first of its kind in Myanmar. Prior to that, Nawal worked for the Qantas Group. She completed her business degree at the University of California, Berkeley and graduated from the University of Melbourne with her LLB. Nawal was admitted as a solicitor and barrister to the Victorian Bar and practised in Melbourne, Australia.
Wing Yuen Loon, Data/A.I. Lead, was previously Head of Technology and Data for CIMB Group Ventures and Partnerships, where he led the technology and strategy, as well as the build for the technology and data platforms to support the various business and product partnerships with platform partners such as Touch ‘n Go Digital, Lazada, Shopee, etc. Prior to this role, Wing Yuen led CIMB Fintech DataLabs and CIMB’s InnovationLabs which focused on ideating, building and rolling out new data-driven propositions and digital banking products for the bank. Prior to CIMB, Wing Yuen worked in various technology companies such as Digital Equipment Corporation, Compaq Computers, Hewlett-Packard, and Microsoft primarily as a technology consultant advising, planning, managing and deploying various business solutions mainly for telecommunications and discrete manufacturing customers. Wing Yuen is familiar and has worked with various data engineering components in the Hadoop Big Data ecosystem and has also built production predictive models in Python for various banking use cases. Wing Yuen has a Masters degree in Information Engineering (specializing in Robotics and Control), a Masters degree in Business Systems Analysis, and a BSc (Hons) in Civil Engineering from the City University of London.
Nicholyn Chang, Business Development Lead, was previously a FinTech Director at the CIMB Group where she led the strategy and execution of cutting-edge digital solutions to accelerate the bank’s SME financing business. Prior to that, Nicholyn was part of a founding team that stood up an IFC-backed Myanmar microfinance leveraging business model and technological innovation to provide data-backed, individually customized financing to farmers and rural market vendors. Formerly, Nicholyn was a public sector consultant. She has a Bachelors in International Studies, a Masters in International Economics, and an MBA from INSEAD.
Note: HelloFinance is mentioned as “HelloGold” in this section as these were accomplishments before our rebranding.
- HelloGold showcases its financial inclusion product at the United Nations Secretary General Task Force in New York
- Top 20 Malaysian fintechs
- HelloGold wins Best Islamic Wealth Management Fintech Company
- HelloGold, only Malaysian company, participates in DIFC Fintech Hive programme
- Why HelloGold started with gold as its launch product
- Why Gold
- HelloGold wins Best Islamic Wealth Management Fintech Company at the World Islamic Fintech Award
- Precious metals go online
- The story of HelloGold
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