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00:00SECOND GUEST THIS MORNING. THANK YOU FOR JOINING US. IS HONG KONG, THE USERS, THE REGULATORY ENVIRONMENT, AND THE INCUMBENT BANKS, READY FOR THESE NEW VIRTUAL BANKS HITTING THE MARKET? > > ABSOLUTELY. THE MERGERS OVER THE LAST THREE TO FOUR YEARS COME AT IS THE BIGGEST SO FAR. THE INCUMBENTS, PRIVATE SECTOR USERS, REGULATORS WILL IN BRACE VIRTUAL BANKS -- EMBRACE VIRTUAL BANKS. IT GIVES CONSUMERS MORE FLEXIBILITY, AND ALSO SERVING THE YOUNGER GENERATION. > > YOU ARE ONE OF THE 29 THAT ARE PART OF THE FIRST BATCH OF APPLICANTS FOR THE VIRTUAL BANK LICENSE. WHAT WILL THAT DO TO THE INCUMBENT, WHICH IF YOU THINK ABOUT IT, IT IS HSBC, STANDARD CHARTERED, AND ALSO BANK OF CHINA HONG KONG. THE THREE OF THEM CONTROL 66% OF THE RETAIL MARKET, 76% OF THE CREDIT CARD MARKET, AND 50% OF DEPOSITS. WILL THOSE NUMBERS COME DOWN? > > IT WILL. IT WILL INCREASE COMPETITIVENESS . WHAT WE THINK WILL HAPPEN IS PEOPLE WILL STILL HAVE BANK ACCOUNTS, BUT THEY WILL OPEN TANK ACCOUNTS WITH VIRTUAL -- BANK ACCOUNTS WITH VIRTUAL BANKS AND USE THOSE MORE FREQUENTLY. CUSTOMERS CAN GET RESULTS WITHIN SECONDS AND MONEY WITHIN MINUTES. THAT VERSUS THE TRADITIONAL EXPENSE WERE YOU HAVE TO WAIT FOR DAYS AND HOURS FOR MONEY TO COME IN, SO IT IS VERY DIFFERENT. > > HOW WILL THE REGULATORY FRAMEWORK BE HERE? LAST YEAR IN CHINA AM A WE SAW P2P LENDING, A HUGE CRACK, BUT A LOT OF FRAUD. THEY CRACKDOWN TO LENDING TO INDIVIDUALS THE DID NOT HAVE A GOOD CREDIT HISTORY. WHAT IS YOUR RISK MANAGEMENT NOW? ARE YOU AFRAID REGULATORS MIGHT BE TOO TOUGH? > > COMING FROM A STRONG BANKING AND RISK BACKGROUND, WE ARE VERY PRUDENT ON THE LENDING SIDE. DESPITE THAT, IDENTITY FRAUD LOSS OVER THE LAST FIVE YEARS IS A TESTAMENT TO HOW STRONG WE FOCUS. WHAT THE REGULATION IS POINTING TO OUR RULES WHERE WEAKER PLAYERS YOU FEEL THE OPPORTUNITY TO MAKE A SHORT PROFIT THEN DISAPPEAR, IT WILL BE MORE STRONGER COME A PROFESSIONAL, WELL ORGANIZED PLAYERS THAT WILL CONSOLIDATE MARKET SHARE FROM THE SMALLER GUYS. > > YOU HAVE A MOBILE APP THAT HAS THE ABILITY TO TRACK OF THE USERS' PHONE ACTIVITY TO DETERMINE CREDITWORTHINESS. HOW DOES THAT WORK? > > IN CHINA, THE YOUNGER SEGMENT , 20 235, THERE IS A LACK OF STRONG CREDIT DATA IN A CENTRALIZED BUREAU. WE NEED ALTERNATIVE WAYS TO DO CUSTOMER RISK MANAGEMENT. ONE IS USING DATA ON THEIR MOBILE PHONE THROUGH AUTHORIZATION. WE USE THAT TO ANALYZE TO FRAUD AND IDENTITY PREDICTIONS. AT THE SAME TIME, ALMOST INSTANTLY. THAT IS HOW WE CAN USE NEW SETS OF BIG DATA ANALYTICS, ARTIFICIAL INTELLIGENCE TO SERVE CUSTOMERS BETTER. > > ONCE YOU GET THE VIRTUAL LICENSE IN HONG KONG, YOU ARE IN CHINA UNDER A DIFFERENT BRAND NAME, ALSO INDONESIA WITH THE JOINT VENTURE. WHAT OTHER SERVICES WILL YOU START ROLLING OUT? INSURANCE IS A POTENTIAL BEYOND MICRO LENDING. > > IT IS A START TO UNDERSTAND CUSTOMERS. WHAT WE ARE LOOKING AT WITH THE DATA AND THE UNDERSTANDING OF BEHAVIOR, CAN WE SERVE THEM BETTER? FOR EXAMPLE, WE ARE LOOKING AT CROSS-SELLING CREDIT CARD INSURANCE. IF WE CAN PREDICT A YOUNG FAMILY NEEDS THIS PRODUCT, WE ARE LOOKING AT INSURANCE RODERICK'S, CREDIT CARDS, OTHER PRODUCTS. IT GOES BACK TO THE IDEA OF GROWING WITH OUR CUSTOMERS. WE FOUND IT OURSELVES AND 2013. A 20-YEAR-OLD CONSUMER TODAY IS 25 YEARS OLD. WE NEED TO OFFER THAN DIFFERENT PRODUCTS. > > HOW WILL YOU PAY FOR THIS EXPANSION? YOU WERE TALKING ABOUT AN IPO, BUT THE MARKET HAS BEEN DOWN. THE UNICORNS THAT HAVE LISTED HAVE NOT DONE WELL. HAVE YOU SHELL IPO PLANS? > > HEITKAMP COMMENT ON THE IPO. THE COMPANY IS PROFITABLE. > > HOW IS YOUR FUNDING RIGHT NOW? > > WE DO WELL. > > THE SHARING ECONOMY IN CHINA IS VERY KEY. HOW ARE YOU CAPITALIZING ON LEASING? > > ONE INSIGHT IS THE RIGHT TO ENJOY THE SHARING ECONOMY. WHAT IS A MAJOR NEED FOR CONSUMERS, AND HOW DO WE MAKE THAT FINTECH? YOUNG PEOPLE BY MOBILE PHONES THAT BECOME OBSOLETE A COUPLE OF YEARS LATER. WE LAUNCHED A NEW SERVICE IN CHINA, ALSO AVAILABLE WITH ALIPAY UNTIL , YOU CAN NOW LEASE THE LATEST IPHONE FOR 400 RENMINBI PER MONTH.

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Virtual Banking Is Set to Shake Up Hong Kong

Simon Loong, founder and chief executive officer at WeLab, discusses new virtual banks in Hong Kong, regulation on the industry, using customer's smartphones to analyze for credit risk, other services they plan to launch and how they're capitalizing on the sharing economy in China. He speaks on "Bloomberg Markets: China Open" from Hong Kong Fintech Week. (Source: Bloomberg)

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