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Sunday, March 31, 2019

Five challenges young Malaysians face with home ownership


For many young Malaysians, the road to owning a home is riddled with speed bumps. — Pexels

PETALING JAYA, Feb 26 — Most would agree that you truly reach adulthood the moment you own your own property.

Just like any other major milestone in life, getting there comes with its own set of challenges that many young Malaysians have to overcome before they can successfully purchase a home.

Here are five hurdles Malaysian millennials might encounter on the path towards home ownership:

1. Worrying about making the wrong choice, when is the ‘right’ time to buy?

 Purchasing a home can be a major decision that many Malaysian youths feel overwhelmed by. — Pexels pic
Purchasing a home can be a major decision that many Malaysian youths feel overwhelmed by. — Pexels pic

Making the decision to buy a piece of property is a huge step that young locals aren’t quite brave enough to take yet.

Social news website SAYS’ 2019 Malaysian Home Survey among 8,568 Malaysians reports that one in five respondents had “(worries) about making the wrong decision”, especially since home ownership requires a hefty financial investment.

2. Unsure about loan application and loan rejections.

Do you have enough saved up for a home in the future? — Pexels pic
Pexels pic Do you have enough saved up for a home in the future? — Pexels pic

A difficult loan approval process is a huge factor that dampens many Malaysians’ prospects of owning a home.

PropertyGuru’s Consumer Sentiment Survey in 2017 states that 33 per cent of Malaysians reported a tough approval process for bank loan applications which presents a major roadblock on the path to home ownership.

3. Starter salaries, not enough money saved for a downpayment.

The average Malaysian needs to plan carefully if they want to own a house with their current salary. — Reuters pic
The average Malaysian needs to plan carefully if they want to own a house with their current salary. — Reuters pic

The thought of dealing with a mortgage on the salary of a fresh graduate is making many millenials think twice about owning a house.

The Employee's Provident Fund statement in 2016 had said that 89 per cent of the working population in Malaysia earn less than RM5,000 monthly, making home ownership especially challenging.

Most millenials wouldn’t believe that they could own a house with that salary.

4. Renting or owning?


It’s not easy maintaining a modern lifestyle when you’ve got a mortgage weighing on your shoulders. — Unsplash pic
  It’s not easy maintaining a modern lifestyle when you’ve got a mortgage weighing on your shoulders. — Unsplash pic

The hefty financial commitment to owning a home means young Malaysians will have to make some lifestyle changes if they want to stay afloat while having a house to their name.

This might mean foregoing luxuries such as weekend brunches and holidays overseas which have become staples for the modern generation.

Hence, a monthly instalment replacing these pleasures is the reason 33% of Malaysians in SAYS’ survey are saying ‘no’ to home ownership.  

5. Lack of awareness on housing deals and promotions.


Housing deals and offers don’t seem to be showing up on the radars of young Malaysians. — Unsplash pic
Housing deals and offers don’t seem to be showing up on the radars of young Malaysians. — Unsplash pic

While initiatives are in place to help young potential homeowners, many do not even know about the resources available to them that can ease the burden of property ownership.

A shocking 65 per cent of Malaysians in SAYS’ survey said that they had no clue about current housing offers and promotions.

This means that many young adults are currently unequipped with knowledge about navigating the property market.

In light of this, property developers EcoWorld have launched HOPE (Home Ownership Programme with EcoWorld), a comprehensive solution that promises to aid young Malaysians in their journey towards owning their dream home.

HOPE aims to make the dream of home ownership a full-fledged reality for millennials with the STAY2OWN (S2O) and HELP2OWN (H2O) programmes.

S2O will allow those wanting to stay in an EcoWorld project to rent their ideal home first with the confidence that they can become homeowners in the future.

A low monthly payment similar to the market rental rate also makes it particularly attractive for first-time homebuyers.

The option to rent first before buying also gives customers ample time to get their finances in order before committing to a new mortgage.

To top it all off, the rental savings will be used to offset part of the purchase price of the home, making it even more affordable for young Malaysians.

The H2O had successfully helped approximately 1,800 young homeowners and upgraders own their choice EcoWorld home last year and you can be one of them too! For more information on owning your dream home, visit EcoWorld’s website (https://ecoworld.my/hope/) or Facebook (https://www.facebook.com/EcoWorldGroup/).

By Tan Mei Zi The Malay Mail

* This article is brought to you by EcoWorld.


A NEW HOPE FOR YOUR DREAM HOME https://ecoworld.my/hope/

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Resilient values: Geh believes that both landed and high-rise units in prime locations will hold their values. Research house sa..


 

Five challenges young Malaysians face with home ownership


For many young Malaysians, the road to owning a home is riddled with speed bumps. — Pexels

PETALING JAYA, Feb 26 — Most would agree that you truly reach adulthood the moment you own your own property.

Just like any other major milestone in life, getting there comes with its own set of challenges that many young Malaysians have to overcome before they can successfully purchase a home.

Here are five hurdles Malaysian millennials might encounter on the path towards home ownership:

1. Worrying about making the wrong choice, when is the ‘right’ time to buy?

 Purchasing a home can be a major decision that many Malaysian youths feel overwhelmed by. — Pexels pic
Purchasing a home can be a major decision that many Malaysian youths feel overwhelmed by. — Pexels pic

Making the decision to buy a piece of property is a huge step that young locals aren’t quite brave enough to take yet.

Social news website SAYS’ 2019 Malaysian Home Survey among 8,568 Malaysians reports that one in five respondents had “(worries) about making the wrong decision”, especially since home ownership requires a hefty financial investment.

2. Unsure about loan application and loan rejections.

Do you have enough saved up for a home in the future? — Pexels pic
Do you have enough saved up for a home in the future? — Pexels pic

A difficult loan approval process is a huge factor that dampens many Malaysians’ prospects of owning a home.

PropertyGuru’s Consumer Sentiment Survey in 2017 states that 33 per cent of Malaysians reported a tough approval process for bank loan applications which presents a major roadblock on the path to home ownership.

3. Starter salaries, not enough money saved for a downpayment.

The average Malaysian needs to plan carefully if they want to own a house with their current salary. — Reuters pic
The average Malaysian needs to plan carefully if they want to own a house with their current salary. — Reuters pic

The thought of dealing with a mortgage on the salary of a fresh graduate is making many millenials think twice about owning a house.

The Employee's Provident Fund statement in 2016 had said that 89 per cent of the working population in Malaysia earn less than RM5,000 monthly, making home ownership especially challenging.

Most millenials wouldn’t believe that they could own a house with that salary.

4. Renting or owning?


It’s not easy maintaining a modern lifestyle when you’ve got a mortgage weighing on your shoulders. — Unsplash pic
  It’s not easy maintaining a modern lifestyle when you’ve got a mortgage weighing on your shoulders. — Unsplash pic

The hefty financial commitment to owning a home means young Malaysians will have to make some lifestyle changes if they want to stay afloat while having a house to their name.

This might mean foregoing luxuries such as weekend brunches and holidays overseas which have become staples for the modern generation.

Hence, a monthly instalment replacing these pleasures is the reason 33% of Malaysians in SAYS’ survey are saying ‘no’ to home ownership.  

5. Lack of awareness on housing deals and promotions.


Housing deals and offers don’t seem to be showing up on the radars of young Malaysians. — Unsplash pic
Housing deals and offers don’t seem to be showing up on the radars of young Malaysians. — Unsplash pic

While initiatives are in place to help young potential homeowners, many do not even know about the resources available to them that can ease the burden of property ownership.

A shocking 65 per cent of Malaysians in SAYS’ survey said that they had no clue about current housing offers and promotions.

This means that many young adults are currently unequipped with knowledge about navigating the property market.

In light of this, property developers EcoWorld have launched HOPE (Home Ownership Programme with EcoWorld), a comprehensive solution that promises to aid young Malaysians in their journey towards owning their dream home.

HOPE aims to make the dream of home ownership a full-fledged reality for millennials with the STAY2OWN (S2O) and HELP2OWN (H2O) programmes.

S2O will allow those wanting to stay in an EcoWorld project to rent their ideal home first with the confidence that they can become homeowners in the future.

A low monthly payment similar to the market rental rate also makes it particularly attractive for first-time homebuyers.

The option to rent first before buying also gives customers ample time to get their finances in order before committing to a new mortgage.

To top it all off, the rental savings will be used to offset part of the purchase price of the home, making it even more affordable for young Malaysians.

The H2O had successfully helped approximately 1,800 young homeowners and upgraders own their choice EcoWorld home last year and you can be one of them too! For more information on owning your dream home, visit EcoWorld’s website (https://ecoworld.my/hope/) or Facebook (https://www.facebook.com/EcoWorldGroup/).

By Tan Mei Zi The Malay Mail

* This article is brought to you by EcoWorld. https://ecoworld.my/hope/


A NEW HOPE FOR YOUR DREAM HOME


Related Articles


Related posts:


Resilient values: Geh believes that both landed and high-rise units in prime locations will hold their values. Research house sa..


 

Saturday, March 30, 2019

Spotlight on virtual banking licenses


Bank Negara’s plan to issue up to three virtual banking licences has excited the local financial sector which otherwise has begun to look a little lethargic.

BANK Negara’s announcement this week which stated that it is looking to issue up to three virtual banking licences has excited the local financial sector which otherwise has begun to look a little lethargic.

The announcement comes at the same time as Hong Kong’s move to issue three licences of this type to a combination of companies partnering finance firms, namely Standard Chartered, BOC Hong Kong Holdings Ltd and online insurance company ZhongAn Online P&C Insurance Co.

Five more of such licences in the city are being processed.

In Malaysia, the announcement by Bank Negara is significant also because the central bank has not issued any new banking licences for many years now.

That said, both Hong Kong and Malaysia’s move to encourage pure online banking ventures is very much in line with the fact that fintech innovations are slowly but surely seeping into the daily lives of people globally, providing cheaper and more easily accessible financial services.

The idea of virtual banks – which theoretically means a bank without any physical branches whatsoever – however, is not entirely new.

In fact, many countries such as the United States and the United Kingdom have attempted it.

Some have failed, others continue to operate, taking deposits and giving out loans much like traditional banking outfits.

Closer to home, India, China, South Korea and Japan have ventured into this model.

Japan, for instance, went for the zero branch strategy as far back as the 1990s with the setting up of Japan Net Bank.

There have been other Internet banks there since then such as Seven Bank which has been providing financial services via ATMs across 7-Eleven convenience shops in Japan since the early 2000s.

In South Korea, the then-chair of the Financial Services Commission, Yim Jong-yong gave initial approval for the setting up of the country’s first two virtual banks back in 2015.

K Bank was its first, starting operations in April 2017 followed a few months later by kakaobank, which started with some W300 billion (about RM1.077bil) in start-up capital.

To be sure, virtual banks, which primarily target the retail segment including the small and medium-sized enterprises (SMEs), have existed even before the concept of fintech – which is basically using technology to provide improved financial services – gained prominence over the last few years.

The rise of fintech in recent times can be attributed to consumers becoming increasingly tech-savvy and more demanding when it comes to convenience on-the-go.

It also stems from the fact that there are millions of individuals who are unbanked or underbanked but who now have access to the Internet.

In China alone, mobile payments run in trillions of yuan.

It is perhaps this increasing savviness that is contributing to regulators the world over wanting to push for more virtual banks and easing guidelines to fit the concept in.

It is noteworthy that within the Asean region, Malaysia is among the first to attempt this virtual bank model.

Timo, Vietnam’s first bank sans any traditional branch, was officially launched in 2016 while nearest neighbour Singapore currently does not have any banks purely of this nature.Even so, Bank Negara governor Datuk Nor Shamsiah Mohd Yunus has said that the central bank is currently working towards releasing licensing guidelines for such operations only by the end of this year.

She has stressed that discussions with the few parties interested in setting up virtual banks in Malaysia are still at the preliminary stage.

Still, that’s not stopped industry people from raising questions, many of which are valid. For starters, notwithstanding theoretical definitions, what will be the exact definition of a local virtual bank ?  

What are the rules?

“Who can apply to operate such banks and will these guys be subject to the same rules that apply to traditional banks such as those involving capital requirements and such?” asks one senior banker attached to a regional bank.

While the jury is still out on rules that will apply in Malaysia should the idea materialise, a broad idea on this can be gleaned from the guidelines that have been set out by the Hong Kong Monetary Authority (HKMA).

According to the HKMA, firstly, a “virtual bank is defined as a bank which primarily delivers retail banking services through the Internet or other forms of electronic channels instead of physical branches”.

HKMA’s guidelines include rules such as virtual banks having to play an active role in promoting financial inclusion when offering their banking services.

“While virtual banks are not expected to maintain physical branches, they should endeavour to take care of the needs of their target customers, be they individuals or SMEs,” it says, adding that virtual banks should not impose any minimum account balance requirement or low-balance fees on their customers.

In terms of ownership, the HKMA says that because virtual banks will mostly be focused on retail businesses covering a large pool of such clients, “they are expected to operate in the form of a locally-incorporated bank, in line with the established policy of requiring banks that operate significant retail businesses to be locally-incorporated entities”.

It also says that it is generally its policy “that a party which has more than 50% of the share capital of a bank incorporated in Hong Kong should be a bank or a financial institution in good standing and supervised by a recognised authority in Hong Kong or elsewhere”.

While the guidelines cover a lot more, it is worthwhile pointing out that the HKMA is of the view that “virtual banks will be subject to the same set of supervisory requirements applicable to conventional banks”, with some of the rules being changed in line with technological requirements.

It adds that in terms of capital requirement, “virtual banks must maintain adequate capital commensurating with the nature of their operations and the banking risks they are undertaking”.

Noticeable absence of tech players

Interestingly, in the first round of licences given out by the HKMA, there was a noticeable absence of major Chinese tech companies like Tencent Holdings Ltd and Alibaba Group Holding Ltd’s Ant Financial, which many would have thought make obvious choices given their experience in carving out game-changing fintech-centric services especially in their home country of China.

“Mobile payment services offered by the likes of WeChat and Alipay are possible with Internet giants like Alibaba and Tencent behind the entire ecosystem, the fact that they were not included raised some eyebrows,” says one Hong Kong-based banking analyst.

In the same vein, Hong Kong has been criticised for not being proactive enough when it comes to encouraging financial start-ups and being overly protective of conventional banks as evident in its fintech sandbox programme of 2016, which was reportedly introduced to help traditional financial institutions try out new technology instead of supporting fresh start-ups.

“Still, a start is better than no start and we are looking forward to when these virtual banks start operating in nine months’ time,” says the analyst.

He adds that as long as security is not an issue, he hopes that virtual banks will be able to provide what traditional banks are “still not good at”, namely personalised customer service and cheaper services.

While it is early days yet in Malaysia, the general feedback is that virtual banks will be good, specifically for consumers who will have more choices.

But this will come at the expense of increased competition within the banking sector.

Analysts in Hong Kong have predicted that about 10% of revenue belonging to traditional banks there will be “at risk” over the next ten years because of the setting up of virtual banks.

Whether or not it will be the same for Malaysian banks remains to be seen.

A lot of this will depend on the guidelines that the central bank plans to set out in the months to come.

By Yvonne Tan The Star

Breaking ground with new banking concept

Backed by Ma: MyBank is backed by billionaire Jack Ma’s Alibaba Group Holding Ltd. Alibaba affiliate company Ant Financial owns 30% of the online lender. (Photo: AFP)

(The Star Online/ANN) - DURING the height of the fintech revolution that’s been taking place over the last few years, one prominent banker in Malaysia made an interesting comment during a private dinner.

The banker said that while he welcomes fintech companies into the market, he wasn’t really afraid of losing any significant business to them. What he really feared, if anything, were the technology giants turning on a banking facility for the millions of users they have on their platforms.

“This Facebook Bank, Google Bank or Whatsapp Financial Group,” he quipped in half jest.

The logic is simple: with those platforms even then having had the myriad users globally, they are able to tap that user group to offer financial services.

But banking remains a highly regulated space. Not every technology company will be able to fulfill those criteria or even have such intentions.

Still, there are a number of virtual banks that have sprung up globally.

Here are some of the more notable ones in this part of the region.

China: WeBank

WeBank is China’s first private digital-only bank, launched in early 2015.

It is backed by tech giant Tencent Holdings – China’s biggest messaging and social networking company, which is also the operator of WeChat

Besides Tencent, its other backers include investment firms Baiyeyuan and Liye Group.

According to its website, WeBank provides consumer banking services through digital channels, as well as microcredits and other loan products.

The Internet-only lender had turned in a profit one year into operation thanks to surging demand for microloans among blue-collar workers and small entrepreneurs.

In 2017, WeBank made a net profit of 1.4 billion yuan or US$209mil, while its return on equity came in at 19.2%.

Its total lending in that year was nearly twice that of closest rival MyBank for the same period.

A recent stake sale of the bank values the company at US$21bil, making it one of the world’s largest “unicorn” companies.

Banking Tech recently reported that the lender is now eyeing an Australian expansion to compete with payments company Alipay, which is its largest rival.

MyBank

MyBank is backed by billionaire Jack Ma’s Alibaba Group Holding Ltd.

Alibaba affiliate company Ant Financial owns 30% of the online lender.

Not unlike WeBank, it has a focus on consumer and small and medium-sized enterprises, a sector underserved by traditional banks in China.

It uses credit data from the e-commerce giant’s AliPay product to conduct analysis for loans.

By circumventing human involvement, the bank said it was able to deliver loans to borrowers faster and up to 1,000 times less than it would cost brick-and-mortar banks to do so.

Like WeBank, it turned profitable one year into operations due to its less capital-intensive model.

Ant Financial is reportedly looking to go public in the near future.

India: Digibank

Singapore’s banking giant DBS Bank launched Digibank in April 2016 – a move that has enabled it to penetrate the Indian retail banking market.

Breaking away from conventional banking norms with their onerous form-filling and cumbersome processes, Digibank incorporates a host of ground-breaking technology, from artificial intelligence to biometrics.

DBS CEO Piyush Gupta expects the mobile-only bank to break even in three to four years, which according to him is not such a bad deal as compared to the traditional branch model, which needs 15 to 20 years to break even.

Digibank has over 1.5 million customers and it is handling them with 60 people rather than the 400-500 staff members it would normally need under the traditional model. Its cost-to-income ratio is in the low 30s.

Following its Indian venture, DBS went on to launch a similar mobile-led bank in Indonesia where the government expects the country’s digital economy to reach US$130bil or about 12% of its gross domestic product in 2020.

Other Singaporean lenders have also jumped on the bandwagon. United Overseas Bank (UOB) said it would launch “digital banks” for its five key markets in Asean, starting in Thailand. It aims to have three to five million customers in the next five years

Elsewhere, OCBC is also reportedly pursuing a similar idea in Indonesia.

Japan

Established in 2008, Jibun Bank reached profitability in less than five years. The outfit is a joint venture between Bank of Tokyo-Mitsubishi UFJ and local mobile network operator, KDDI.

The story goes that instead of competing with each other, the two organisations decided it would make more sense creating a “separate bank” that complement their goals.

The Asian Banker in a case study on Jibun Bank noted that in its first year, the lender had accumulated over 500,000 new customers. By 2015, Jibun Bank’s asset volume surpassed that of Japan’s oldest Internet bank, Japan Net Bank. Asian Banker also noted that the lender’s deposit volume has grown to a size that is comparable to that of a mid-tier regional bank – all of this without the help of a branch footprint.  

South Korea: K-bank and Kakao Bank

The two South Korea’s online-only banks have signed up new customers by the millions since beginning operations in 2017.

Kakao Bank is run by mobile messaging Kakao and Korea Investment Holdings, while K-bank is operated by telco KT.

The authorities there are hoping that K-bank and Kakao Bank would spur growth in a banking industry that has stagnated amid rising credit costs, narrowing interest margins and heavy regulation.

The Financial Times in an October 2017 report wrote that about 300,000 new accounts were opened with Kakao Bank in the 24 hours following its launch in late July. This figure was more than what traditional banks in South Korea got in a year through online channels. And as at end-September that year, it had already garnered 3.9 million users.

The news agency said that Kako Bank users can wire money abroad for just a tenth of typical commission fees.

Its peer K-bank, meanwhile, attracted over half a million users in the few months following its April 2017 launch.

In contrast, international banks operating traditional branch networks in the country were looking at downsizing their branches.

Early this year, Shinhan Financial Group inked a deal with mobile app maker Viva Republica to set up an Internet-only bank, making it the third player in the game.

by gurmeet kaur The Star

Related:

Spotlight on virtual banking licenses


Bank Negara’s plan to issue up to three virtual banking licences has excited the local financial sector which otherwise has begun to look a little lethargic.

BANK Negara’s announcement this week which stated that it is looking to issue up to three virtual banking licences has excited the local financial sector which otherwise has begun to look a little lethargic.

The announcement comes at the same time as Hong Kong’s move to issue three licences of this type to a combination of companies partnering finance firms, namely Standard Chartered, BOC Hong Kong Holdings Ltd and online insurance company ZhongAn Online P&C Insurance Co.

Five more of such licences in the city are being processed.

In Malaysia, the announcement by Bank Negara is significant also because the central bank has not issued any new banking licences for many years now.

That said, both Hong Kong and Malaysia’s move to encourage pure online banking ventures is very much in line with the fact that fintech innovations are slowly but surely seeping into the daily lives of people globally, providing cheaper and more easily accessible financial services.

The idea of virtual banks – which theoretically means a bank without any physical branches whatsoever – however, is not entirely new.

In fact, many countries such as the United States and the United Kingdom have attempted it.

Some have failed, others continue to operate, taking deposits and giving out loans much like traditional banking outfits.

Closer to home, India, China, South Korea and Japan have ventured into this model.

Japan, for instance, went for the zero branch strategy as far back as the 1990s with the setting up of Japan Net Bank.

There have been other Internet banks there since then such as Seven Bank which has been providing financial services via ATMs across 7-Eleven convenience shops in Japan since the early 2000s.

In South Korea, the then-chair of the Financial Services Commission, Yim Jong-yong gave initial approval for the setting up of the country’s first two virtual banks back in 2015.

K Bank was its first, starting operations in April 2017 followed a few months later by kakaobank, which started with some W300 billion (about RM1.077bil) in start-up capital.

To be sure, virtual banks, which primarily target the retail segment including the small and medium-sized enterprises (SMEs), have existed even before the concept of fintech – which is basically using technology to provide improved financial services – gained prominence over the last few years.

The rise of fintech in recent times can be attributed to consumers becoming increasingly tech-savvy and more demanding when it comes to convenience on-the-go.

It also stems from the fact that there are millions of individuals who are unbanked or underbanked but who now have access to the Internet.

In China alone, mobile payments run in trillions of yuan.

It is perhaps this increasing savviness that is contributing to regulators the world over wanting to push for more virtual banks and easing guidelines to fit the concept in.

It is noteworthy that within the Asean region, Malaysia is among the first to attempt this virtual bank model.

Timo, Vietnam’s first bank sans any traditional branch, was officially launched in 2016 while nearest neighbour Singapore currently does not have any banks purely of this nature.Even so, Bank Negara governor Datuk Nor Shamsiah Mohd Yunus has said that the central bank is currently working towards releasing licensing guidelines for such operations only by the end of this year.

She has stressed that discussions with the few parties interested in setting up virtual banks in Malaysia are still at the preliminary stage.

Still, that’s not stopped industry people from raising questions, many of which are valid. For starters, notwithstanding theoretical definitions, what will be the exact definition of a local virtual bank ?  

What are the rules?

“Who can apply to operate such banks and will these guys be subject to the same rules that apply to traditional banks such as those involving capital requirements and such?” asks one senior banker attached to a regional bank.

While the jury is still out on rules that will apply in Malaysia should the idea materialise, a broad idea on this can be gleaned from the guidelines that have been set out by the Hong Kong Monetary Authority (HKMA).

According to the HKMA, firstly, a “virtual bank is defined as a bank which primarily delivers retail banking services through the Internet or other forms of electronic channels instead of physical branches”.

HKMA’s guidelines include rules such as virtual banks having to play an active role in promoting financial inclusion when offering their banking services.

“While virtual banks are not expected to maintain physical branches, they should endeavour to take care of the needs of their target customers, be they individuals or SMEs,” it says, adding that virtual banks should not impose any minimum account balance requirement or low-balance fees on their customers.

In terms of ownership, the HKMA says that because virtual banks will mostly be focused on retail businesses covering a large pool of such clients, “they are expected to operate in the form of a locally-incorporated bank, in line with the established policy of requiring banks that operate significant retail businesses to be locally-incorporated entities”.

It also says that it is generally its policy “that a party which has more than 50% of the share capital of a bank incorporated in Hong Kong should be a bank or a financial institution in good standing and supervised by a recognised authority in Hong Kong or elsewhere”.

While the guidelines cover a lot more, it is worthwhile pointing out that the HKMA is of the view that “virtual banks will be subject to the same set of supervisory requirements applicable to conventional banks”, with some of the rules being changed in line with technological requirements.

It adds that in terms of capital requirement, “virtual banks must maintain adequate capital commensurating with the nature of their operations and the banking risks they are undertaking”.

Noticeable absence of tech players

Interestingly, in the first round of licences given out by the HKMA, there was a noticeable absence of major Chinese tech companies like Tencent Holdings Ltd and Alibaba Group Holding Ltd’s Ant Financial, which many would have thought make obvious choices given their experience in carving out game-changing fintech-centric services especially in their home country of China.

“Mobile payment services offered by the likes of WeChat and Alipay are possible with Internet giants like Alibaba and Tencent behind the entire ecosystem, the fact that they were not included raised some eyebrows,” says one Hong Kong-based banking analyst.

In the same vein, Hong Kong has been criticised for not being proactive enough when it comes to encouraging financial start-ups and being overly protective of conventional banks as evident in its fintech sandbox programme of 2016, which was reportedly introduced to help traditional financial institutions try out new technology instead of supporting fresh start-ups.

“Still, a start is better than no start and we are looking forward to when these virtual banks start operating in nine months’ time,” says the analyst.

He adds that as long as security is not an issue, he hopes that virtual banks will be able to provide what traditional banks are “still not good at”, namely personalised customer service and cheaper services.

While it is early days yet in Malaysia, the general feedback is that virtual banks will be good, specifically for consumers who will have more choices.

But this will come at the expense of increased competition within the banking sector.

Analysts in Hong Kong have predicted that about 10% of revenue belonging to traditional banks there will be “at risk” over the next ten years because of the setting up of virtual banks.

Whether or not it will be the same for Malaysian banks remains to be seen.

A lot of this will depend on the guidelines that the central bank plans to set out in the months to come.

By Yvonne Tan The Star

Breaking ground with new banking concept

Backed by Ma: MyBank is backed by billionaire Jack Ma’s Alibaba Group Holding Ltd. Alibaba affiliate company Ant Financial owns 30% of the online lender. (Photo: AFP)

(The Star Online/ANN) - DURING the height of the fintech revolution that’s been taking place over the last few years, one prominent banker in Malaysia made an interesting comment during a private dinner.

The banker said that while he welcomes fintech companies into the market, he wasn’t really afraid of losing any significant business to them. What he really feared, if anything, were the technology giants turning on a banking facility for the millions of users they have on their platforms.

“This Facebook Bank, Google Bank or Whatsapp Financial Group,” he quipped in half jest.

The logic is simple: with those platforms even then having had the myriad users globally, they are able to tap that user group to offer financial services.

But banking remains a highly regulated space. Not every technology company will be able to fulfill those criteria or even have such intentions.

Still, there are a number of virtual banks that have sprung up globally.

Here are some of the more notable ones in this part of the region.

China: WeBank

WeBank is China’s first private digital-only bank, launched in early 2015.

It is backed by tech giant Tencent Holdings – China’s biggest messaging and social networking company, which is also the operator of WeChat

Besides Tencent, its other backers include investment firms Baiyeyuan and Liye Group.

According to its website, WeBank provides consumer banking services through digital channels, as well as microcredits and other loan products.

The Internet-only lender had turned in a profit one year into operation thanks to surging demand for microloans among blue-collar workers and small entrepreneurs.

In 2017, WeBank made a net profit of 1.4 billion yuan or US$209mil, while its return on equity came in at 19.2%.

Its total lending in that year was nearly twice that of closest rival MyBank for the same period.

A recent stake sale of the bank values the company at US$21bil, making it one of the world’s largest “unicorn” companies.

Banking Tech recently reported that the lender is now eyeing an Australian expansion to compete with payments company Alipay, which is its largest rival.

MyBank

MyBank is backed by billionaire Jack Ma’s Alibaba Group Holding Ltd.

Alibaba affiliate company Ant Financial owns 30% of the online lender.

Not unlike WeBank, it has a focus on consumer and small and medium-sized enterprises, a sector underserved by traditional banks in China.

It uses credit data from the e-commerce giant’s AliPay product to conduct analysis for loans.

By circumventing human involvement, the bank said it was able to deliver loans to borrowers faster and up to 1,000 times less than it would cost brick-and-mortar banks to do so.

Like WeBank, it turned profitable one year into operations due to its less capital-intensive model.

Ant Financial is reportedly looking to go public in the near future.

India: Digibank

Singapore’s banking giant DBS Bank launched Digibank in April 2016 – a move that has enabled it to penetrate the Indian retail banking market.

Breaking away from conventional banking norms with their onerous form-filling and cumbersome processes, Digibank incorporates a host of ground-breaking technology, from artificial intelligence to biometrics.

DBS CEO Piyush Gupta expects the mobile-only bank to break even in three to four years, which according to him is not such a bad deal as compared to the traditional branch model, which needs 15 to 20 years to break even.

Digibank has over 1.5 million customers and it is handling them with 60 people rather than the 400-500 staff members it would normally need under the traditional model. Its cost-to-income ratio is in the low 30s.

Following its Indian venture, DBS went on to launch a similar mobile-led bank in Indonesia where the government expects the country’s digital economy to reach US$130bil or about 12% of its gross domestic product in 2020.

Other Singaporean lenders have also jumped on the bandwagon. United Overseas Bank (UOB) said it would launch “digital banks” for its five key markets in Asean, starting in Thailand. It aims to have three to five million customers in the next five years

Elsewhere, OCBC is also reportedly pursuing a similar idea in Indonesia.

Japan

Established in 2008, Jibun Bank reached profitability in less than five years. The outfit is a joint venture between Bank of Tokyo-Mitsubishi UFJ and local mobile network operator, KDDI.

The story goes that instead of competing with each other, the two organisations decided it would make more sense creating a “separate bank” that complement their goals.

The Asian Banker in a case study on Jibun Bank noted that in its first year, the lender had accumulated over 500,000 new customers. By 2015, Jibun Bank’s asset volume surpassed that of Japan’s oldest Internet bank, Japan Net Bank. Asian Banker also noted that the lender’s deposit volume has grown to a size that is comparable to that of a mid-tier regional bank – all of this without the help of a branch footprint.  

South Korea: K-bank and Kakao Bank

The two South Korea’s online-only banks have signed up new customers by the millions since beginning operations in 2017.

Kakao Bank is run by mobile messaging Kakao and Korea Investment Holdings, while K-bank is operated by telco KT.

The authorities there are hoping that K-bank and Kakao Bank would spur growth in a banking industry that has stagnated amid rising credit costs, narrowing interest margins and heavy regulation.

The Financial Times in an October 2017 report wrote that about 300,000 new accounts were opened with Kakao Bank in the 24 hours following its launch in late July. This figure was more than what traditional banks in South Korea got in a year through online channels. And as at end-September that year, it had already garnered 3.9 million users.

The news agency said that Kako Bank users can wire money abroad for just a tenth of typical commission fees.

Its peer K-bank, meanwhile, attracted over half a million users in the few months following its April 2017 launch.

In contrast, international banks operating traditional branch networks in the country were looking at downsizing their branches.

Early this year, Shinhan Financial Group inked a deal with mobile app maker Viva Republica to set up an Internet-only bank, making it the third player in the game.

by gurmeet kaur The Star

Related:

Tuesday, March 26, 2019

Bytedance, World's Most Valuable Startup Is Home to a Complex Fortune

US$13bil man: Zhang is the youngest self-made billionaire in Asia on the Bloomberg index, which tracks the world’s 500 richest people. He is worth US$13bil. — Bloomberg
https://youtu.be/VKD3jt0KvhQ

  • Ownership structure used by Zhang Yiming is popular in tech
  • Chinese authorities will soon allow so-called VIEs to list
The 35-year-old founder of Bytedance Ltd. is worth about $13 billion, according to the Bloomberg Billionaires Index, making him China’s 9th-richest person and one of the fastest in modern times to amass a mega-fortune.

The business, founded in 2012, has more than 1 billion active monthly users across eight mobile apps, including a news aggregator powered by artificial intelligence and a video-sharing platform.

Zhang is the youngest self-made billionaire in Asia on the Bloomberg index, which tracks the world’s 500 richest people. His rapid wealth accumulation is a sign that China hasn’t lost its knack for creating mega-rich company founders despite a slowing economy.

His rapid wealth accumulation -- he’s now the world’s 98th-richest person -- is a sign that China hasn’t lost its knack for creating mega-rich company founders despite a slowing economy. It also helps explain why authorities seem to be taking a more tolerant stance toward a corporate structure favored by the country’s technology tycoons, most of whom have chosen to list their businesses overseas.

Zhang’s fortune is harder to calculate than the founders of Baidu Inc. and Tencent Holdings Ltd. in part because his company isn’t yet public. It’s also difficult because Bytedance is structured in the same way as the two tech behemoths -- a complicated ownership system known as a variable interest entity (VIE).

Of the 44 Chinese tycoons on Bloomberg’s wealth index, eight are tech moguls with VIEs listed outside China. The billionaires’ combined net worth exceeded $150 billion as of March 21, and their stakes weren’t publicly known until the companies filed with regulators ahead of going public in New York or Hong Kong.

VIEs have never been formally endorsed by the Chinese government. But in an acknowledgment of their importance, officials will soon permit VIEs to go public in the country, allowing them to list on a new technology-focused exchange set to launch in coming months.

Complex Structure

Bytedance is, for now, a closely held VIE with a complex structure that involves layers of holding companies.

Its main business, Jinri Toutiao, is ultimately owned by Zhang and Bytedance Senior Vice President Zhang Lidong through a Beijing-registered holding firm, according to China’s National Enterprise Credit Information Publicity System.

Zhang pledged his 98.8 percent stake to another Beijing company, which in turn is owned by a Hong Kong-registered firm. That entity, where Zhang is a director, is owned by a company registered in the Cayman Islands. The principals won’t be disclosed unless there’s an IPO prospectus.

The Bloomberg Billionaires Index calculated Zhang’s net worth by pegging his stake at 65 percent and using the company’s valuation of $20 billion, a figure provided in 2017 by people with knowledge of the matter. The analysis assumes his stake has been diluted through funding rounds.

Bytedance is said to have secured a $75 billion valuation in late 2018, making it the world’s most valuable startup -- though the figure isn’t used in the net worth calculation because the details haven’t been confirmed.

Yin Ai, a Bytedance spokeswoman, declined to comment on Zhang’s wealth or the ownership structure.

Zhang uses a VIE because Chinese regulations limit foreign investment across more than 30 sectors including the internet, telecommunications and education. The VIE structure -- which allows offshore companies to control domestic Chinese businesses through contractual agreements -- circumvents the rules and allows, for example, Baidu’s holding company to be based offshore (and list in the U.S.) while still being a dominant force in China.

Internet giant Sina Corp. pioneered the VIE model so that it could transfer income from onshore operating businesses to an offshore holding company, an arrangement that meant the Cayman Islands entity could list on the Nasdaq Stock Market in 2000.

There are risks to the structure for foreign investors, said Donald Clarke, a specialist in Chinese law at George Washington University.

“A contract entered into for an unlawful purpose is invalid under Chinese law,” he said. “Any time the government wants to pull the plug, it can.”

Still, that hasn’t stopped more than 100 companies using VIEs in offshore IPOs, according to research by Zhou Fang, a Beijing-based partner at law firm JunHe LLP, who predicts that more companies will follow.

That growth helps explain why authorities are slowly embracing VIEs. Earlier this month, China enacted a foreign-investment law that allayed investor concerns about the future of such companies, while unicorn VIEs will be able to list on the new exchange in Shanghai, known as the Tech Board.

“To some extent, it shows the government easing concerns over VIEs -- but they still care about who’s the ultimate controller of the company,” said Zhang Biwang, a partner at Allbright Law Offices. As long as the controller of the company remains a Chinese citizen, “the government won’t shut their eyes and ignore reality to make the companies give up VIEs.”

ByBloomberg

Read more: 
China tech firms, seeking passion and energy,
promote younger staff
 https://www.reuters.com/article/us-china-tech-ageism/china-tech-firms-seeking-passion-and-energy-promote-younger-staff-idUSKCN1R60PS

Related posts:

Unknown Chinese startup creates the world's most valuable Bytedance

Bytedance: The complex fortune growing

Bytedance, World's Most Valuable Startup Is Home to a Complex Fortune

US$13bil man: Zhang is the youngest self-made billionaire in Asia on the Bloomberg index, which tracks the world’s 500 richest people. He is worth US$13bil. — Bloomberg
https://youtu.be/VKD3jt0KvhQ
  • Ownership structure used by Zhang Yiming is popular in tech
  • Chinese authorities will soon allow so-called VIEs to list
The 35-year-old founder of Bytedance Ltd. is worth about $13 billion, according to the Bloomberg Billionaires Index, making him China’s 9th-richest person and one of the fastest in modern times to amass a mega-fortune.

The business, founded in 2012, has more than 1 billion active monthly users across eight mobile apps, including a news aggregator powered by artificial intelligence and a video-sharing platform.

Zhang is the youngest self-made billionaire in Asia on the Bloomberg index, which tracks the world’s 500 richest people. His rapid wealth accumulation is a sign that China hasn’t lost its knack for creating mega-rich company founders despite a slowing economy.

His rapid wealth accumulation -- he’s now the world’s 98th-richest person -- is a sign that China hasn’t lost its knack for creating mega-rich company founders despite a slowing economy. It also helps explain why authorities seem to be taking a more tolerant stance toward a corporate structure favored by the country’s technology tycoons, most of whom have chosen to list their businesses overseas.

Zhang’s fortune is harder to calculate than the founders of Baidu Inc. and Tencent Holdings Ltd. in part because his company isn’t yet public. It’s also difficult because Bytedance is structured in the same way as the two tech behemoths -- a complicated ownership system known as a variable interest entity (VIE).

Of the 44 Chinese tycoons on Bloomberg’s wealth index, eight are tech moguls with VIEs listed outside China. The billionaires’ combined net worth exceeded $150 billion as of March 21, and their stakes weren’t publicly known until the companies filed with regulators ahead of going public in New York or Hong Kong.

VIEs have never been formally endorsed by the Chinese government. But in an acknowledgment of their importance, officials will soon permit VIEs to go public in the country, allowing them to list on a new technology-focused exchange set to launch in coming months.

Complex Structure

Bytedance is, for now, a closely held VIE with a complex structure that involves layers of holding companies.

Its main business, Jinri Toutiao, is ultimately owned by Zhang and Bytedance Senior Vice President Zhang Lidong through a Beijing-registered holding firm, according to China’s National Enterprise Credit Information Publicity System.

Zhang pledged his 98.8 percent stake to another Beijing company, which in turn is owned by a Hong Kong-registered firm. That entity, where Zhang is a director, is owned by a company registered in the Cayman Islands. The principals won’t be disclosed unless there’s an IPO prospectus.

The Bloomberg Billionaires Index calculated Zhang’s net worth by pegging his stake at 65 percent and using the company’s valuation of $20 billion, a figure provided in 2017 by people with knowledge of the matter. The analysis assumes his stake has been diluted through funding rounds.

Bytedance is said to have secured a $75 billion valuation in late 2018, making it the world’s most valuable startup -- though the figure isn’t used in the net worth calculation because the details haven’t been confirmed.

Yin Ai, a Bytedance spokeswoman, declined to comment on Zhang’s wealth or the ownership structure.

Zhang uses a VIE because Chinese regulations limit foreign investment across more than 30 sectors including the internet, telecommunications and education. The VIE structure -- which allows offshore companies to control domestic Chinese businesses through contractual agreements -- circumvents the rules and allows, for example, Baidu’s holding company to be based offshore (and list in the U.S.) while still being a dominant force in China.

Internet giant Sina Corp. pioneered the VIE model so that it could transfer income from onshore operating businesses to an offshore holding company, an arrangement that meant the Cayman Islands entity could list on the Nasdaq Stock Market in 2000.

There are risks to the structure for foreign investors, said Donald Clarke, a specialist in Chinese law at George Washington University.

“A contract entered into for an unlawful purpose is invalid under Chinese law,” he said. “Any time the government wants to pull the plug, it can.”

Still, that hasn’t stopped more than 100 companies using VIEs in offshore IPOs, according to research by Zhou Fang, a Beijing-based partner at law firm JunHe LLP, who predicts that more companies will follow.

That growth helps explain why authorities are slowly embracing VIEs. Earlier this month, China enacted a foreign-investment law that allayed investor concerns about the future of such companies, while unicorn VIEs will be able to list on the new exchange in Shanghai, known as the Tech Board.

“To some extent, it shows the government easing concerns over VIEs -- but they still care about who’s the ultimate controller of the company,” said Zhang Biwang, a partner at Allbright Law Offices. As long as the controller of the company remains a Chinese citizen, “the government won’t shut their eyes and ignore reality to make the companies give up VIEs.”

ByBloomberg

Read more: 
China tech firms, seeking passion and energy,
promote younger staff
 https://www.reuters.com/article/us-china-tech-ageism/china-tech-firms-seeking-passion-and-energy-promote-younger-staff-idUSKCN1R60PS


The Insanely Popular Chinese News App That You've Never Heard Of ...

 

The rise of Toutiao | The rise of Toutiao  

 

 Chinese news aggregation app called Toutiao (meaning “headlines”). 

 

 TopBuzz News: Breaking, Local & More - Apps on Google Play

https://youtu.be/OelhULVNQnA



Related posts:

Unknown Chinese startup creates the world's most valuable Bytedance

Bytedance: The complex fortune growing

Sunday, March 24, 2019

Apple CEO Tim Cook grateful for China's opening policy, calls for more global trade with China, he’s bullish on global economy

https://youtu.be/ROkQ0yZl89c

Apple CEO Tim Cook calls for more global trade with China in rare public speech.
 
https://youtu.be/VYTd-ctTx9o

Key Points

In a speech at an economic forum in Beijing, Cook said Apple is less concerned with the short-term economic outlook because the tech giant makes investments looking ahead years or decades.

His remarks come as China and the U.S. prepare to meet again to resolve their trade dispute, which has roiled global markets, and as Apple is expected to announce that it is launching a video service.

Apple CEO Tim Cook said Saturday that he is “extremely bullish” about the global economy based on the amount of innovation underway, and urged China to continue to “open up” amid complaints from the U.S. and others that it is shutting foreign firms out of key high-tech industries.

In a speech at an economic forum in Beijing, Cook said Apple is less concerned with the short-term economic outlook because the tech giant makes investments looking ahead years or decades.

“In the long term, I’m extremely bullish. I think the key to the economy, unlocking its potential has always been innovation, and when I travel around the world, I’ve never seen innovation at a more feverish pace than I do today, so I’m extremely optimistic,” Cook told participants at the China Development Forum, a gathering of business leaders in Beijing.

His remarks come as China and the U.S. prepare to meet again to resolve their trade dispute, which has roiled global markets, and as Apple is expected to announce that it is launching a video service

The iPhone has long been Apple’s marquee product and main money maker, but sales are starting to decline. The company is pushing digital subscriptions as it searches for new growth.

Apple is one of many American companies now grappling with increasing Chinese consumer anxiety. China is a major market for Apple and other smartphone makers, accounting for one-third of the industry’s global handset shipments.

In other comments, Cook said the world was “facing greater challenges than ever before.”

“Climate change is threatening our planet, poverty and inequality hold citizens and nations back from their potential, basic health care remains out of reach for millions,” he said.

“At the same time ... we can have a healthy planet and a thriving economy. We can continue to lift millions of people out of poverty, and we can give everyone a chance to learn and thrive. To fulfill this potential, we must all work hand in hand, government, academic institutions and businesses like Apple,” Cook said.- CNBC


Read more

China Development Forum 2019 held in Beijing - Global Times

  

Apple's Cook confident of China's huge market ...

 

 

 Italy joining BRI paves the road to closer EU-China relationship


As long as the rules of fairness, open tender, full disclosure of terms of deals, concern for the environment are respected, BRI can be a meaningful contribution to economic growth and social development.


Engineering school in Shanghai becomes China's first 5G university

Quiet lawns and playgrounds, students riding bicycles... it seemed to be an ordinary campus scene at the Shanghai University of Engineering Science on Thursday morning, but changes were taking place invisibly because of 5G.

Apple CEO Tim Cook grateful for China's opening policy, calls for more global trade with China, he’s bullish on global economy

https://youtu.be/ROkQ0yZl89c

Apple CEO Tim Cook calls for more global trade with China in rare public speech.
 
https://youtu.be/VYTd-ctTx9o

Key Points

In a speech at an economic forum in Beijing, Cook said Apple is less concerned with the short-term economic outlook because the tech giant makes investments looking ahead years or decades.

His remarks come as China and the U.S. prepare to meet again to resolve their trade dispute, which has roiled global markets, and as Apple is expected to announce that it is launching a video service.

Apple CEO Tim Cook said Saturday that he is “extremely bullish” about the global economy based on the amount of innovation underway, and urged China to continue to “open up” amid complaints from the U.S. and others that it is shutting foreign firms out of key high-tech industries.

In a speech at an economic forum in Beijing, Cook said Apple is less concerned with the short-term economic outlook because the tech giant makes investments looking ahead years or decades.

“In the long term, I’m extremely bullish. I think the key to the economy, unlocking its potential has always been innovation, and when I travel around the world, I’ve never seen innovation at a more feverish pace than I do today, so I’m extremely optimistic,” Cook told participants at the China Development Forum, a gathering of business leaders in Beijing.

His remarks come as China and the U.S. prepare to meet again to resolve their trade dispute, which has roiled global markets, and as Apple is expected to announce that it is launching a video service

The iPhone has long been Apple’s marquee product and main money maker, but sales are starting to decline. The company is pushing digital subscriptions as it searches for new growth.

Apple is one of many American companies now grappling with increasing Chinese consumer anxiety. China is a major market for Apple and other smartphone makers, accounting for one-third of the industry’s global handset shipments.

In other comments, Cook said the world was “facing greater challenges than ever before.”

“Climate change is threatening our planet, poverty and inequality hold citizens and nations back from their potential, basic health care remains out of reach for millions,” he said.

“At the same time ... we can have a healthy planet and a thriving economy. We can continue to lift millions of people out of poverty, and we can give everyone a chance to learn and thrive. To fulfill this potential, we must all work hand in hand, government, academic institutions and businesses like Apple,” Cook said.- CNBC


Read more

China Development Forum 2019 held in Beijing - Global Times

  

Apple's Cook confident of China's huge market ...

 

 

 Italy joining BRI paves the road to closer EU-China relationship


As long as the rules of fairness, open tender, full disclosure of terms of deals, concern for the environment are respected, BRI can be a meaningful contribution to economic growth and social development.


Engineering school in Shanghai becomes China's first 5G university

Quiet lawns and playgrounds, students riding bicycles... it seemed to be an ordinary campus scene at the Shanghai University of Engineering Science on Thursday morning, but changes were taking place invisibly because of 5G.