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HongKongEcho: E-wallets bringing banking to the 'unbanked'

Many of us may take having a bank account and a credit card for granted. But these aren’t always accessible for all. E-wallets like Alex Kong’s TNG Wallet are an alternative which will change banking as we know it.

“There are two groups of people in Hong Kong, the well-banked and the unbanked,” says Alex Kong, Founder & CEO of Hong Kong-based startup TNG Wallet.

It sounds like the slightly ominous preamble to a dystopian novel, but the Malaysian-born serial entrepreneur assures us it’s simply the backdrop to a global shift in greater access to financial services.

Alex Kong, Founder & CEO of Hong Kong-based startup TNG Wallet

Some 50% of the world’s population are without a bank account. In Hong Kong Alex claims the number is around 1 million people – a staggering number for a city that is (rightly) proclaimed as a global financial capital.

Many of those are the city’s domestic helpers, and now, Alex’s core client base.

Banking on the unbanked

Take a stroll through the city any Sunday afternoon and you’re bound to see handfuls of domestic helpers lining up – sometimes for hours on end – to send cash payments to families in their home countries, mostly the Philippines and Indonesia.

It’s costly, slow, draining.

Alex’s proposition? Real-time international transfers, low transaction fees – and all of it done on your mobile.

Essentially, it’s a streamlined mobile banking service without a bank account. Instead of traditional physical branches, users can make deposits (or cash withdrawals) at any 7-Eleven or Circle K convenience store – making it the only e-wallet in Hong Kong offering such a service.

“We haven’t changed much for the ‘well-banked’ individuals because they already have a bank account, a credit card and an Octopus card,” he says. But for those traditionally neglected by banks, it’s a remarkable shift.

So too for cashless payments. If there’s a last bastion of resistance to the virtues of e-payments, it’s Hong Kong’s taxis. Here TNG has also made some ground, with some 2,000 taxis now accepting payment via the e-wallet.

“We’re essentially a branchless bank and yet we have more than 400,000 non-bank branches in our worldwide network."

Of course, others are at it too. The likes of WeChat, Alipay, Apple Pay and even Octopus all provide relatively easy access to alternative payment models. WeChat and Alipay in particular offer the kind of low-cost remittance payments to the Philippines which are used by domestic helpers, but their coverage to other countries is far less extensive than the 14 Asia-Pacific countries which are covered by TNG.

Traditional actors like HSBC have likewise entered the e-payment market with their own e-wallet, but of course users need to already be a customer of the bank.

Alex admits there are still limitations – there’s no interest given out on deposits and there is a payment ceiling that automatically bans further transactions once exceeded – but it nonetheless looks and feels like a bank, and yet it isn’t.

User-to-user chat facilities, as well as its planned 2018 rollout for an associated Mastercard which can be programmed with daily limits via your phone or cancelled entirely and a dynamic CVV code which changes every hour are likewise all features that go beyond regular banking app facilities.

It may not be as all-encompassing (or all-invasive) as an application like WeChat, but its spread has been equally astounding since its creation in Hong Kong in 2015.

“We’re essentially a branchless bank and yet we have more than 400,000 non-bank branches in our worldwide network including convenience stores, post offices, shopping malls and local ATM machines.”

A virtual reality

Alex isn’t the only one scrambling to change the very definition of banking. The upcoming virtual bank licencing from the Hong Kong Monetary Authority (for which TNG Wallet has applied) will further open banking services to customers who previously may not have engaged with traditional banks.

While the wallet service is already extensive, a virtual bank licence would allow for further enhancements. Customers would be able to establish an account remotely by uploading personal documents for screening, with the whole process only taking roughly half an hour.

The ramifications of this for service providers like TNG Wallet – among others expected to enter the space – would be significant. Small companies operating in Belt & Road countries, Alex explains, would be able to set up accounts in Hong Kong remotely and make easy international payments.

“We’re able to bring financial management and responsibility to people who would never have had access to such a thing before.”

“Again, we’re not going after the traditional banks’ clients. In most of those countries, the majority of businesses are SMEs – banks are typically only interested in serving the giants, while we’re interested in taking care of the smaller players.” Likewise, he hopes employers will be the next to embrace this sort of alternative banking, with salaries being paid directly to the e-wallets of users.

These, clearly, are transformative times. Despite these lofty ambitions, Alex is keen to emphasise the basic fundamentals of what such apps can achieve.

“Through virtual services like ours, we’re able to bring financial management and responsibility to people who would never have had access to such a thing before – that in itself helps to alleviate the conditions of poverty. For us it’s really about working towards fixing a social problem.”