Jason Henrichs: (00:00)
Welcome to Breaking Banks, the number one global fintech podcast and radio show. Brett and I are pleased to bring a very special episode focused not just on the pandemic, but on Asia is one of the first to enter into it and have some of the swiftest response. There’s a lot of lessons for our global community to learn and Brett you frequently bring in that Asian perspective with the amount of work that you’ve done there over the years, the amount of time you spent flying there to give talks. So to tee this up, the first half we’re going to focus on the sector as a whole and as the pandemic began to unfold the response by the banking and fintech sector.

Jason Henrichs: (00:39)
In the second half we’re going to talk about some of the digital implications. Asia’s always been tech led when it comes to the fintech revolution versus the banking and fintech led in the U.S. so we’re going to delve into what are some of those implications. Now, one of our partners in crime in this part of our fintech mafia is Matt Dooley, founder and CEO of Connected Thinking and previously global head of internet strategy for HSBC. Matt, which continent do we find you on today? Because when we tweet back and forth I can’t keep track of where you are.

Matt Dooley: (01:12)
I’m actually dialing in from Hong Kong. So yes, throughout the pandemic I’ve been in China, Japan and Australia and now back to Hong Kong. I find it quite safe being in Hong Kong because basically the whole population is been in lockdown. We’re been homeschooling and homeworking for about 10 weeks now and there’s definitely some learnings. But joining us on the call, we have Simon Loong, Simon Loong is a founder and CEO at WeLab, which is one of the first, well one of the largest lending platforms in China, but they’re also about to launch one of the virtual banks here in Hong Kong. They serve over 42 million customers and it’s all digital. So their business has started in Hong Kong, but firstly they had their growth in China and now they’re actually operating in Indonesia and other Southeast Asian countries. So thanks Simon for joining us on the call.

Matt Dooley: (02:19)
We also have their head of strategy at WeLab, which is Jessica Lam, she has a history of working at Goldman Sachs and joining us will also be Ben Quinlan who’s the CEO of Quinlan and associates here in Hong Kong. They’re a fintech advisory, they do a lot of publications and he’s just written a white paper on Covid and the impacts for facing Asia and banking. And he also was the head of strategy for Deutsche Bank’s equities business in Asia Pacific. So welcome guys. It should be a really interesting discussion given the breadth and all coming from Asia where the pandemic started, but it’s still really shifted. Dealing with epidemics, viruses and diseases isn’t really new to Hong Kongers or anyone living in Asia.

Matt Dooley: (03:15)
Diseases are a part of our life here. And it also affects working homeschooling now and of course banking in the tropics. We have many outbreaks from time to time, from Dengue fever to flu to yellow fever. But one of the biggest things and what has really prepared Hong Kong to battle this pandemic has been in 2002 we had an outbreak of SARS.

Brett King: (03:46)
It’s actually 2003 technically.

Matt Dooley: (03:49)
Well 2003 was really the-

Brett King: (03:52)
That’s when it hit Hong Kong and I guess, well how many of us were in Hong Kong during SARS for 2003? Just you Brett? Just me? Fiona you were in… I lived through it in Hong Kong. My family left and went to Australia and I stayed in Hong Kong and I was there for the duration. Maybe I can give you a little bit of perspective on what it was like in Hong Kong during SARS because that really does inform how Hong Kong has responded to this threat from COVID-19 this time around or SARS-CoV-2 as it’s called in the lab, which we might get into it a little bit in discussion as well. But one of the things Hong Kong learned, and I don’t see it happening here in the United Sites, I don’t see it happening in Europe, but if you’re in Hong Kong right now, and Matt, you’ll observe this Ben yourself Simon as well, is that every major building you go into now someone’s checking your temperature. Certainly when you enter in the airport, the thermal imaging is there. When you go into a lift in a Hong Kong building, they all got a plastic film over the buttons of the lift and they’re disinfected every 15 minutes.

Brett King: (05:09)
In fact, every surface that you would touch, like doors, counters and so forth are disinfected on that cycle. And everyone without exception, wears a mask in Hong Kong. You can always tell the foreigners visiting Hong Kong, you could always tell in SARS, I’m sure it’s the same at the moment, even though I’m coming from New York, is the only ones that weren’t wearing masks were foreigners during the time. And what most of the west misses in respect to prevention of the spread of this is that discipline and that approach to it. So everybody complies, everybody wears a mask, they wear a mask because they realize that they may not know if they’ve got the coronavirus and so they may spread it unwillingly. So they wear a mask to stop spreading. And this is one of the reasons this discipline and compliance with the government and a health department direction is really outstanding in the Asian countries. So when you look at South Korea, when you look at Taiwan, Hong Kong and Singapore, this is one thing that really differentiates these cities in terms of their responsiveness to both SARS and in this case COVID-19. Would you guys agree with that those are in Hong Kong?

Matt Dooley: (06:26)
Absolutely with that. I also think that we have the masks here. We had them in our shops and we were the first to actually do a lot of hoarding. So the toilet paper thing came through us and-

Brett King: (06:44)
Yeah, you guys pioneered the toilet paper hoarding.

Jason Henrichs: (06:46)
I didn’t realize that. I thought that was good old US of A, go America.

Brett King: (06:52)
No, and in fact, I think Australia even toilet paper before U.S. but-

Matt Dooley: (06:57)
I think they [inaudible 00:06:59].

Brett King: (06:59)
Yes. Well, they were fighting in the willies, remember that YouTube clip, Matt?

Matt Dooley: (07:05)
I definitely do. But the facial mask thing is a big deterrent and because it is airborne and there might not be proof of it. But the thing is when you’re wearing a mask, you don’t realize that you touched your mouth and your nose quite a lot. And that’s when it enters the body. The big difference here is even getting into a taxi, taxi drivers won’t pick you up off the street if you’re not wearing a mask. And when you actually get into most taxis in Hong Kong, there’s actually hand sanitizer there for you. So they’re trying to protect everyone and it really is a community spirit and the only way that we can actually beat this is through the community being diligent and all doing it. What I do notice with my friends on Instagram in Australia is there’s still social distancing without masks and they’re still having weekend neighborhoods going out and at five o’clock having a wind down and having a glass of wine with someone and standing a meter away won’t prevent you from actually breathing in the particles.

Brett King: (08:19)
Did you hear about the Coronavirus parties going on in the U.S.?

Matt Dooley: (08:23)
It’s ridiculous.

Brett King: (08:28)
Don’t even ask, don’t even ask.

Matt Dooley: (08:29)
This is no joke.

Jason Henrichs: (08:31)
We’ve got… You know what Matt, later I’m going to edit this and I’m playing this for my 16 year old niece. This is going to be part of her 15 minutes of fame is you’re saying exactly the argument we had. Now, I am curious though, for as much preparedness as you’re talking about, I know that Hong Kong’s banking association ran a tabletop exercise for a pandemic and what I’ve heard talking to some resident experts that this actually even goes off the charts because it’s a bit of a trifecta of what’s going on because it’s more than just a health crisis. I’m curious, I want to take it either Ben or Simon or Jessica, what was your first inkling that this was something a little bit different? Did it feel a little bit different than this past perspective of what you might’ve experienced with SARS or other outbreaks?

Simon Loong: (09:26)
Yeah, I think it’s quite interesting. I mean the Coronavirus and even versus SARS, this time is particularly challenging. It was highly contagious and the carrier is you and me is human being. I mean unlike what we talk about dengue fever which is, well, mosquitoes borne or like plague, which is more rodent. You can’t just kill off human beings. That’s why the only thing we can do is what the most not the evil way, which is social distancing and lockdown and quarantine. But social distancing is also the completely opposite of how we have built the fabric of the society or the economy for the last couple of centuries. So the world effectively came to a hard stop right now and obviously there’s inertia in human behavior and hard stop is pretty difficult.

Simon Loong: (10:11)
And even for banks, as we talked to a couple of banks, part of the challenges they have is, you have to understand one thing that the Hong Kong economy or society decided that they will go on to work from home from the day they returned from a long stretch of Chinese new year holiday. So before you went on a holiday, which was a Friday, everyone expected themselves to come back next Wednesday. But nobody came back because we couldn’t come back so it was pretty messy, I think that’s number one. And number two is when we talked to banks, the biggest problem they had was actually laptop penetration. People could not work from home effectively, many people could not work from home effectively. A banker told me that laptop penetration was only 20%. So no matter how hard they try to get their employees back to productivity, it’s actually very, very difficult.

Brett King: (11:03)
JP Morgan Chase had to rapidly get 115,000 people into Zoom who’d never used it before, so similar.

Simon Loong: (11:12)
Yeah. So I think another thing is tech savviness of employees which is people who have never used Zoom or never used video conferencing in banks before, you need to start getting everyone used to it, not just themselves, sometimes even their clients onto that platform to start chatting with them. So it’s a lot to do with the tech savviness of the organization, also the tech savviness of the employees and of your clients as well.

Ben Quinlan: (11:35)
I think beyond the tech savviness is also the mindset about the way people are using these platforms. I mean I’ve used Zoom and so on and FaceTime and all these video applications. I’ve chat groups with my team, but then when we finally need to migrate to an actual Zoom meeting between us, no one’s got their videos on the responses that really lukewarm, productivity is sunk through the floor. And unless there’s a very clear, I guess leadership or ownership about how the meetings are conducted or what we need to discuss, what people actually need to speak up about. You find these long moments of silence or pauses that people just aren’t aware of or used to.

Ben Quinlan: (12:15)
So even when the tech is there, I think there is a mindset challenge that people need to cross in terms of just doing their work. So it does change the way you manage your team and it does change the way that you lay out what the objectives of your team are and how you coordinate and basically work together so that the whole collaboration and teamwork environment is very, very different to what it used to be, especially as consultants where we always sit down and brainstorm ideas in front of each other with a whiteboard.

Jason Henrichs: (12:42)
Jessica, I’m curious as resident, you lead strategy for a unicorn and anywhere in your strategies did you have, like this is one of the potential scenarios that you would deal with and I’m curious what was in your plan or when did you as a group go back to the drawing board of, wait a second, we serve over 42 million people who are about to go through a whole bunch of really different stuff that’s going to impact our lives in different ways. What was the WeLab first response and how did that begin to unfold?

Jessica Lam: (13:19)
I think we look at it from a couple of different levels. So the first thing is, is the business able to operate? And so the first thing is that we operate a fully online business, so from processing of applications for our customers continue to do their daily tasks or if they have queries and they want to come to us, that’s not a problem. They don’t physically need to leave their homes, go into a branch, knock on a door and everything. So that part of the obstacle is not there. So we’ve had no issues in terms of dealing with that and reaching our customers. Everything is done through a mobile, whether it’s chat bots, whether it’s all these electronic means. So that’s the best part in terms of the first part. The second aspect of it is actually, well, even though we’ve used a lot of technology to enable our customers, there’s still a team of us, which is why I have a job behind the scenes that’s actually processing a lot of, doing the bookkeeping.

Jessica Lam: (14:14)
Our finance team continues to meet to work. So how do we make that part of it work? And I think that comes back to what Simon said on infrastructure, what Ben said on mentality. Are they prepared to sit at home? I mean, I’ve been at home for the last on and off five to six weeks. There’s been a couple of days in the office here and there, but by and large pretty much stayed within my hood at home. And the thing that we’ve had to spend a lot of time talking to our business partners, as well our employees is this is going to last for longer than you think. This is not a one week temporary situation or a couple of days and it’ll be over. This is probably going to become part of the new normal. So hence using technology. And so therefore let’s start getting comfortable with this new regime.

Brett King: (15:05)
SARS took a good six months from when we started shutting down buildings and things like that. So yeah, if that’s any measure.

Jessica Lam: (15:14)
Oh, absolutely. We’ve been looking at that from both a, how’s this going to impact our business perspective, what needs to change in terms of that part? But the other part is, okay, so we can’t keep saying, “Oh look, we’re going to wait till next week when we can physically have a meeting with our clients.” So we’re like, “You know what, next week’s not going to happen. So let’s do a video call.” And I hear you, there is a lot of resistance to begin with, but over time you try once you try twice, the first one’s a short call, that’s audio. And then the second one becomes a video call but you give them advanced notice. You teach them to do virtual backgrounds. So the acceptance and adoption takes time, but it does improve over time.

Simon Loong: (15:53)
Yeah. Just add on what Jessica was saying, I think going back to the scenarios of banks and organization, most of them have this business continuity plan, what we call BCP plan but if you look at it most BCP plan actually it’s for an organization or bank where you have one or two days of disruption of typhoon where people cannot come in for a day or two at most. So what they do is they say, “Okay, essential functions, what are we going to do? Like essential functions, like customer service, people drawing cash and stuff.” But what we are facing is an extended prolonged, we’re actually on our second month now, February and March. So now we started considering it’s not just essential function, what about your colleagues in strategy? I know it’s not essential function on the one that one day, but they still need to be productive. So every function needs to be productive. You need to get everyone back on to 100% efficiency. So how do you actually build that?

Jason Henrichs: (16:47)
How is the system dealing with that though? So I mean because what organization is hard enough? How do you deal with now hundreds of organizations that are required to drive commerce and interact with each other. What was the government, let’s start with Hong Kong and then we can get some of the other countries WeLab gets into. But I’m curious, did you get calls from regulators saying, “Hey, here’s how we’re going to start to coordinate.” Who responded first that started to make this gel together? Jessica, you want to take lead or Simon?

Simon Loong: (17:23)
Jessica. I think I’m on the government side obviously the first thing they did was working from home and stuff like that and then regulators also followed by issuing letters and informing people to safety, continuity of business and stuff like that. I think it is always left obviously to the companies themselves to do it. And as Jessica was saying, it’s not just about the organization or the bank or the fintech company managing your own employee, is also your clients, your partner. It’s sometimes difficult to motivate them, they’re not the employees, So it takes a little bit of time. I think if you look at it, even a lot of official, like trade organization meetings and stuff like that, they started to move a lot of the meetings, all of them to Zoom. So I think that does a good start.

Jason Henrichs: (18:13)
What about the deeper, something that resonated in the earlier conversation is this is not, your typhoon example in the U.S., the first banks we had enacted their snow day plan, everyone snowed in. Well guess what? No one expected to be snowed in for two months, but now we’re talking about essential payments and people’s ability to access their money and make deposits and WeLab having the benefit of being digital first to your customers, but you’re not digital first in the back office, how do you begin to deal with that problem?

Simon Loong: (18:49)
We do see that it’s quite interesting and we’re in three markets, Hong Kong, mainland China, Indonesia, and the three markets actually reacting slightly differently. For Hong Kong business, we actually see how this is changing or molding that new consumer behavior. As you can see like most recently, Hong Kong people are quite traditional as in, they buy things offline, they like to go to shops and branches because it’s just so convenient. But I think this time around we really see like e-commerce-

Ben Quinlan: (19:17)
Still use cash.

Simon Loong: (19:19)
Yeah, still use cash. This time around we see online e-commerce, gaming, streaming, we see people moving onto it. For Hong Kong, we run one of the largest online lending business under the brand WeLend, if I compare March this year versus March last year, the year on year growth of online applications actually increased by 36%, that’s a massive increase in that. 51% of that increase is actually driven by people below the age of 30, so we see a lot of new applications coming in through online. So that is great. Now, even on the credit quality of these applicants, you may say that, “Oh, is it because of bad economy people coming in.” We see actually is an average increase across all credit grades. So it’s not just the worst guys coming in. Indonesia we’re seeing that too. China obviously is slightly different. I mean they started off earlier than anyone else so we can get some delinquency data now.

Simon Loong: (20:08)
The credit delinquency in China as a whole actually increase a little bit. So we have to be a lot more cautious on that. I think going back to the earlier story on digital cash, I think on digital cash, obviously this has a strong push, but your traditional cash where there is no threat of theft storage issue or you don’t have to touch someone’s credit card or that very dirty notes that every, and I don’t know who was the last guy I’ve used that note. So talk about China scanning QR codes instead of passing you a debit card or credit card that you slot into a machine. So that actually is quite effective

Jason Henrichs: (20:43)
I’m curious, who within WeLab ends up spending the most time with the regulators and what is their response? Are they proactive, reactive, broadly what do they end up doing? Jessica, we’re on video, I can see you nodding. So I think it’s you. I’m curious to hear from you. And then Ben, I want to hear from you next about-

Brett King: (21:05)
I actually rate Norman Chan is a pretty solid regulator, but that’s my view.

Jason Henrichs: (21:10)
Your view.

Brett King: (21:11)
He runs the HKMA out in Hong Kong. Made some pretty significant changes to align with fintech and disruption over the years.

Jason Henrichs: (21:21)
So he called you right Jessica and said don’t worry, everything’s going to be okay?

Jessica Lam: (21:25)
No, I mean we have a team that obviously talks to regulators. We have a bank that we’re building, WeLab Bank, which is regulated by the HTMA. So as a regulated entity, they have frequent dialogues with them on that part of the business. But as a leading player in the market, we obviously do have consultations as well. One is with my WeLab hats on and then the other is where Ben, Matt and I sit, which is part of the fintech Association of Hong Kong, where we’re actually` a body of industry representatives to share our views of how the fintech community is doing. But more from the WeLab perspective, I think it’s always the government is actually proactive. They actually want to hear what the boots on the ground are feeling like. What is the actual pain points that you’re actually facing?

Jessica Lam: (22:12)
There’s no promises in terms of an immediate solution that would be suitable for all, but at least we can feel that they’re very receptive in terms of hearing from the boots on the ground in terms of, oh, why doesn’t that work? When you say this process is inefficient or slow, can you be specific as to which part of this 10 step process, which is actually becoming the bottleneck. So we feel the attitude is there, and then they’re balancing it out between what’s a short term fix and what needs to be done more comprehensively. So this whole virtual banking regime that they rolled in, it started in 2017 when they came out with seven initiatives for new era of smart banking. So the point is the government is actually forward thinking in terms of what do we need to start doing now in 2017 such that Hong Kong is going to be ready and to future proof themselves for the future when smart banking or when everything electronic does come into play.

Jessica Lam: (23:11)
Now as Simon said, cash is not quite there yet. Mobile adoption isn’t as ready as China is with 90% e-wallet adoption. But there’s other aspects that I think Hong Kong has actually done pretty well, but it may be more in the backend, which is not as visible to customers or the individuals, et cetera. So we’re seeing a lot more growth of B2B service companies, providers, entrepreneurs, fintechs in Hong Kong over last year. I don’t know what the exact numbers are, Ben or Matt can help me here. In terms of number of startups or fintech companies, I believe it’s 2000 if I’m not mistaken. But there’s a lot of talent being nurtured here and I think the government’s been very, very supportive on that because they know that there is a necessity to invest in the future on that aspect.

Brett King: (23:55)
Hong Kong was pretty full with thinking on a number of things. Octopus card as a contact less payment system was very early. But even more than that, they had real time payments between banks essentially near real time payments. Was it 2006 I think if my memory serves correctly. The U.S. is still three years away or four years away from that. We’re talking almost 20 years ahead of the United States in terms of real time bank to bank payments.

Matt Dooley: (24:25)
Marketers always say it takes 28 days to really change a habit and I think that being cooped up in a house where you still have to make payments, you still have to pay bills and everything, you’re really forced to do that online behavior. And going back to the point that Simon made earlier about in Hong Kong, we’re being quite traditional in the way that we did our banking and the way that we handle physical cash. In China, you have that digital lifestyle. You have digital payment, you do not touch a note or a coin for years. Some people have gone living normal life just using Alipay and WeChat Pay. I think that behavioral shift is what we’re going to enjoy from this. I think everyone looks at a crisis but they always see the threat. Hi, that’s another thing that happens with Zoom calls now it’s a family moment. So when-

Brett King: (25:28)
My daughter just popped in to say exactly.

Matt Dooley: (25:30)
Exactly. And when a daughter comes into a call, when you’re having it, you don’t shove them away because you’re actually, they need to have social contact. So that human aspect and that change of mindset of saying, “Oh, you can’t do it, this is my business call.” Or, “This is we’re taping for a radio show.” My daughter’s doing her homeschooling in the other room right now.

Jason Henrichs: (25:52)
I’m not wearing pants.

Brett King: (25:57)
Prove it. Prove it.

Matt Dooley: (26:01)
But I think we don’t know how long this is going to go, but the truth out of this is doing digital payments and doing virtual banking will become the new norm. And with that catalyst, I think there’s a real opportunity for fintechs in this time. So don’t look at it as a threat to your business and the runway is getting very short and funding. What you’ve got to do is you’ve got to shape your business plan and shape your proposition to be a solution for this pandemic and you’ve got to sell it to the banks as banks will invest in solutions to help their customers at this time because they’re losing that engagement with their customer through the virus because branches aren’t open.

Matt Dooley: (26:49)
People aren’t going to physically going to connect with you or go down to an ATM. They will only touch you digitally and you’ve got to enhance your proposition with that. So if you can actually get your business proposition and wrap it up as a solution for Covid and for coronavirus, then this becomes a part of the solution that banks will actually invest in to get themselves out of this mess.

Brett King: (27:16)
Absolutely. All right Matt. Well listen, let’s take it to break because we need to give our sponsors a chance to come in and say hello. So you’re listening to Breaking Banks, we’re coming to you from both live from New York and Asia actually not live because we are pre recording it, but we have people from all over the world talking about how Coronavirus is impacting cultures and impacting the banking sector in particular. We’ll be right back after these words from our sponsors, you’re listening to Breaking Banks.

Brett King: (27:51)
Hey guys, this is Brett King from Breaking Banks. You may or may not know, but Provoke Media, the parent company of Breaking Banks runs a range of different podcasts and many of them are focused right now on the Coronavirus impact and the trends happening around us as a result of that. Check out these comments from Ron Shevlin on the recent Finovate podcast hosted by Greg Palmer.

Ron Shevlin: (28:16)
Number one has got to be about stability, stabilizing your customers or members’ financial lives, stabilizing your employees’ financials and personal lives.

Brett King: (28:30)
So don’t forget to go to provoke.fm and check out the other Provoke Media podcasts. We’ve got Breaking Banks, Breaking Banks Europe, Breaking Banks Asia, serial entrepreneur, fintech five, tech on reg and the Finovate podcast. Check them out at provoke.fm. And you’re back with Breaking Banks. I’m Brett King, I’m co-hosting here with Jason Henrichs from Provoke Media and Matt Dooley, Simon Loong, Jessica Lam, Fiona [inaudible 00:29:09] and Ben Quinlan are joining us all the way from honkers, Hong Kong. Matt, you were saying during the break, you were talking about a research report that shed some light on some of these details in terms of how behavioral changes are happening, but more importantly, how banks are responding to that from a Mark [inaudible 00:29:27] perspective.

Matt Dooley: (29:29)
Yeah, so Mark Donahue at iSky Research, I do some work with him, he’s got access to over close to 200 banks and fintechs, all their apps and all their channels, and he gets all the communications as a customer of those institutions. And he’s just put together a whitepaper this week looking at the responses from banks across from Asia to Australasia, Europe and the Americas and looking at their communications, looking at their propositions, how are they really engaging customers during this time? In Hong Kong we have seen some changes. We have Bank of East Asia which has been first off the bat. This is coming into tax season here in Hong Kong and what they’ve done is they’ve brought all their customer records, so as a customer you can go onto your mobile banking or go onto your internet banking and get access to your seven years of statements, which are usually you’d have to walk into a branch and actually sign a form and they would actually send you about a kilogram of paper with those statements, but now you can actually conveniently get access to it.

Matt Dooley: (30:50)
I’m seeing it across Australasia in particular, a lot of empathy from banks to understanding that this is a really different situation and deferring payments of loans, extending access to overdrafts. But a lot of banks are responding in the sense that they’re just packaging up communications and they’re not really thinking about everyone is in information overload at the moment. We’re getting bombarded by all our social mediums about, and there’s a lot of fake news and all this and the banks are simply started to email and to send huge texts to customers saying, “These are all the things that we’re doing and these are all the things that you can actually do to remotely do your banking.” But it’s not really helping.

Matt Dooley: (31:44)
Only a few banks that I’ve seen are actually made it a real concerted effort and changing their propositions to simplify it and changing the journey to make it actually possible. And I think it’s a right and an real opportunity for fintech and those virtual banks to come into the market because it really to think a way how to apply for products, how to actually service their customers using digital only solutions. But that white paper, I’ll put some ink in the link so you can actually get access to having a look at what Mark’s done at iSky Research.

Brett King: (32:20)
Let me ask Ben to jump in here. Ben, while we’ve had some progress being made on the digital reformation side of things over the last few years. And obviously increasingly with organizations like WeLab Bank and Ant and others coming into the Hong Kong market, it’s put a bit more pressure on the banks to move faster and we’ve noted that posture. But this is like a rapid acceleration because they can’t come into the branch to sign a credit application form and those sorts of things. So how are you approaching this and how are your clients approaching this in terms of responding to those digital needs in terms of customer engagement?

Ben Quinlan: (33:03)
I think you have a very good point. I mean, look, past few years it’s not debatable that pretty much every bank or financial institution has been looking at how digital can apply across its entire client service value chain. So that’s from the acquisition stage, how do we identify the right clients and then get them onboarded through maybe eKYC solutions from a product development and monetization, sales execution perspective. And then all the ongoing client maintenance, their queries, reporting and so on. And a lot of been playing around with different tools and solutions in the market. But the speed at which they’ve been doing it has been far from, I would call it expeditious. So you’re actually seeing even at this point, and we were discussing on a board call with fintech Association, and I’m even seeing it with a lot of our clients trying to apply for the government loans and just going through nonstop roadblocks of being at the branch in-person, needing to interface with a particular individual.

Ben Quinlan: (34:05)
I mean one of my clients was livid because he said, “It’s a nice 22 year old trainee, but they have no idea what they’re doing.” And then a lot of the documents we said we should provide, they said you shouldn’t. And there was just no process to get through it in a streamlined fashion. So people are still frustrated. And I think the evolution of just how digitally enabled, especially when it comes to the experience that customers get is the area where the big incumbents really fall behind. And I think that’s where the digital banks and all the digitally enabled players really have that point of differentiation. I mean Matt was just talking about the point of communication. I think it’s important how a bank communicates with you or how your service provider engages with you.

Ben Quinlan: (34:50)
And if it’s really sloppy or the whole experience is quite a negative one, it doesn’t really bode well for your willingness to stick with certain providers, especially if new deals or initiatives are being launched by alternatives in the market. So I think this has caused a real need to accelerate that process. But I don’t think… I think some of the incumbents will be left behind in certain parameters of this digital transformation. And I think the challenger institutions have really been focusing on how to make this move forward in a much faster and much more meaningful way. So it’s not just innovation lab galore or experimentation galore, it’s actually moving forward with real initiatives.

Jason Henrichs: (35:31)
Yeah, no more fintech petting zoo allowed. And so I don’t know if that translates for the Asian market in terms of, that pretend we’re being innovative. I see Jessica laughing. Actually Jessica, I’m curious with your strategy hat on, roll back 120 days, how would you have described how WeLab banking is different as a virtual bank versus roll to today are you thinking about how your differentiation has changed?

Jessica Lam: (36:04)
Today at 120 days ago, I would say that the changes have been quite minor actually in terms of our approach to how we’ve looked at this. Because we started off with, we’re building a brand new digital bank right now, infrastructure all the way. We’re not uprooting anything or changing anything. We have no legacy, no baggage. So as you think about the architecture, the technical infrastructure that we have behind it, how we’re thinking about the customer experience, we’re starting with all the things that Ben says we should be doing right now for our customers, customer first customer journey. How would I like it? Rather than trying to teach a dog new tricks. So the reality of it is, is that 120 days ago, pre virus, pre everything and what we’re doing right now, it’s absolutely consistent.

Jessica Lam: (36:56)
In fact, what I would say is, is actually reinforced our view of what we wanted to do about 120 days ago. Now obviously on the cuff there are certain things that we need to be even more aware of as it relates to, our employees feeling safe, feeling comfortable when it comes to hygiene, when it comes to an office space that’s more spacious, et cetera and all that. But ultimately, as you think about the proposition that we put together and how we’ve actually built our virtual bank, that has been very, very consistent.

Matt Dooley: (37:26)
I deal with a lot of banks and what I see is they are responding in different ways. Some of the largest banks that I deal with, they’ve got their own platforms of communication. So rather than using Zoom, which is really convenient, easy for everyone to connect to and actually quite open and Zoom is probably one of the only companies that is actually benefiting dramatically in terms of their valuation at the moment.

Brett King: (37:52)
Although they did get hit pretty hard with their encryption when not encrypted issue.

Matt Dooley: (37:59)
Yeah, yeah, yeah. And that’s a big deal because for banks they can’t sacrifice that kind of encryption and trust is a part of that. So dealing with some banks, 121 days ago, as a leader for Asia Pacific, this guy had to get two head counts. And since that 120 days, even though he’s the head of digital regionally for this large bank, he cannot get that head count because there’s a head count freeze. So they don’t have, they have branch staff, but they don’t have digital staff and he’s trying to do it. So, he’s working day and nights to try and do his job, but also to try and get resources.

Matt Dooley: (38:44)
So he’s asking fintechs and other players, can they help him resource and get the required effort done outside of the bank because he can’t do it inside. So I think there’s been this shift. The other thing is, I’ve noticed a shift with people and their children coming into calls and everything. There is this openness now that you can really do so much with just video. I think video is really important because you can build that empathy and that connection with the other person.

Brett King: (39:22)
Yeah, we’re certainly going to push towards a more distributed working force after this. We’re going to find many of the offices that we’ve had a unnecessary, satellite offices and things like that. Simon, tell me a bit about the culture and how you guys, obviously it’s not a big change for you, but for you as a digital team moving to remote access or remote working, has that had any material impact on the business?

Simon Loong: (39:51)
It does. It actually changed the way we look at our business as well as you guys were saying. I think a couple of things. First thing is when we entered into… So the Hong Kong office was the, out of our three geographical locations, Hong Kong was the first to start working from home. We noticed that people are not used to their problems. We have colleagues complaining that the dining chair is uncomfortable, we have colleagues feeling embarrassed that their kids or cats running around the back of a conference call. So we actually wrote the email to all our 900 employees about just getting them mentally prepared for working from home. And subsequently it was a very useful email to everyone and then our employees urge us to actually publish on LinkedIn. So we actually make that email public and subsequently has been shared in many countries about how do we make this work effectively?

Simon Loong: (40:41)
It turns out a lot of it’s actually mental preparation, getting themselves ready and stuff like that. And we also transfer a lot of these knowhow to the second market, which opened for business two, three days later than Hong Kong, it was just our China office. So before they opened for business also in a working from home mode, we already got people to test the Zoom connection, test order VPN connection. We even couriered laptops back to people’s village where they were stuck. We couriered almost 50 to 60 laptops back to different people in different parts of China. So that on a day itself when they start for business, they can work. The last business which started working from home, where it’s actually Indonesia, they actually started doing that two weeks ago. So they actually learn a lot from us. So we actually try to scale the knowhow and knowledge as well.

Simon Loong: (41:32)
And the other thing that we did recently was, I think when people are all stuck and being very negative, reading all the news about coronavirus impact and social impact and stuff like that, we actually ran a little campaign in office saying, okay, everyone should come together with crowd source ideas. What are the risks and also opportunities arising from this coronavirus? We want to hear our employees to think about both risks and opportunities. And it turned out right, we actually collected equal number of risks and opportunity. So then we get people to think about it in a very balanced way rather than just all focusing on reading, like how many cases they are today. But also think about how it has changed your lives, what are the new opportunity arising from this coronavirus or the new economy?

Brett King: (42:14)
So Ben, when I was in Hong Kong during SARS I was running consulting business and essentially all consulting stopped, people put it on hold, budgets were put on hold. And while some of that has happened, I’ve noticed that we’ve now got the tools to be more engaged and continue to do some of these projects. So tell us a little bit about your perspectives on the changing working styles.

Ben Quinlan: (42:40)
It definitely has changed the way we engage with our clients. I think consultants, obviously because we’re trying to get people to do big ticket things and making a decision around decisions to engage external partners such as advisors can be very difficult at a time like this because I obviously find that most of my influence with people comes from being there in person. I use the word gravitas. A lot of that can be distracted when you’re working in an online environment and it works to facilitate many more smaller decisions, but the largest decisions may not necessarily have as much impact or effect on a Zoom call. That’s just my personal opinion about it. But it has changed, I think the one thing that people need to be aware of, and Simon did touch on this in a nice way, which is really around the negativity.

Ben Quinlan: (43:29)
I wouldn’t underestimate just how much of a negative impact this has had on the people around me, be it my clients or even my staff and colleagues. And I think the most important thing during this time is really around empathy and flexibility. A lot of people are going through things that they’re not enjoying. I have partners who have children that want to burn the house down at the moment. I have young consultants and albeit I would like to think we’re a competitive payer but in Hong Kong competitive entry level pay means you still live in a marginally larger coffin than someone else. So they don’t like being stuck at home for that such a long degree of time in such a cramped up space. And I think just being aware of that. I mean-

Brett King: (44:14)
Hold my fan.

Ben Quinlan: (44:15)
Hold my fan, yeah. I mean I think one of the arrangements that a lot of companies have done is this 50 on 50 off working arrangement or clustered people in different groups and teams so they could go in the office on specified days or weeks. We are social creatures and we spend all our time online having a chat and so on. But at the end of it, we still want to come in and see each other. And I know it’s weighed on the mental health of a couple of my staff, so much so that a consultant was screaming, “Can I just come to the office because I shut down since Chinese new year?” And I said, “Of course you can. I mean you’ll be the only one there, but of course you can come to the office.”

Jason Henrichs: (44:59)
I don’t know about that Ben. When I was a consultant I was screaming, “Can I please come into the consultant meeting?” I was sick of being on an airplane to go to clients all the time and they didn’t let me back.

Ben Quinlan: (45:08)
Right. I mean actually the one thing is we’re so used to working remotely in the sense that when we do projects with clients offshore, I tend to advise the client, unless I’m there for a specified period of time to work through something with you, I don’t need to be there all the time. We’ll do a Skype call, we’ll do a FaceTime. I mean, we’re digitally enabled, save yourself some money. So I think our working style as a consulting firm is very much geared towards how we can work effectively in this environment. But again, I think the problem when it comes to businesses like ours is how do you build your next pipeline when you’re trying to get people engaged on a consulting idea via Zoom, it’s a lot more difficult.

Brett King: (45:50)
Matt, you were talking about in the chat, talking about Luckin Coffee. So why have they had success throughout this period compared with Starbucks?

Matt Dooley: (46:00)
They were having success before, well last year and looking at China, because of the behavioral change towards digital and everything, there are some different business models in China and looking at what is that sector doing and how are they integrating with other data or agreeing with how do they build experiences in a different way leveraging cross-company tie-ups is quite interesting. So Starbucks being such a social, it’s just more than coffee. The coffee’s one aspect, but it’s actual the sitting in the store and the whole experience and the connection with other people.

Brett King: (46:50)
Yeah. But they’ve also got a really dominant delivery strategy, right?

Matt Dooley: (46:55)
They do, definitely. But what we’re seeing in Hong Kong is the success of Deliveroo, the success of Foodpanda at this time, no one’s allowed to go to a restaurant. So now they’re-

Brett King: (47:11)
I tell you what, Seamless here in New York and Postmates and Uber Eats but with my place in Thailand, I’m always on Foodpanda and it’s great.

Jason Henrichs: (47:22)
Well, I mean, I think that speaks to the broader trend is we’re in a moment of crisis that you’re changing behaviors. I liken it to, it’s like the patient that has the heart attack is probably thinking in the midst of that I’m going to change some certain behaviors. I’m going to have fewer fats in my diet, I’m going to start to exercise and do those things. The question is, does it begin to stick? And so as we’re changing our digital habits, our need to go to places to conduct business, are those habits going to stick?

Brett King: (47:51)
I think one of the points, Jason is, you’ve got people, particularly here in the U.S., I don’t know if it’s the same… It will be the same in Hong Kong, not necessarily in China, because I think that’s already shifted. But you’ve got people who have never used digital, they’ve never had to. So this is the first time. And they may just find it’s a lot simpler, a lot faster and a lot easier than they expected and that could elicit a permanent behavioral change.

Matt Dooley: (48:18)
I also think from an industry perspective, you’ve got financial services, which has a long time non-creative, they’re into numbers, they’re risk adverse. And at this time, when there’s so much instability and volatility around, people usually need to actually give an outlet. And what you’re saying is they’re at home by themselves and with their colleagues on Zoom calls, they’re not getting that interaction. So what we’ve seen in the healthcare sector, especially in the biotech area, is companies are working together, it doesn’t matter about competitive because they’ve got a unique thing that they’re trying to solve.

Matt Dooley: (49:02)
They’re trying to protect humanity and find a solution to the virus. So I think this is a time when we could probably take lessons from the healthcare sector and then say, how can banks and fintechs work together and collaborate? Now we’re all at home, we’ve all got some time and stuff. Time is used on zoom calls, but this is a way where to get on a Zoom call-

Brett King: (49:26)
I’m busier than ever dude. I don’t know about you, but-

Matt Dooley: (49:32)
Geography means nothing. So we can actually connect and actually link up and actually make solutions that are right globally. The difference between 2003 with SARS and today is supply chains are global. Most of those supply chains in Asia either start or finish in China, which was the start point for this crisis. What we’re seeing now, especially in the last week, is productivity in China is starting to kick off. We are seeing companies and people going back to work in China because they’ve been able to stop the virus in Wuhan and spreading from other sectors and now you’re saying companies and factories going back to work. It’s going to be interesting to see how those supply chains actually work now that other areas are actually facing the problem, but it’s actually a great sign for the global economy now that we’ve got some factories in operation.

Brett King: (50:32)
Although this has identified weaknesses in global supply chain, there’s obviously for mass production and ventilated production right now that’s an issue. But listen, we’re running out of time so I want to finish it off. But what we haven’t done as part of the cast here is Simon, we haven’t really got an update from you in terms of what WeLab is doing. Obviously with WeLab Bank in Hong Kong, but just generally give us a bit of an update on what’s happening with WeLab and where you’re at this year.

Simon Loong: (51:05)
Yeah, thank you. I think it’s obviously going to be an interesting year. We just completed last round of Series C financing of 156 million U.S. last year. We actually set ourselves some fair targets this year, I would not say it’s overly aggressive. I think it’s fair given the economy and the first thing is obviously successfully launching the bank. I think we hope to do so the later part of this year, hopefully sooner than later. I think the second piece is, we focus a lot of our technology development on a new area called privacy computing, which is very important area. How do we use data technology to protect consumers? So what we’re talking about the use of the data, the storage, to access everything is just so fragmented. I think the famous Facebook story, you don’t even know who is using your Facebook data.

Simon Loong: (51:54)
I think we see this story coming up over and over again. I think this will become increasingly important topic about financial services. So since last year we’ve invested a lot of money into this area called privacy computing. We’ve gotten a couple of patents as well in terms of how do we do so. I think we’re looking at how do we productize and modulize it and offer it as a B2B service to a lot of our clients. We have almost close to 300, 400 banks who are our clients in China and beyond. The third thing we’re looking at is how do we expand to a second or potentially even more products and services in Southeast Asia above and beyond where we are right now in Indonesia.

Simon Loong: (52:30)
I think this will continue to be a growth area. I think with this whole epidemic going on we feel that one of the potential trend is actually focusing back on the inter Asian travel. So people may not travel as far as to Europe or U.S. but actually they gravitate back towards Asia Pacific as a whole, closer domestic or even just across closer proximity of countries. So that’s why we continue to invest more into Southeast Asia and existing markets.

Brett King: (52:59)
Awesome. [inaudible 00:53:01]. All right, so that brings the show to a close. Thank you Jessica. Simon, Matt, Ben for joining us and participating and Fiona for helping us through as well. It’s great to get that perspective and stay safe for all of you in Hong Kong.

Jason Henrichs: (53:20)
Thank you everyone and if you enjoyed the show, please on your favorite podcast platform give us a five star rating. We always enjoy getting feedback on Twitter at @BreakingBanks1 and we’ll post a lot of the links to white papers, et cetera, that have been talked about in today’s show on the social feeds. So thank you everyone for joining us. And again, as Fred said, stay safe.

Brett King: (53:44)
That’s it for this week. Thanks to our guests and to our sponsors who help make the show possible. You may have a little more time on your hands right now so you can listen to all of our more than 300 shows plus episodes from all of our other shows, including Breaking Banks Europe, Tech on Reg, the Finovate podcast, and more all on provoke.fm. I hope you like them and if so that you’ll give all the shows five stars and share them with others. Stay home if you can, take care of your loved ones and let’s all work together to move this industry forward and to make it stronger than ever. That’s it for this week, we’ll see you again next week with more Breaking Banks.