Lessons from running a digital bank in Hong Kong

In The Top Up this week, we dive into WeLab’s plans to build a pan-Asia digibank franchise and look at a growing trend of specialized insurtech firms. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every Wednesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by [registering here](. Written by Melissa Goh Fintech Journalist Hello {NAME} Being a first mover often has its perks. But depending on how you see it, it could also be a curse. Southeast Asia’s digital banks have watched every step of their Hong Kong-based predecessors keenly - since their launch in 2020, when many dangled attractive deposit rates to entice customers, until now, two years on, as they remain in the red. One of these Hong Kong-based players is WeLab Bank. That said, while it lags behind rivals like ZA Bank and Mox Bank in users and deposits, WeLab Bank seems to have figured out the most important piece of the puzzle: its path to profitability. In this week’s Big Story, WeLab founder and CEO Simon Loong shares his experiences operating one of the region’s first digital banks. Indonesia now offers a second shot of doing things right - together with Astra International, WeLab plans to transform Bank Jasa Jakarta into a digital bank by the second half of this year. This time, though, WeLab will be armed with the benefit of hindsight and experience of operating a digital bank for several years - something few of its competitors in the region have. Elsewhere in Southeast Asia, our Hot Take this week examines an emerging trend of hyper-specialized insurtech firms offering protection plans down to individual items - from a luxury watch to a tablet - as well as in the emerging space of electric vehicles. – Melissa  --------------------------------------------------------------- THE BIG STORY [WeLab eyes a ‘pan-Asia franchise’ as digital banking footprint grows]( WeLab Bank may not be a frontrunner in its home market of Hong Kong, but its CEO has its eyes on the prize - profitability.  --------------------------------------------------------------- THE HOT TAKE Insurtechs get creative with specialized coverage Here’s what happened: - KoverNow, a Singapore-headquartered insurtech firm, launched a service last week allowing customers to insure luxury watches on demand. - Singlife with Aviva also recently launched rainfall protection against travel plans foiled by bad weather, as well as auto insurance for electric vehicles. - In Southeast Asia and all over the world, specialist insurance appears to be gaining traction. Here’s our take: Ever wished you could insure an expensive watch? Not me - I don’t own any - but I’m sure watch aficionados have, in the same way that sneakerheads have (and do). KoverNow, an insurtech startup founded in the UK but is now headquartered in Singapore, has recently started insuring watches for users in the city-state, responding to a growing demand from the region’s collectors and wearers. The firm’s app acts as a digital vault where valuables such as tablets, cameras, handbags, and jewelry can be insured. Users simply need to snap a picture of the item with a corresponding receipt. I’m no big wearer or owner of luxury goods myself, but I could see the allure of an ad-hoc insurance policy that protects the butter-fingered. KoverNow’s selling points are that its coverage is flexible, based on specific runtimes, and available for specific items. Pricing of its premiums, meanwhile, is transparent and “self-adjusting,” - the company maintains a database of these luxury goods’ current values to avoid over- and under-insurance. Though currently available only to those residing in Singapore, KoverNow is now targeting Southeast Asia as a whole. Indeed, with the global luxury goods market estimated to increase from US$349 billion in 2022 to US$419 billion by 2027, Asia Pacific will become the largest consumer market of personal luxury goods worldwide, KoverNow CEO Stephan Kaiser tells Tech in Asia. Startups like KoverNow are not the only ones tackling the niche insurance space. In a similar vein, Singlife with Aviva launched a rainfall protection cover last month, which insures travelers in case unpredictable weather conditions impact their plans. The insurtech firm also recently launched a new protection plan for drivers of electric vehicles, which can include peripherals - such as charging cables, batteries, and private charging stations - in case of accidental damage. Providing specialized insurance is a trend that’s unfolding in the West as well. US firms like Boundless Rider and CoverTree, for instance, offer [specialized]( coverage for e-bikes and prefabricated homes, respectively. Is there really demand for such niche insurance? The answer seems to be yes. KoverNow’s Kaiser says the firm is seeing a “healthy flow of users” in the short time since its solution launched in June. It’s now teaming up with WatchBox, a global dealer for luxury timepieces, to offer insurance coverage at the point of sale. It’s perhaps also a natural development. For many people in Southeast Asia, insurtech-powered microinsurance provides coverage to those [previously unable to afford]( conventional products. Specialized insurance uses a similar concept of breaking down the product to zoom in on a specific type of coverage (albeit not for affordability reasons). While it’s early days for these firms, there’s clearly a lack of such solutions on the market at a time when demand - at least for categories like electric vehicles - is increasing. Specialty products warrant their own unique customer and claims experience. Insurance for broad product categories, like home and contents insurance, often fail to capture the needed coverage. As users’ needs evolve, so must insurtech firms - or so it would seem. (This brings to mind the rise of [crypto insurance]( - a nascent but growing space particularly in light of the current crypto winter.) Singlife’s new EV plan, for instance, comes as the number of electric car registrations in Singapore [double]( from a year ago, albeit still at 8.4% of all new car registrations. KoverNow also plans to extend its “usage-based solutions” to bicycles and Teslas as Singapore transitions to greener transport means. It’s also working on developing parametric travel as well as community-based pet products. In addition, KoverNow is building up its items database to include “more collector items over time, from vintage Air Jordans to NFTs,” Kaiser adds. – Melissa  --------------------------------------------------------------- NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [Australian fintech platform secures $21.4m in series C funding round]( Shaype, which was established in 2018, helps financial institutions to create transaction accounts linked to Visa cards for their users, among other functions. 2️⃣ [Indian no-code digibank enabler secures $26m]( Founded in 2015, Signzy provides features such as video know-your-customer processes and fraud checks to help financial institutions establish digital banking solutions. 3️⃣ [500 Global, Vertex Ventures back Malaysian POS firm’s $13.5m raise]( StoreHub helps over 15,000 restaurants and retailers across Malaysia, Thailand, and the Philippines to accept payments, manage table ordering, and maintain customer loyalty. 4️⃣ [India’s market regulator aims to tighten rules for fintech firms]( India will tighten its scrutiny of fintech firms with business models that “cannot be audited or permitted,” such as those offering algorithmic trading opportunities to retail investors. 5️⃣ [Singapore’s Arbor Ventures notches $193m toward next early-stage fintech fund]( Arbor, whose portfolio of companies include BNPL firm Akulaku, super app Grab, and payment gateway 2C2P, is aiming to raise an additional US$107 million for its third fund.  --------------------------------------------------------------- That’s it for this edition - we hope you liked it! 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