Photo: HelloGold co-founders Ridwan Abdullah and Robin Lee. Photo supplied by HelloGold.

Islamic Finance

Driven by financial inclusion, Islamic fintech HelloGold still determined to crack Africa after being burned at first try


Robin Lee admits he is no longer a sound sleeper. He will often awake with a start in the dead of night, wondering how, after an impressive career in blue-chip finance, he is now an entrepreneur, running a small fintech start-up in Kuala Lumpur.

Having enjoyed the stability that comes from working for employers such as KPMG, Boston Consulting and the World Gold Council in a career that began in 1991, he now contends with the uncertainties of running HelloGold, the digital gold trading platform he founded with fellow Malaysian Ridwan Abdullah nearly four years ago.

“We’ve had some peaks but we’ve also had a lot of troughs along the way. When you pull yourself out of the troughs you have to learn to enjoy the peaks a bit more,” he told Salaam Gateway.

This year has been challenging for the Shariah-compliant start-up, the first of its kind to allow customers to buy, save and invest in gold directly through a mobile application.

From the start it set out to help the millions of people in emerging markets without access to bank accounts to save for the future by using their phones to buy gold from as little as 25 cents.

In February, HelloGold announced plans to expand into Africa in partnership with Baobab, an established French microfinance provider with operations in nine African countries and China.

Under the agreement, the Malaysian start-up would plug its services into an app being developed by Baobab and launch this year. But since the announcement, Baobab has appointed a new chief executive and its priorities have changed, leading the project to be halted. This has prompted HelloGold to tweak its approach to working with partners in new markets.

“One of the lessons we have learnt… is our partnership pipeline cannot be linear,” said the former CFO of the World Gold Council.

“You have to fill it up with potential partners and manage them appropriately and make sure that things like that don’t happen,” he added.

Following the collapse of the Baobab partnership, HelloGold is now speaking to a number of parties in Dubai that could potentially reignite the start-up’s charge into Africa, with its promise of a large customer base of unbanked people and their willingness to save outside the formal banking system.

“We have learnt about the drawbacks of putting all our eggs in one basket because some of these things are beyond our control. We need to have more partners lined up so we can work with them over the months, and as people and interests change it won’t matter so much because we have other parties working with us.”

Down but not out, Africa is still in HelloGold’s sights.

To this end, Robin is looking at alternative financial solutions.

Mobile phone talk time is commonly used as a form of currency in some African countries. In addition, transactions between mobile phones, rather than bank accounts, have also been growing like wildfire.

According to the GSM Association, which represents the interests of mobile network operators worldwide, $26.8 billion in mobile money transactions were made in Sub-Saharan Africa in 2018, accounting for 65.68% of global value.

Alternative financial solutions like these suggests that Africa is “crying out for a savings product that is easy to understand, easily accessible and easily affordable” according to Robin.

ASEAN, MIDEAST EXPANSION

As HelloGold regroups in Africa, it is also continuing its expansion across Southeast Asia and more Muslim-majority countries.

Since the app’s launch in Malaysia in April 2017, it has seen transactions of some $10 million of gold. Robin claims its user base has quadrupled every six months in that time.

“Which is kind of cool, in terms of getting the kind of growth trajectory we would like, but as a fintech business focused on the under-served and the unbanked in the emerging markets, for us to get to what we would consider to be scale, we would need a lot more,” he conceded.

“Plus Malaysia is a market with just a 30 million population. It isnt big enough for us. It was always part of the strategy to look beyond Malaysia at the rest of ASEAN,” he said, referring to the ten-member Association of Southeast Asian nations.

In June HelloGold moved into Thailand, in partnership with local retailer Central Group. The country now accounts for roughly 10,000 of the platform’s 150,000 investors.

Though gold trading is not unique to Muslims, Shariah-compliance was always central to HelloGold’s business model.

On a practical level, mobile phone subscriptions is especially high in Islamic countries, with 10 of the top 50 nations with the highest mobile penetration being Muslim-majority, according to data gathered by the World Bank.

Likewise, financial inclusion in OIC countries is a lot lower: only 43% of adults in 50 of 57 OIC countries have a bank account, versus 69% for the world average, according to Salaam Gateway calculation of latest data from the World Bank’s Global Findex.

“If we are here to serve the underserved and unbanked, and you look at the underserved and unbanked population of the world, and where they come from, there’s a disproportionate number of Muslims,” said Robin.

“So it makes sense for us as a financial inclusion play, to be in Islamic finance. If we were not, we would by definition be discarding a whole chunk of people we are here to serve,” he said.

Next year the start-up aims to tap into Indonesia’s vast and largely Muslim market.

“The idea for 2020 is to get to Indonesia. Because we are a Shariah-compliant product it makes sense for us to go there.”

Outside ASEAN Robin is also eyeing the Middle East.

“We have been working to get up and running there for the better part of 12 months,” he said.

HelloGold’s ambitions to enter some of the most challenging fintech markets suggests a certain boldness in its intentions, Robin admits.

Indonesia is known for fierce competition within a booming financial start-up sector; the Middle East has its own cut-throat financial services industry; while in African fintech, its vast potential is matched by difficulties of doing business, especially in the countries where there are barriers to repatriating money.

“We have big ambitions and lofty goals. We believe we can make a big difference for the communities we serve, not just in Southeast Asia but in Asia and all emerging markets,” said Robin.

“But we also recognise we are very small so we have to temper that ambition with a sense of realism to make sure that we are within our means. We plan to be pervasive across the world; that’s the play.”

He admits he could have pursued his goals in a non-start-up environment, perhaps at a major bank, given his business background. But founding HelloGold “was an itch and I needed to scratch it”.

Doing so has allowed him to pursue his dreams, something he says is essential to spur on any entrepreneur.

Ironically, it is the fulfilment of his dreams that wakes him up in the night.

(Reporting by Richard Whitehead; Editing by Emmy Abdul Alim [email protected])

 

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Richard Whitehead