The Greater Bay Area: Celtic Connections

They say money makes the world go around and in an increasingly digital global marketplace that money is moving faster and more cheaply than ever before.

As the worlds of technology and finance collide – as Fintech advances – businesses and individuals who need to move money quickly, efficiently and cheaply are turning in ever growing numbers to the online sphere. The World Bank estimated recently that the global remittances market is worth almost US$600 billion.

According to banking experts, since the mid-to-late 2000s online peer-to-peer (P2P) operators have been increasingly offering customers a more competitive rate of exchange for their money transfers compared with the traditional banking system.

Up-and-coming

Among the up-and-coming companies designed to meet these needs is the Ireland-headquartered CurrencyFair, a global payments and money transfer company which has been active in Hong Kong for just over a year.

In a landmark move in December 2019, the Irish money transfer technology company inked a partnership deal with the Guangzhou-based Chinese online trade network Buy-World to launch its marketplace payment product.

Under the deal the management of global payments made via Buy-World is outsourced to CurrencyFair. Through the partnership, Buy-World – which works as a ‘factory to business to consumer’ trade network with 2.3 million global buyers – will transition to a full-service online model. One of the latest moves is Buy-World’s launch at the 127th China Import and Export Fair (Canton Fair), held in June 2020.

“We also have around 200 individual customers in Hong Kong, most of which are expats, and who are reasonably wealthy and well-paid individuals. Most of them are sending money back and forth to Europe, the US or Australia”.

Technology-led Safety

The world of finance and banking is undergoing a period of unprecedented change as the business of money moves inexorably online. These changes not only bring opportunities but also challenges in terms of compliance and regulation.

With know-your-customer (KYC), anti-money laundering (AML), counter-terrorist financing (CTF) and customer due diligence (CDD) requirements becoming ever more stringent, Byrne says CurrencyFair is extremely serious about applying the same standards of compliance as traditional banks in order to reassure customers that their money is safe in the company’s hands.

“Obviously at the very heart of our business is making sure that we know our customers and that our customers know that their money is safe with us,” the businessman said.

In every country where CurrencyFair signs up customers they have secured a payment licence to do so, and Byrne says his company probably has more such licences in more countries than most banks do because they usually only operate on a quasi-global basis.

“We are regulated in the EU, Canada, Australia, Singapore and Hong Kong, we also expect to be regulated in more countries by the end of this year. This means that we operate on the same level of compliance as do many international banks,” Byrne said.

GBA Partnerships

In line with the strategy which brought about the Convoy Payments deal, Paul Byrne points out that as a foreign Fintech company CurrencyFair cannot yet secure a payment licence in mainland China, so they operate through partners in the mainland who are regulated in that jurisdiction. By doing so, the company can offer services to companies and individuals alike.

“We service other payment companies and our own customers which include companies and individuals. Our general customer base is high-net-worth individuals and SMEs. Small businesses are the area on which we have been focussing in Hong Kong and our mission is to service them directly and indirectly,” he said.

“In Hong Kong – CurrencyFair’s Asian headquarters – we offer more than our products, we also have a commitment to research and development, and a strong sales and customer service team. Our aim is to sign up new businesses in Hong Kong, whether that be for cross-border payments into China or subsidiaries or agents of Chinese companies dealing with the rest of the world,” added Byrne.

Thanks to the city’s commitment to putting in place the necessary technological and regulatory infrastructure for digital identification and eKYC to support its role as a leading 21st century international financial centre, Byrne expects to see the emergence of a faster process for on-boarding customers in a non-face-to-face context and hopefully a streamlined system integration within the GBA, enabling the connection of local eID systems across Hong Kong, Macao and Guangdong province.

Cost-base Benefits

One overwhelming benefit of being a technology-led money transfer company, says Byrne, is the ability to have a much lower cost base for the business – savings that can be passed on to the customer.

“We are a technology company and work in the field of Fintech – where technology meets financial services – in other words a financial company which is totally underpinned by financial technology. Because we are technology first we have a much lower cost base than a traditional bank which has lots of branches, real estate and offices to take care of. Yes we have people in service offices providing customer services, compliance, sales and development, but pretty much everything else we do is online.

“Because of the asset-light business model, our cost base is lower, and we are obviously able to offer a lower price to our customers. In addition, because we are technology-led our cost of acquisition, i.e., securing and signing up new customers, is lower because the way we do marketing is digital and highly driven by artificial intelligence. Put those two things together and you really can offer a cheaper and better service to customers.

In-house Delivery System

Another key feature of CurrencyFair’s operation is the fact that they have built their own infrastructure as a company. This has enabled them to partner with DBS bank and work with them using their own technology and innovation skills to offer a fast, secure and lucrative transfer system which cuts out normal banking costs incurred with the likes of the SWIFT system of payment.

“If you open a CurrencyFair account through our app online and deposit money in that account, you are literally depositing it into a DBS bank account. For example, when you send money or make a transfer to an individual or a business in the US, our system converts your Hong Kong dollars into US dollars in real time and gives you access to US dollars in a US bank account,” says Byrne.

“This means that it is still your money in your account, but it is now in US dollars in the US banking system. We do not have the expensive cross-border payment costs that come with SWIFT or other payment networks, instead it is all done through our proprietary in-house technology and systems. We avoid the high-cost correspondent banking costs and can therefore provide a much lower cost service. Couple that with a much faster service for our customers, which we can do because everything is done in real time,” he added.