With innovations such as blockchain creating an entirely new segment in the finance industry, Johnny Hon reveals how the Global Group is tapping into the new investment opportunities
Disruption of the financial services industry is long overdue. While sectors such as entertainment, news and retail have been profoundly affected by technology during the past two decades, the ways we bank, buy insurance or use legal services have largely stayed the same. But that is set to change.
Innovations such as blockchain are opening the door for disruptive startups to challenge the status quo with services that consumers actually want, as well as many more they don’t yet know they want. And that means there are significant opportunities for investors to take part in the evolution of an entirely new financial landscape.
“The current state of play with blockchain is like the internet in 1998,” says Johnny Hon, founder and chairman of the Global Group. “There’s so much more that people can do—the technology can create really important innovations for consumers. It’s going to change the world, and this is only the beginning.”
Operating from its base in Hong Kong, the Global Group has always sought to act as a bridge between East and West, helping investors and entrepreneurs in Mainland China and the rest of the world to access opportunities. But Hon also seeks to bridge new frontiers of technology, particularly where they help to break down borders and facilitate global trade.
Fintech fits the profile perfectly. Just as the internet created a global communications network that allows people around the world to interact with each other, blockchain will enable them to transact—immediately, effortlessly and securely.
The power of this type of innovation is already visible in the mobile payments world, where revenue is forecast to surpass US$1 trillion this year. Just one company, global payments platform Adyen, processed almost US$150 billion last year—a US$60 billion year-on-year increase.
“People in developing countries are skipping past credit cards and using technology to transact,” says Hon. “The sector is evolving very quickly.”
But the possibilities extend far beyond secure payments. Blockchain is being used to create smart contracts that are turning once-expensive legal documents into commoditised products. To this end, the Global Group is in the process of acquiring a European-based law firm with a view to bringing together lawyers and technology specialists, fostering expertise in this developing area of law.
The insurance industry has been similarly slow to embrace new technology. Smartphones, wearables and the internet of things are creating masses of data that could help underwriters to analyse risk far more effectively than in the past, but much of the industry still relies on traditional actuarial techniques instead of leveraging big data, artificial intelligence and the blockchain. Disruption is therefore inevitable.
Cryptocurrencies are also upending the ways that early-stage businesses finance themselves, with initial coin offerings (ICOs) already starting to rival venture capital in terms of fundraising.