Hong Kong is one of the major financial cities in the world and has the 3rd largest stock exchange in Asia after Tokyo and Shanghai. Making and spending money is a passion of Hong Kong and is reflected in the big shiny buildings, sports cars and model only clubs crowded in the small island.
To make the money, people love to trade securities. Online trading has remained stagnant for a long time, mainly due to the high barriers to entry in terms of cost and skill. Now Hong Kong start-up 8securities is looking to shake things up by launching an online trading portal that is simple, customizable and social. The team announced the product back in October at TechCrunch Beijing Disrupt and will launch in February.
People can select the markets to trade on, use analytics tools, read news and research, watch videos and interact with other investors through social apps.
When in Hong Kong recently, I had the chance to meet up with Co-founder and CEO, Mikaal Abdulla. Here’s some insight into the company.
Disrupting the old school way of trading and democratizing it
There are many professional online trading systems on the market today. Many are targeted at the experienced and savvy investor and are usually too sophisticated to use for the amateur investor. To make online investing more accessible to more people, 8securities is aiming to make things easier and fun.
The inspiration for creating 8securities was the founder’s frustration with traditional institutions having ideas, but no execution. The team is made up of many ex-E*trade executives so they know what needed to change, but couldn’t in such a large organization.
“We built 8 Securities to both empower and to give a voice to investors in Hong Kong and Greater China…we simply want to democratize the process of investing by giving people the ability to exchange ideas, follow trending trades and topics and crowd source research all in real-time.
We are breaking the conventional one way relationship people have been forced to have with their traditional brokerage. By leveraging a Web 2.0 philosophy and ubiquity across the desktop and mobile (using HTML 5) we hope to advance the market away from the static user interfaces that exist today to a more personalized experience.” Said Mikaal.
Going social, talking money
For many amateur traders, investing can be rather daunting. Betting on intangible things online would make many people uncomfortable. To ease the discomfort, 8securities makes trading more social by allowing investors to interact within a community.
Members are given an anonymous cartoon avatar where their identity is hidden but the trades are real. Reality is powerful compared to paper trades or ‘what-if’ or ‘what I think’ communities. This enables people to follow what they invest in, learn from each other and exchange ideas. Keeping identity private is important because it would be dangerous if people knew you made a lot of money or embarrassing if you lost a lot of money. Similar to the Google+ circles concept, members can form a closed group of investors to make it more private, like for their family.
Mikaal believes Hong Kong is the perfect place to launch this kind of product because it has 78% social penetration rate of total online population, coupled with 67% of investors having an online brokerage account. “Social networks will unlock investing ideas and knowledge from individuals. And how we shape, filter, and listen to those ideas is in our individual control. The 8 Securities Trading Portal is the first vehicle to bring it all together.”
Hong Kong also offers a prime location because people love to talk about friends and family, food, real estate and the stock market. It is wise that the company is capitalizing on what Hong Kong is good at.
Lower costs = Happy investors
8securities revenue model is simple; it charges investors for placing a buy/sell order. Since it uses technology rather than people to execute a trade, there are obvious cost savings. Mikaal said that “We intend to be significantly cheaper than the banks that dominate the landscape in Hong Kong. We will offer both HK and US markets from a single multi-currency account in HKD, RMB and USD.
The App Market, all research and content and the private social network will be offered to our customers at no additional cost. We will also not charge any of account maintenance fees that are so common in Hong Kong.”
Raised US$8m, no VCs!
It’s rare to find many start-ups raise more than US$5m without any VC backers, but 8securities managed to raise US$8m from private wealthy investors who believe in their vision. Part of the decision to go private was to keep more decision making power. The other reason is that Hong Kong is known to be not very start-up friendly, mainly because the market is too small and there is more security in finance or real estate. Mikaal explained the money will be used to expand to new geographies. “Our vision is to connect individual investors from around the world on our social trading platform.”
China – so close yet so hard
Hong Kong is less than 3 hours flight from China, the golden investing opportunity. However, there are some restrictions that prevent 8securities entering right now. “China financial regulation does not yet permit non Mailnland China brokerages to compete domestically. That said, we are very interested to find a forward looking partner that can help us launch our private social network in China. This partner may be a financial portal who would like to modernize and expand its services. When financial regulation in China eases, we of course look forward to establishing a presence on the ground.”
Why would you use it?
Being a web 2.0 start-up, the product has a heavy focus on intuitive design and usability. Additionally, 8securities will open up a proprietary Investing App Market that allows customers to download financial apps that help them invest smarter. The platform is also very flexible and allows customers to personalize the trading experience with different tools, research and multi-media. This helps cut out any noise and let’s people focus on only what they need. Mikaal also feels the “private social network will liberate people from the one sided control by the traditional banks and brokers.”