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It's data and more for Hong Kong's AMTD

AMTD's partnership with Xiaomi will power virtual banking by capturing bits and bytes.

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Calvin Choi (holding gavel), chairman and CEO of AMTD International Inc celebrating his company's IPO on the floor at the New York Stock Exchange in August 2019. AMTD's partnership with Xiaomi hinges on data-driven aspirations.

LONG before "big data" became an industry buzzword with the advent of digitalisation, data analytics was already fashionable for Hong Kong's AMTD Group back in 2003.

The financial services firm, which started out offering independent wealth management solutions, has always centred its products on data, or what its chief executive Calvin Choi calls "smart financials". "We're always thinking about how to offer more efficient financial solutions by making use of data and anything surrounding it," Mr Choi told The Business Times in an interview.

It therefore comes as no surprise that AMTD's partnership with Chinese electronics giant Xiaomi for a virtual banking licence in Hong Kong earlier in May hinges on data-driven aspirations.

The combined entity, known as Insight Fintech, will focus on integrating big data, IoT (Internet of Things), cloud computing, artificial intelligence and blockchain into traditional banking services in its initial phase of operations. Insight Fintech is expected to launch by early 2020.

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A pioneer in the IoT space, Xiaomi is one of the largest data-capture firms in the Chinese market and boasts of more than 200 million monthly active users.

More than 196 million consumer devices are connected to Xiaomi's IoT platform, making it the largest platform of its kind in terms of IoT devices.

"With IoT data and existing tool sets from Xiaomi, having them as a partner will set us apart from competitors (other virtual banks in Hong Kong)," said Mr Choi, adding that AMTD can also tap Xiaomi's growing user base in Hong Kong to expand its own network.

"Acquiring and analysing key client information will allow us to deliver products catered to the right needs, (and) the right risk appetites. Data captures will also allow us to offer more personalised IoT products," he told BT.

Personalised and affordable banking solutions

AMTD will bring its vast experience in the banking industry and its own data trove to the partnership. Its core business lines across Asia are: investment banking, asset management, strategic investments and insurance brokerage.

In its home market, AMTD is one of the largest insurance brokers and an active provider of retirement fund services. The firm is also a leading independent investment banking group in Asia serving mid-market companies.

"Having been in the industry for so long, we've also been collecting our own useful data points over the years from both individuals and corporates," said Mr Choi.

By pooling databases, networks, technologies and expertise in different markets, Mr Choi is confident that Xiaomi and AMTD are able to leverage their shared resources to provide more personalised banking solutions, such as wealth management or asset allocation services, via their new virtual bank in Hong Kong.

Targeted services aside, accessibility is another pain point that the virtual bank hopes to tackle.

Mr Choi identified the mid-net worth market as an untapped sector where Insight Fintech can roll out its "accurately priced" products.

"We found that there are lots of mid-net worth individuals looking for more personalised and diversified solutions for wealth management or asset allocation. But if they were to walk into a typical private bank, the criteria for those services are pretty high," said Mr Choi.

Up next: Singapore

Digitalisation helps to drive down service fees, he noted, adding that there are also cost savings from the lack of a physical presence.

Hong Kong's eight new virtual banks are not required to maintain physical branches.

With up to five digital banking licences up for grabs in Singapore, AMTD is now eyeing a stake in Singapore's emerging virtual scene.

The Monetary Authority of Singapore (MAS) looks to issue up to two digital full bank licences and up to three digital wholesale bank licences in a bid to liberalise the banking sector. A digital full bank would have to be headquartered in Singapore, and is able to take retail deposits. A digital wholesale bank is open to both Singaporean and foreign players, but it can only take deposits from small and medium-sized enterprises (SMEs) and other non-retail segments.

Singapore serves as AMTD's regional gateway to other South-east Asian markets, so it makes clear business sense for the firm to channel its resources here, said Mr Choi.

"If we have a digital bank in Singapore, we can join the dots, connect both banks to offer a more comprehensive suite of financial services to the rest of Asia. We are fully committed to exploring our opportunities here... and finding partners to apply for the licence," he said. "South-east Asia is a super growth engine, we wouldn't want to miss out."

The ideal digital bank consortium for AMTD is one that includes partners with diverse experience in the various markets.

"A single-market experience is not good enough. We need a diversity of shareholders who can break into this combined space," said Mr Choi.

Having gone through the virtual banking application in Hong Kong, AMTD can lend its knowledge in this relatively uncharted field.

"We have experience setting up a completely new bank from scratch," said Mr Choi. With more digital-related licences being rolled out across Asia, he told BT that it is crucial for AMTD to react swiftly to gain first-mover advantage and stay ahead in the digital race.

"It's no longer a question of whether we need to digitalise, but a must. Disruption now exists in every industry," said Mr Choi.

Diversification

AMTD recently made its mark on Singapore's property scene with the purchase of Oakwood Premier OUE, a luxury serviced residences and hotel business, in September.

The S$289 million deal was closed via a joint venture with Dorsett Hospitality International.

This comes as AMTD looks to diversify its offerings across Asia. Oakwood Premier OUE is the first project of the firm's property arm, AMTD Property Development Group.

Real estate is a "good match" to a financial services company, said Mr Choi, who pointed out that hospitality is a bright spot in the region.

"We see more tourists coming to Singapore and the surrounding South-east Asian countries. This is a good time to acquire assets to expand our reach," he said, adding that there are similar projects in the pipeline.

AMTD has also forayed into the private education market with much focus on the Greater Bay Area.

With a population of 70 million and a gross domestic product of US$1.5 trillion, the Greater Bay Area presents a "superb opportunity" for diversification, said Mr Choi.

The firm is currently in talks with several education providers with details to be announced soon. "We want to identify and invest in ways to provide better educational models to the Asian market," he said.

AMTD's non-banking initiatives are a lead-up to its long-term vision of achieving conglomerate status.

Dabbling in financial services alone is not enough to reach that goal - diversification needs to occur, both geographically and in different business markets, said Mr Choi.

The 41-year-old told BT: "My ideal retirement age is 90. I'll have 50 more years to build the organisation... this is how long-term our vision is."