The fintech phenomenon is not just reshaping finance but also bringing about a social change among the economically disadvantaged of the world. This is particularly true in the world of Islamic finance which seeks to serve some two billion Muslims around the world, a quarter of the world’s population.
HelloGold started in Malaysia, with the inspiration coming from Malaysia’s financial ecosystem. With the average household savings rate at 1.6% of disposable income, one of the greatest challenges the country faces is the income disparity between the rich and the poor. Despite having one of the lowest levels of an unbanked population in the region, Bank Negara Malaysia said that more than 75% of Malaysians find it difficult to raise RM1,000 (US$238.47) in the event of an emergency and have insufficient private investment. As the United Nations Capital Development said, financial inclusion is not solely focused on the percentage of the population with bank accounts, but should also focus on the usage of financial products to save, invest, insure and plan for the future.
In April 2017, HelloGold launched the fintech savings HelloGold app, available on Android and iOS. It is the world’s first Shariah compliant app that digitizes the entire gold buying and selling process for people to overcome financial challenges that are prevalent in emerging markets. It allows individuals to purchase gold through a mobile application, for as low as RM1 (23.85 US cents), underscoring the affordability and accessibility of financial products through digitization.
Earlier this year, HelloGold launched the world’s first tokenized gold product, GOLDX, an ERC20 token representing ownership of fully allocated investment grade gold on the blockchain. Recently, HelloGold’s token, HGT, also received Shariah compliance, making HelloGold a fully Shariah compliant entity.
HelloGold’s products revolve around a unique business model which allows users to buy and sell gold and eventually other financial assets, using an app. Gold is fully insured and custodied in secure vaults in locations like Singapore and soon, in Dubai, and can be used for savings or as collateral for loans. With a growing presence in Southeast Asia, HelloGold’s mobile app is the world’s first Shariah compliant fintech gold app used to buy and sell gold.
Islamic finance and Shariah compliance
HelloGold believes that no one should be excluded if a product is to be truly financially inclusive. HelloGold strives to make financial services and products more accessible to people who are not well served by traditional financial services firms today and at dramatically lower costs than the current incumbents.
Shariah compliance crucially ensures no one is excluded regardless of religion and culture. HelloGold’s Shariah compliant gold-backed savings and credit products and services are readily available to those who are underserved and are not afforded appropriate financial services.
About 71% of Muslims are unbanked, against a global average of 38%, despite the growing popularity of Islamic finance over the last 40 years. With some 500 Islamic banks in the Islamic world, well-capitalized, established firms are well placed (and funded) to bank the unbanked.
However, the distribution of Islamic financial assets shows that three countries make up 60-plus% of all financial assets (according to ICD Thomson Reuters ) but only make up 7% of the global Muslim population.
Clearly, the assets are not evenly distributed to serve the majority of the Muslim population globally. Islamic finance is, all too often, available to sovereigns, large corporates and banks. Only in the case of the more advanced economies is Islamic finance available to retail consumers. Islamic finance is not pervasively and easily accessible to vast tracts of the Muslim population and remains exclusive to the ‘top of the pyramid’. As a Shariah compliant entity, HelloGold is capable of identifying and addressing untapped market segments in emerging markets to help the unbanked and underserved.
The growing penetration of smartphones and the advent of other technological advances make it possible now to penetrate, profitably, lower income level groups with new cost structures. HelloGold has been able to scale with relatively little capital expenditure for things like physical infrastructure or equipment with its technologically empowered solutions. The team can test and adapt customer acquisition and user experience more cheaply and more quickly, using technology to make significant improvements on operational efficiency and to optimize delivery channels. This has helped in creating and improving margins in market segments where previously there were little or no margins.
HelloGold uses blockchain technology to enable its customers to access affordable financial products and services starting with gold. The mission is to democratize asset-based savings and lending products for the underserved and the unbanked in emerging markets through digitization.
The widespread use of commodities in Islamic financial products from cash deposits to derivatives ensures adherence to a key tenet that makes sure that returns must be derived from a genuine business activity, such as trading goods.
HelloGold chooses to manufacture financial products through the commodities building block – starting with gold. Gold is a simple but effective tool for portfolio diversification, especially in periods of high market stress. It is extremely liquid – accepted and traded the world over. With its unique attributes of scarcity and durability, gold has earned a reputation as a great means to preserve wealth across time and cultures.
In fact, gold is one of the few investment assets that has a truly global appeal – it has resonated and continues to resonate with all people across cultures and throughout history and is the most widely understood and accepted investment asset for the global community.
Gold has for centuries been used as a store of value and as a means of exchange and especially to maintain stability in market ups and downs. Everyone everywhere understands the role that gold can play in their financial future. Gold is also extremely stable and tangible in today’s unpredictable market and is an attractive choice for savings and investments.
HelloGold has plans to expand into additional asset categories, but gold was an obvious first choice of asset. We see steady demand for gold through the HelloGold platform.
HelloGold continues to fundraise and is having ongoing discussions with institutional and private equity investors for its long-term strategic road map. HelloGold is also preparing for market expansion in Asia and the MENA region and is planning product/service extensions. The firm is also focusing on the extension of its financial savings platform with more features and asset categories. HelloGold is in discussions with partners in a number of countries as to the applicability of its platform to facilitate financial services.
This article is contributed by HelloGold.