However, the other side of the ‘blockchain revolution’ is still alive and well. Platforms that have been designed to target retail investors in some of the world’s most impoverished regions are providing financial products and services to populations that have never had access to any before.
One of these platforms is HelloGold, a blockchain-based gold investment platform that was originally designed for retail investors in Malaysia. Recently, Finance Magnates sat down with HelloGold CEO Robin Lee to discuss the platform’s mission to provide financial products and services to low-volume investors and its plans for expansion.
HelloGold was Inspired by the Needs of Malaysian Users
HelloGold’s main goal is to “[provide] asset-based savings and lending products for underserved and unbanked communities in emerging markets through digitization.”
“There are two billion unbanked adults in developing economies,” Robin explained. “HelloGold believes that the acceleration of tangible and useful financial inclusion will significantly reduce the disparity between the rich and the poor and will help to ensure the stability of economies across various regions and countries.”
The company was founded in Malaysia, where the disparity between the rich and the poor is very high. “Despite having one of the lowest levels of an unbanked population in the region, the grim reality is that more than 75% of Malaysians find it difficult to raise RM1,000 [ roughly 240.00USD] in the event of an emergency and have insufficient private investment, Robin said.
The HelloGold team would like to wish everyone Selamat Hari Malaysia! Divided we are different, together we are family!
Since all Malaysians love gold, HelloGold is giving every new user RM5 worth of gold*!
For more: https://t.co/8EH77XAGqB
#HelloGold #MalaysiaDay pic.twitter.com/iNwyj5BQ2h
— HelloGold (@myhellogold) September 16, 2018
Designed to Target Muslim Customers
The platform has also been designed specifically to accommodate Muslim users. According to the Pew Reserch Center, 61.3% of Malaysia’s population identifies as Muslim; 24% percent of the global population identifies as Muslim.
“HelloGold launched the first Shariah-compliant mobile app, available on Android and iOS, allowing users to turn their savings into fully allocated gold,” said Robin.
He explained that Islamic populations represent an important business opportunity. “Muslims form a quarter of the global population, making Islamic finance a key segment of global financial inclusion. 1.2 Billion unbanked Muslims, globally, pose a massive opportunity worth $ 3.2 trillion, in banking the unbanked, and stimulating financial and economic growth across regions.”
”No Community Should Be Denied Access to Financial Products and Services”
Robin also said that the way that blockchain technology and cryptocurrency work are in line with Islamic philosophies about finance. “Blockchain technology, with its offering of decentralized and friction-free systems, is lauded as one of the major disruptors in the financial industry. It is also changing the landscape of Islamic banking.”
“Application of blockchain in finance will allow better transparency, quality and efficiency of processes. It goes very well with the Islamic view on finance, based on shariah laws, which means money should be circulated for business, for good, and in an ethical manner.”
@FoundationHG’s HelloGold Token has just received Sharia certification. The #token is the third product by the foundation to become Sharia compliant. whttps://bit.ly/2O09Io3 pic.twitter.com/GL5QCLa6rM
— Holland FinTech (@HollandFinTech) October 2, 2018
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He explained that of the over 85,000 downloads that the app has had so far, most users have been in their 20s and 30s “with an even split between male and female.”
The platform is also planning to reach out to users in other areas of the world with economic and cultural similarities to Malaysia. “HelloGold is now preparing for market expansion in Asia and MENA (The Middle East and North Africa) and also planning product/service extension.”
Indeed, “No community should be denied access to financial products and services,” he said, “and this supports HelloGold’ s vision of financial inclusion.”
HelloGold Offers Micro Investments, Physical Gold Delivery
Robin explained that HelloGold’s most important feature is the fact that it allows users to make micro investments. In the economic landscape of any developing country, investment opportunities can be few and far between for individuals with little capital.
“Consumers can make an investment for as little as USD0.25, and so anyone can begin to save at that level,” he said. Then, “when an investment is made, we purchase that value of physical gold, and it is placed in a vault in Singapore. Consumers can save the gold, use it as collateral for a personal loan or easily sell the gold, all on the mobile app.”
In order to ensure that user’s funds are secure, Robin said that “all transactions must be confirmed with the correct OTP.” Transactions are monitored for unusual activity.
“Additionally, When a customer wants to take physical delivery of the gold, we will only send it to the address on account and the courier will only hand it over to the named customer on account. Any changes in personal information requires re-submission of documentation to HelloGold for approval,” he added.
HelloGold’s Basis on Gold
The fact that HelloGold is based on gold also has to do with the user base that the platform is targeting. “Gold has for centuries been used as a store of value, as a means of exchange, and as especially able to maintain stability in market up and downs. Everyone everywhere understands the role that gold can play in their financial future,” Robin explained. “Gold is extremely stable and tangible in today’s unpredictable market and was an attractive choice for us.”
However, the price of gold has dipped considerably this year.
To this, Robin says that “all assets rise and fall over time. Gold has historically risen in line with local inflation. When market commentators talk about gold, they usually refer to gold to the USD which is reasonable for people who are interested in the USD/XAU.”
“The expected upswing in the gold price given global tensions has yet to materialise as there usually is a ‘flight to safety’ towards the USD before it turns to the ultimate safe haven asset that is gold. That is what has happened in 2018 – the USD has strengthened despite the concerns about US policy regarding trade, globalisation etc. I expect that, at some point, the markets will take a view on the impact of US policy over USD as a ‘safe haven’ asset and will switch to gold.”
“This said,” however, “HelloGold customers don’t have the luxury of taking a view on the USD – their financial wealth is largely/wholly denominated in local currency. So, depending on which economies they live in, gold has done well as their economies have suffered e.g. Turkey. Conversely, when their economies do better, they have less need to call on their ultimate ‘risk-free’ asset.”
Robin added that despite the price dip, “we see steady demand for gold through the HelloGold platform.” This is likely because of the platform’s target user base–”the more recent rise and fall is having no discernible impact as our target customers are the underserved and unbanked in the emerging markets.”