The Rise of Online Finance and WeLab's Growth

The online finance sector has experienced significant growth as a result of the COVID-19 pandemic. Globally, the crisis accelerated the adoption of digital banking services among consumers.

Founded in 2013, Hong Kong-based fintech company WeLab witnessed a 20% year-over-year increase in its user base in 2020. This growth brought the company’s total accumulated users to 50 million.

Allianz Investment and Strategic Partnership

Traditional financial institutions are being driven to innovate in response to dynamic companies like WeLab, which focuses on delivering increased convenience, transparency, and affordability to customers.

This is a key factor behind Allianz X, the venture capital division of the 131-year-old Allianz financial group, leading WeLab’s recent $75 million funding round.

This Series C1 funding followed a $156 million Series C round secured by WeLab in late 2019.

WeLab's Vision and Valuation

“Allianz holds a prominent position as one of the world’s largest asset managers and insurers, possessing a robust presence and established footprint,” stated WeLab’s co-founder and CEO, Simon Loong, in an interview with TechCrunch.

While Loong did not reveal WeLab’s current valuation, he confirmed that it has increased since the company first achieved unicorn status, surpassing $1 billion.

Developing Next-Generation Wealth Advisory

When WeLab launched its digital bank in Hong Kong last year, a core component of its strategy was the development of “a new generation of wealth advisory services for digital banks.”

Loong explained that Allianz recognized the potential of this initiative and approached WeLab with a proposal to lead the funding round, citing the opportunity to co-develop wealth technology tailored for digital banking platforms.

Expanding Reach Across Asia

This strategic investment will facilitate the joint development and distribution of investment and insurance solutions throughout Asia.

These new products will complement WeLab’s existing portfolio, which includes a virtual bank and lending services in Hong Kong, alongside various lending offerings in mainland China and Indonesia.

Currently, WeLab’s user base is distributed as follows: approximately 47 million users in mainland China, 2.5 million in Indonesia, and under one million in Hong Kong, which has a population of 7.5 million.

A Synergistic Collaboration

“This represents a compelling four-way collaboration,” Loong noted, highlighting the respective roles of Allianz as a leading asset management and insurance provider, and WeLab as both a bank and a fintech solution provider.

“We anticipate this partnership will serve as a pivotal moment for the company, enabling significant scaling of our operations.”

WeLab's Strategic Positioning

Beyond direct consumer revenue, WeLab also generates significant income through enterprise solutions. These services assist established banks and financial organizations in developing and enhancing their digital capabilities.

This approach mirrors the strategy employed by Ant Group, which aimed to function as a facilitator for conventional financial institutions.

Market Dynamics and Competition

Despite the substantial market dominance of Ant Group and Tencent within China’s fintech sector, opportunities persist for niche and specialized companies such as WeLab.

Currently, WeLab has secured approximately 600 enterprise clients, with the majority located in mainland China.

Loong explained the complex relationship WeLab has with the industry giant, Ant Group, noting both competitive and collaborative aspects.

He stated that while some business areas involve direct competition, others allow for fruitful partnerships.

As an illustration, WeLab was instrumental in launching one of the initial smartphone leasing services available on Alipay, Ant Group's primary application functioning as a platform for third-party financial offerings and consumers.

Maintaining Independence

However, Ant Group also develops its own internal financial products, potentially creating conflict with external providers operating within its marketplace.

Loong emphasized that WeLab’s independent structure allows it to collaborate with a wide range of partners.

“We maintain the ability to work with everyone,” he confirmed.

Greater Bay Area Integration

Founded in Hong Kong, WeLab is proactively participating in the Chinese government's initiative to unify the Greater Bay Area. This region encompasses the two Special Administrative Regions of Hong Kong and Macau, alongside nine cities within Guangdong province, notably including Shenzhen.

A key aim of the GBA plan is to facilitate the movement of skilled professionals across borders. The area presents an ideal environment for launching a fintech startup, offering access to both technological expertise in Shenzhen and financial proficiency in Hong Kong. WeLab has capitalized on this, establishing a larger technology workforce in Shenzhen compared to its Hong Kong office, which focuses on finance professionals.

The company intends to expand its team by approximately 100 employees this year, bringing its total headcount to 900.

Financial Collaboration and Expansion

Beyond shared talent, Beijing is focused on fostering greater financial connectivity within the GBA. WeLab recognizes this and is preparing to launch its new wealth management offerings initially in Hong Kong.

Subsequently, these products will be extended to other GBA locations via the Wealth Management Connect scheme. This government-backed program enables residents of Hong Kong and Macau to invest in wealth management products offered by mainland banks within the GBA, and conversely, allows mainland GBA residents to access products in Hong Kong and Macau.

Loong explained that Hong Kong serves as an excellent testing ground, but scaling an online business necessitates access to a substantial population base.

The Greater Bay Area provides this opportunity, boasting a population of 72 million and a GDP of $1.7 trillion – exceeding that of South Korea. This makes it a strategically advantageous region for growth.

IPO Considerations

WeLab initially considered an initial public offering (IPO) in 2018 but postponed the plan due to unfavorable market conditions, as Loong stated.

At the time, the company was also in the process of obtaining a banking license and prioritized securing this crucial approval before pursuing an IPO.

“Currently, the equity market is experiencing significant activity,” Loong noted. “Consequently, we are engaged in discussions with numerous parties and remain attentive to potential opportunities for an IPO when the market conditions are optimal.”

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