May 15, 2020
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The “FinTech Leadership During the COVID-19 Crisis” is part of the video series brought to you by MEDICI Studio and FinStep Asia. In the second video Q&A of this series, Mikaal Abdulla, CEO & Co-Founder at 8 Securities, answers a few questions about how they are dealing with the COVID-19 pandemic as an organization and how one could emerge as a winner.
This video Q&A was held on April 17, 2020, and this video Q&A was hosted and moderated by Syed Musheer Ahmed – Managing Director of FinStep Asia, and Amit Goel – Founder of MEDICI.
Mikaal started with an introduction to his company, 8 Securities. The organization, which was launched in 2012, is a mobile-only investing app. They were Asia’s first robo-advisor and a zero-commission broker. He stated that the company had seen good growth and been through challenges but that it was nothing like the current situation.
Musheer: How has been in these challenging times, especially the unrest in Hong Kong, now followed by COVID-19 since January 2020, how is your product been doing considering its digital, it is also for investment, which tested downward during the time of crisis?
Mikaal: Yes, in many respects, we are fortunate to be a digital, mobile-only business. In our case, it's a bit sort of counterintuitive, but because our customers are investing, they see an opportunity in this market. We have seen 400% growth across all of our growth metrics – new accounts, deposits, turnover trades since Q4 of 2019. So, QoQ, the growth has been very, very big.
Amit: How do you compare this with the industry, generally? Because, when there is a crisis like this, people usually invest less. And, academically, everyone thinks that digital products would take-off during a crisis like this. So, between these two things, how do you see the industry doing right now?
Mikaal: On one hand, for anybody who is in B2B FinTech at the moment, it has got to be incredibly hard. Sales opportunities and projects have probably been ground to a halt. I think B2B is going to be difficult. From a consumer’s perspective, digital-only businesses – my peers in Hong Kong and other markets (Europe and the US) – are faring quite well. This is an opportunity for digital businesses to expand and grow.
I would say the one difficulty most digital businesses have, including ours, is this sort of internal battle that consumers have: “Can I trust this startup? Do I trust this startup with my money?” So, in some aspects, incumbents are probably also succeeding because people are moving money away from neobanks or neo-brokers and potentially moving it to incumbents. There is some friction now.
Amit: With regard to organizations, people are working from home and seem to be facing productivity issues. Some people say productivity has gone up, and some say it has gone down. The way the infrastructure has been set up is sometimes when things are happening within the physical and online work, but right now, what are the things that you have done? What changes do you see in terms of productivity and other organizational issues?
Mikaal: Well, ultimately, we are a technology company, so people are accustomed to working from home. We also have a young team with most people in their 20s. So, I think, communicating, getting business done on Slack is what we do in the office. I speak for many when I say it. I’d rather have conversations on Slack and not waste time in an in-person meeting. So for us, there hasn’t been that much impact. With all this going on in Hong Kong, we did have a period where everybody worked remotely. But, in areas where it is business as usual, I think in the next 12 months, we will probably do about $5 billion in transaction value for our clients. And, there was really no impact. So, we can do that with everyone from home. It is also a test that we passed. So, it has been good.
Musheer: What about compliance? You are a licensed organization at multiple levels. So, how have you been dealing with that? How has the regulatory response been when it comes to dealing with compliance issues?
Mikaal: In our case, we were proactively reaching out to the regulator and telling them we were moving to a BCP and that we were moving to a remote model. That communication comes to our responsible officer and compliance team. In that respect, it is important to be proactive. As long as the regulator is aware of what we are doing, it’s fine. And, the SFC (Securities and Futures Commission of Hong Kong) has been operating remotely as well. The model has been accepted across the industry at this time.
Musheer: You have been the CEO of the firm for nine years now. But this is probably a once-in-a-lifetime experience for quite a few people. How have you been leading this? What have been the senior management’s (and your own) principles and philosophy? And how have you handled it? Have you been more engaged? What have you been doing in this period?
Mikaal: It has been challenging because, as a leader, you have to be responsible for the entire team. And, everybody on that team is accepting this to a different degree. Some are taking it in stride. To others, it is incredibly worrying. As a leader, you have to see eye-to-eye with everyone in the organization and understand that everybody in that organization is perceiving and handling it very differently. In terms of challenge, it has been less on the business but more taxing on the leadership. But, by and large, we are getting through it – Hong Kong is a resilient city. I have lived in many places in my life, and no one takes a punch and bounces back better than Hong Kong.
Musheer: Do you have any tips for CEOs? You have kids – how have you been handling working from home and managing to lead your team of 50+ employees?
Mikaal: It isn’t easy. There is no question about it. My advice to other founders, especially of companies that are in an earlier stage than ours: this is going to be devastating to many companies. A lot of them won’t make it. I guess as it is, 90% of startups won’t make it. This (crisis) is going to accelerate that. But, by going through this experience, maybe their next company will be stronger and better off. But, I do think it is going to be a really difficult time for most founders. Those that do have a runway ahead of them, it is important to make the tough choices if that means cost-cutting, reducing the number of products you have, and focusing on the core. You have to make these tough decisions, and you have to make them now.
Musheer: In these tough times, there are many things that people are finding difficult to deal with; the same goes for both employers and employees globally. Is there something that you would like to offer with regard to being a mentor for internships or any other support systems for students? We’re running an internship program (MEDICI and FinStep Asia) for students globally by offering remote internships. I know you have been a mentor in the FT Slingshot program as well – it would be great to learn what you could offer to the community as a whole.
Mikaal: We have three interns coming on board this summer. Now, what’s that going to look like? I am not sure. It will depend on where we are with a work-from-home situation. We are certainly open to having more across the functions. It is an opportunity for people to learn. They’d be able to see how businesses are coping with the crisis.
Amit: I want to end this on a positive note – people say a lot of successful companies and startups emerge in the time of crisis. E.g., WhatsApp started in 2009. Cloudera, Slack, Square – a lot of these companies emerged in 2008 and 2009. Are we going to see something like that again around this time?
As part of his response to this query, Mikaal shared:
To hear Mikaal’s response to the above question, watch the full Q&A video here.