United Asia Finance: digital transformation in money lending
United Asia Finance (UA) is the biggest money lender in Hong Kong. Founded in 1993 by Managing Director and CEO Akihiro Nagahara, who introduced the concept of unsecured personal loans into the Hong Kong market in 1977, earning Nagahara the nickname ‘Father of Personal Loan of Hong Kong’. United Asia Finance is now the biggest finance company in Hong Kong, with the largest variety of all-round personal loan products and the most comprehensive online and offline channels, including the most extensive branch network of a total 49 branches located at different locations throughout Hong Kong.
Born in Taiwan, Nagahara joined a company after graduation in Tokyo in 1976. He initiated and helped to start up the consumer lending business for his company in Japan which turned out to be very successful. Despite not speaking Cantonese at that time, In 1977, Nagahara was dispatched to venture to Hong Kong by his boss at the time, bringing the idea of the unsecured personal loan to the city. He was able to do so thanks to the deposit-taking companies ordinance instituted in 1976, allowing an overseas company with a minimum capital of HK$2.8mn to set up JCF Finance in Hong Kong, . The personal loan business grew fast and successfully until being sold in 1990, at which time there were 30 branches.
In 1993, with investment by Allied Group, Nagahara opened United Asia Finance Limited, with profits recorded from the very first year. In 2007 the company achieved the milestone of expanding to mainland China, with the first branch opening at Shenzhen, thus becoming the first Hong Kong finance company to start a consumer finance business on the Mainland. Now, there are branches in 15 Chinese cities. Since 1995, ORIX Asia has been a shareholder, along with ITOCHU since 1996. In 2005, a majority stake in the company was acquired by Sun Hung Kai & Co. Limited from Allied Group.
Having recently celebrated its 25th anniversary, the company is gearing up to ward off the rise of virtual banks, as CIO Aaron Lee emphasises. “Keeping the business model competitive with virtual banks is the reason we have to be ready to transform for the digital generation.” A sentiment shared by Nagahara, the Fintech and Innovation Department was officially set up in January 2019 by UA, being the first and only such set-up with the commitment to keep up with technology in order to offer the best consumer loan services for customers.
Lee’s role actually comprises two complementary halves, as he explains. “My role is CIO at UAF, yet I supervise different responsibilities for the company. I oversee traditional IT functions and make sure the IT operation runs harmoniously, while simultaneously implementing digital strategies to enhance the competitiveness of our business to keep our leading position in the industry.”
One of these strategies consists of a move towards an “open consumer loan platform”, which in practice means providing greater transparency to customers and improving the access of third party services via APIs. “We have our API gateway to talk with our external business partners. Our organisation’s architecture is based around Kubernetes, and we’re setting up a new generation of on-line app, web and legacy applications using the Pivotal Container Service as an integration platform.”
UA has to remain on top of the requirements of respective statutory and regulatory government institutions of the industry, and the representative industry association (i.e. Licensed Money Lenders Association (LMLA)). “One example of the requirements is in customer information protection, because Hong Kong has very strong requirements regarding the handling of such information. Another is in anti-money laundering. The money lenders’ regulator has very detailed electronic Know Your Customer (EKYC) due diligence procedures.”
The EKYC requirement itself serves as an opportunity, as Lee explains. “In Hong Kong, we use the EKYC approval with a Hong Kong ID. As part of the licensing process, this Hong Kong ID card is associated with the likeness or image and then we can detect abnormalities or approve loans. We plan to launch the latest ‘Yes UA’ app in 2020 with the EKYC solution associated. We first launched the app in August, 2019, which was a huge success, significantly increasing our customer base by 23%.”
The philosophy underpinning the success of the app is based around ease of use. “We would like to use our online apps to enhance the ultimate convenience of the customer experience, and put the structure of loan processing purely online.” Hong Kong citizens are able to use the app with their Hong Kong ID card, even the newly-issued one for part of the population, with its embedded hologram.” says Lee. “The Hong Kong ID card is the key and eases the whole application process. You apply for the loan and then go through the application procedure to approval. Once that’s done you receive the money directly through the Faster Payment system, transferred to your account. Everything is done without annoyance to you.”
The approval part of the process relies on data, and Lee is overseeing the transformation in both the format of data UA collects and how it is analysed. “We are going to build up a 360-degree view of customer information.” Currently UA collects customer information for processing the loan, much of it from credit reference agency TransUnion. From this information, however, only the transaction data at the respective financial institution can be gleaned. “Traditionally we only get the loan-related information. We grab your financial data, your address, your name and so on, and then you apply for a loan. Then we’ll collect your financial information and consolidate it with the rest. We would like to know our customers more by referencing data derived from online channels, and we’re considering it a multi intelligence platform that we can use with our attribution customer data.” It’s a direction that Lee is hoping to further explore, collecting data from new and varied sources. “We would like to associate more of the social information with traditional customer information. Maybe we can understand our customer more from different aspects of their online behaviors like their online browsing. We would like to consolidate it together to build up that 360-degree view and offer the most suitable loan services for each single customer to best serve his financial needs.”
The complexity of such a system has required the support of a number of expert partners. “Because we would like to acquire more data, we use an enterprise scale database as our traditional database. Our relationship with Oracle has lasted over ten years, which is why we choose them as our transactional database and data warehouse platform.” Owing to the volumes of data created, UA has also found it necessary to move to the cloud. “As we convert data into a big data platform, we’re moving it to big PaaS players. Again, the relationship is there. While Oracle is our traditional database platform, we’re extending it to an object database meaning we can move all of our reasoning and other 360 degree data into a single platform.”
The transformation of its technology offerings is an ongoing process and is in service of retaining its prime position, as Lee emphasises. “In the coming three to five years, we aim to keep our leading status as the most influential and largest money lender in Hong Kong by further enhancing our capability. This is our vision. The feedback we have received for our technology has been very positive so far.”
Thanks to Akihiro Nagahara’s insight and understanding of the market with his rich experience, the products UA have pioneered will continue to serve it in good stead for the future, from debts consolidation loans to property owner’s loans to no show personal loans which can be processed entirely over the phone. In 2000, UA pioneered the “i-Money Internet Personal Loan”, becoming the first money lender to introduce online loan services in the market. The whole loan application, from approval to disbursement, could all be completed online without the need to show up in person.
The service motto of UA is to always offer caring and personalised services for customers. “We try to understand each customer that comes to us, their problems and needs, then our experienced staff will share professional advice with them regarding the options of the best loan solution plan to solve their problems, helping customers to let go of their worries and enjoy life again,” says Nagahara. “This humanised and caring approach, together with the pace we keep up with technology and the outside world makes UA different and outstanding, with the support and recognition of the public and customers for more than a quarter of a century in Hong Kong.”
Alongside this stand experienced and loyal staff and company service that puts the customer first, inspiring the slogan: “Let go of your worries. YES, UA!”