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MALAYSIA, Focus Malaysia, 21 July 2017  HelloGold reduces barrier to entry for gold purchases

GOLD investments are considered to be one of the safest forms of investments owing to its ability to withstand market fluctuations and inflation.
Such investments through recognised and legitimate financial institutions are usually reserved for the high income market mainly due to expensive fees.

However, HelloGold Sdn Bhd CEO Robin Lee believes the lower and middle income group, which earns between RM30,000 and RM80,000 a year, can also capitalise on gold.

“I saw how high net-worth investors and corporates use gold to enhance their returns. I believe we could do the same for the masses in emerging markets,” he tells FocusM.

Lee is no stranger to the world of gold as he was formerly the chief financial officer of the World Gold Council for five years from 2010 where he was also the principal accounting officer for the world’s largest private gold fund with US$30 bil (RM129 bil) assets under management.

Today, his financial technology (fintech) startup HelloGold allows users to purchase gold through their smartphones for as low as RM1. The app, which was launched in November last year, has over 2,000 customers.

Lee notes three key problems among its target market include over-reliance on cash savings, lack of accessibility to personal credit and costly conventional remittance.

“I worked for the Securities Commission Malaysia during the 1997 Asian Financial Crisis and had first-hand account on how bad things can happen to good people.

“For someone earning the equivalent of US$1,500 a month, he woke up one morning earning the equivalent of US$700 a month due to extreme devaluation to the currency,” recalls Lee, adding that there is a need to diversify one’s savings portfolio.


Recognised international vault


Buying and selling gold for most of the middle income groups typically range from purchasing directly from jewellers or gold traders, or to some extent, opening a gold savings account with the bank.

“The typical smallest gold coin that a gold merchant offers is one gramme and has an associated premium of up to 40% above the prevailing gold price.

“In other words, the gold price would have to increase by 40% before the buyer could break even on his investment,” he explains.

For HelloGold, its customers purchase and own the allocated gold, which is fully insured and stored in a recognised international vault. The vault has the state-of-the-art security in Singapore by its bullion provider, Bullion Star International.

Lee expects his customers to keep their gold in Singapore as opposed to opting for the physical gold bars to be delivered to them as HelloGold offers instant gold remittance at no cost to the intended recipient.

So far, only five customers have over RM2,000 gold investment on HelloGold’s platform.

HelloGold reveals its customers have purchased over 1,520 grammes of gold as of July 11 and there is an average amount of RM400 in each account.

The company earns a fee each time a customer buys or sells gold through its platform; typically 2% of the transacted value. It also charges a 2% annual management fee.


Working with partners


To help customers access personal credit, HelloGold announced in April a collaborative agreement with Aeon Credit Service (M) Bhd to offer asset-backed personal financing products. Lee says further details of the product will be announced in the fourth quarter of the year.

“As customers will also be able to apply for loans from our partner by using the gold they have purchased as collateral, we will also receive a commission for every loan approved by our partner,” Lee adds.
HelloGold was selected to be part of The FinLab, Singapore’s first corporate fintech accelerator, last month.

The acceleration programme includes equity investment and mentorship from The FinLab, United Overseas Bank (UOB) and Singapore government-owned entrepreneurship enhancement entity SGInnovate.


Credible government fund


When asked whether the slow take-up of the company’s offerings is attributed to Malaysians being wary of another gold investment scheme, Lee believes customers should scrutinise any new business, not just gold.

“People are right to question the integrity of any new business, not just specific to gold but that of financial services.

“For us, we have one of the biggest banks in Southeast Asia [UOB] and a credible government fund backing us [SGInnovate], while partnering a reputable Japanese financial institution [Aeon Credit],” Lee points out.

In terms of how HelloGold regulates its business, Lee says there are two pertinent processes to its operations.

“Gold is not a regulated product under Bank Negara Malaysia regulations, hence we do not fall under the Banking and Financial Institutions Act 1989. Our approach is geared towards know-your-customer [KYC] and anti-money laundering,” he adds.

Lee explains that the KYC process executed by HelloGold requires customers who register on its platform to provide proper identification, namely a photograph of their MyKad which can only be shot using the in-app camera feature.

“Based on the amounts transacted, these transaction fall below the Anti-Money Laundering Act. Whenever we have any large deposits, we will query that,” he says.

Such was the case when a transaction of over RM10,000 was flagged by its system recently. Upon investigation, the amount deposited was from one of HelloGold’s investors who were keen to test the platform.

“We flag any figure above thousands as we [do not] have an idea of how our customers behave based on their profiles,” Lee says.

On business expansion, Lee says the company will be closing its Series A round of funding exercise by the end of this month. Funding received will be used to grow its reach domestically.

Beyond Malaysia, HelloGold is speaking to partners from the Middle East and Central Asia. However, growth will be focused on emerging Asean markets with a large pool of the middle income group.

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