Background

In February 2019, together with Robert Collins, I wrote a blogpost titled “FinsurTech – the future of diversified InsurTech” to document a growing observation that top tier InsurTech firms are foraying into the broader world of finance either through partnerships or directly.

Since then, several announcements have been made in Asia which demonstrate that the intersection between InsurTech and FinTech is growing. In this article, I will share some of my observations and thoughts regarding this growing trend by way of few examples from Singapore, China and India.

I. Singlife

The Singapore headquartered neo-insurer closed a $90M Series C funding round on 1st July 2019 [1]. This announcement was quick follow-up to a previous $33M capital infusion in January 2019 [2] by Aflac Investments and Aberdeen Standard Investments.

The company, today valued at $360M [3], acquired a license from the MAS in 2017 and began selling life insurance policies after buying Zurich Insurance’s Singapore business. The firm has forayed beyond life insurance into health insurance; specifically, Singlife recently launched a cancer insurance product [4].

Singlife and FinTech

Acquisition of Canvas by YoloPay

In February 2019, Singlife paid $2M to acquire Canvas by YoloPay – a pre-paid debit card for children together with the capability for parents to track spending. A YoloPay MD was hired to head up Singlife’s FinTech unit.

At the time of the announcement, I had a hypothesis in my personal InsurTech blog that this could be the first step towards securing a digital banking license in Singapore (at that time, Hong Kong was issuing licenses and Singapore wasn’t; in retrospect, it seems Singapore moved faster than I anticipated and has already issued digital banking licenses – Singlife wasn’t on that list!)

Why did Singlife acquire Canvas? In my opinion,

• Data to build customer profiles: By owning the payment mechanism (card), Singlife can learn about the customer based off spending habits (could be insightful important for life and health insurance). Here, I’m assuming Canvas will expand beyond a pre-paid debit card into a full-fledged debit/credit card (either by acquisition, partnership or organic growth).
• Increased customer touchpoints: Insurance companies struggle to establish deep relationships with their customer because of inadequate customer touchpoints (only renewals and claims); providing a payments card creates a daily touchpoint which could create brand awareness and affinity.
• Alternative customer acquisition tool: Payment “platforms” such as Paytm and MobiKwik acquire customers by offering payments solutions and (theoretically) increase their contribution margin by selling insurance and finance products.

In February 19, in my person blog, I had commented: Given that some life insurance products have a savings component, it is not hard to see Singlife offer a payments service (using Canvas as a prototype) to acquire customers and then up-sell its insurance products!

Launch of Visa branded debit card

After reading the above section, it shouldn’t surprise you that SingLife has launched a co-branded debit card with global payments processor Visa. The waiting list for customers in Singapore is now open; this announcement was coupled with a rebranding from “Singapore Life” to “SingLife”.

Naturally, SingLife will face challenges such as securing regulatory licenses (should they choose to go down the digital bank route), competition in the low-mid income segment from the rise of super-apps in SE Asia and a few others mentioned here.

Regardless, I remain optimistic regarding Singlife’s progress with its expansion through SE Asia and with the development of FinTech offerings; see the LinkedIn post from Walter (CEO of Singlife) below:

Participation in Railsbank Series A funding round

Railsbank is a London-based open banking and RegTech (regulatory technology) firm; Singlife was an investor in its recent $10M Series A funding round [5]. Railsbank offers a set of APIs for financial services to be used by developers and product managers.

Why did Singlife invest into Railsbank? In my opinion,

• As Singlife looks to expand out into SE Asia, it may choose to integrate with channel partners (specifically super-apps like Grab, GoJek etc) to offer its insurance products; Railsbank might be the answer to integration problems.
• The APIs provided by Railsbank might accelerate the development of an in-house FinTech platform or other finance related offerings by Singlife.

II. ZhongAn

Hong Kong listed ZhongAn was founded in 2013 as a joint venture between Ping An, Tencent and Alibaba. The firm is widely known for its e-commerce insurance offering (high volume low premium policies for shipping returns); the firm wrote 100M policies during Alibaba’s Singles’ Day.

Although the firm is classified as an InsurTech or in some cases, an online insurance company, ZhongAn has invested heavily into technology outside of insurance; through its subsidiary ZhongAn Technology, it offers:

• “T-series” – blockchain solutions (ZhongAn offered the first insurance policy backed token in October 2018 [6]).
• “S-series” – InsurTech solutions (ZhongAn Technology has partnered with Grab in SE Asia to provide the infrastructure to build an insurance marketplace [7]; Grab also partnered with Ping An Good Doctor to build this ecosystem [8]).

However, in this article, I will focus on:

• “F-series” – FinTech solutions

ZhongAn Virtual Bank

In March 2019, ZhongAn International (a subsidiary of ZhongAn) was one of the 9 entities to be granted a digital banking license by the Hong Kong Monetary Authority [9]. This license was issued jointly to ZhongAn International and Sinolink.

Whilst this announcement came as a surprise to many observers, this was a result of conveniently overlooking the “F-series” offering by ZhongAn Technology.

There are some salient features of ZhongAn Virtual Bank:

• Security – The bank will utilize privacy preserving techniques (cryptography/blockchain, however you like to refer to it) developed by ZhongAn Technology.
• Insurance offerings – The bank will have an unnatural advantage in this regard (due to its parent entity). Specifically, in an interview, Wayne Zu, President at ZhongAn, stated that ZA Virtual Bank will focus on credit insurance – an area of expertise for the company given its e-commerce related insurance offerings [10].
• Focus on lending – Lending is a core module in the “F Series” offering by ZhongAn Technology and is a primary banking activity. I would expect the bank to offer personalized interest rates to SMEs based on a discussion at a CB Insights event in 2018. [11]

In March 2019, it was expected that ZA Virtual Bank would be live within 6 to 9 months; the clock is ticking (for HSBC and other rivals!)

III. Ping An

The poster child for global insurance innovation, Ping An was founded in 1988, although the firm is labeled as an insurance incumbent, I would argue they are an InsurTech firm rather than an insurance company for the following reasons:

• Five ecosystem vision as described by Co-CEO Jessica Tan during a McKinsey China interview (December 2018) [12]
• $1bn earmarked for technology investment for FY 20 (roughly 1% of Ping An Group’s revenue) as per Ping An’s latest financial report for H1 2019 [13]

Beyond insurance, Ping An Group has two ventures that are often overlooked (sadly):

• Good Doctor – Ping An’s HealthTech venture which is listed in Hong Kong which has 62.7M MAU as report in its H1 2019 financial report [14]; expect this number to grow significantly as Good Doctor has partnered with Grab in SE Asia.
• OneConnect – Ping An’s FinTech venture which I will focus on in this article; OneConnect is rumored to be lining up for a $1bn IPO in Hong Kong later this year [15].

Ping An OneConnect

Hong Kong digital bank

It seems InsurTech firms in China are gravitating towards Hong Kong – ZhongAn was not the only China headquartered insurance company to secure a digital banking license – OneConnect secured a license in the same batch!

The Hong Kong digital bank will mark a shift in OneConnect’s strategy from being a FinTech SaaS provider to becoming a full stack licensed entity. Some observations regarding OneConnect and its proposed digital bank:

• Biometric authentication: OneConnect has built an AI module for facial recognition which has 99.8% accuracy – could this be their primary differentiator – biometric payments authentication v/s PIN based authentication? [16]
• Privacy: OneConnect has built eTradeConnect – a blockchain based trade finance solution backed by the HKMA [17]; with in-house cryptographers, OneConnect could offer similar privacy preserving features as ZhongAn.
• FinTech solutions for SMEs: In addition to OneConnect’s trade finance experience, the firm has partnered with Union Bank (Philippines) to co-create a blockchain based financing platform for MSMEs [18]. Could this experience translate to retail lending?

A dynamic to watch out for is how OneConnect and ZhongAn roll out their Hong Kong digital banking propositions – will they compete aggressively on lending and privacy or will they go down different paths; I’d love to hear your thoughts!

finleap partnership – voyage into Europe

finleap is a financial services infrastructure provider based in Berlin; neo-insurer Element Insurance is a spin-off from finleap. The company caught everyone’s attention in November 2018 following an $47M funding round led by Ping An’s Global Voyager Fund (Ping An’s $1bn venture arm) [19]

It appears that the finleap investment is strategic in nature given the announcement in August that finleap will distribute OneConnect’s FinTech products [20]. There was a specific mention that OneConnect is keen to distribute it’s OCR (optical character recognition) and biometric recognition capabilities.

It is early days for OneConnect’s venture into the European Fintech ecosystem; as a side note, I find it very interesting how Ping An called its CVC “Global Voyager Fund” – seems like Ping An’s “voyage” beyond China has just begun – I’ve been contemplating about a detailed blogpost on this subject – if you think it’s interesting do drop me a line!

Note: Ping An’s OneConnect unit is considering applying for a license under Singapore’s proposed digital banking regime [21]; if nothing else, you have to give credit where it’s due – “insurance incumbent” Ping An is a trailblazer in both the InsurTech and FinTech ecosystem.

IV. Examples from India

There are a few emerging examples of the intersection between InsurTech and Fintech in India. Since these examples are recent and primarily partnerships, I’ve chosen to combine them into a single section.

• Credit Insurance: Acko Insurance, a neo-insurer, partnered with FinTech ZestMoney to offer credit insurance. ZestMoney offers EMI (East Monthly Installment) payment options to retail customers; the credit insurance offering by Acko covers non-payment of EMIs due to hospitalization, critical illness and other conditions [22].
• Small ticket insurance: True Balance is a FinTech platform focused on Tier 2 and Tier 3 cities in India; together with the InsurTech Toffee Insurance, it has launched dengue insurance, Kamai Bachao Yojna (savings plan) and other small ticket insurance products [23].

Closing words

In this brief article, I have highlighted some examples of the intersection between FinTech and InsurTech; the key messages I’d like to drive home are:

• Do not look at InsurTech and FinTech in isolation – the world of finance includes insurance; Robert Collins uses the phrase “FinsurTech” to refer to InsurTech firms (like Singlife, Ping An and ZhongAn) who are diversifying beyond insurance into finance (i.e. FinTech).
• Top-tier InsurTech firms in Asia are looking beyond insurance – this article looked at some examples of this growing trend.

Whilst the convergence between InsurTech and Fintech may be apparent from this article; would you prefer to read further about this convergence or have me explore the intersection between InsurTech and HealthTech in next week’s article?

Disclaimer

Views expressed in this article are my own and do not represent those of Accenture, its management, its employees or its affiliates.

This article does not constitute investment or any other form advice. The author bears no responsibility in the event of financial or other loss arising from actions taken by the reader or any related party on the basis of information represented in this article. The author does have any financial interest in any firm mentioned in the article above; this article is produced for educational purposes.

For any further queries or complaints, kindly email me at rahul.j.mathur@gmail.com

About the author

Rahul is a Consulting Analyst at Accenture. Prior to Accenture, he was an Insurance Product Manager at Laka Insurance, a London headquartered early stage InsurTech start-up which recently won at the British Insurance Awards 2019. He spent his childhood in Mumbai, India and holds a master’s degree in Statistics from the University of Warwick.

As an Ambassador at the Asia InsurTech podcast, he has a keen interest in the InsurTech ecosystem in Asia. If you found this article interesting, feel free to reach out via LinkedIn or Twitter. Any comments, feedback or constructive criticism is welcome.