Travellers on the MRT these days may have noticed photos of a grinning film star, Henry Golding. Golding played a handsome heir in Crazy Rich Asians. The film, aired in 2018, put Singapore on the map. He is now promoting Chocolate Finance, a fintech app that encourages saving.
Crazy Rich Asians reversed decades of Hollywood stereotypes about Asia. Asians had often been portrayed as martial artists, such as Bruce Lee. In the film, the characters wear Rolex watches and drive Maseratis. The film featured a lunch at a Good Class Bungalow, where lobster and caviar were savoured.
Crazy Rich Asians is based on a novel by Kevin Kwan. Like his book’s characters, Kwan does not have to worry about his next meal. His great-grandfather, Oh Sian Guan, was the founder of Oversea-Chinese Banking Corp (OCBC).
Oh was a pioneer financier in Singapore. He started his career in the 1890s when banking was dominated by British institutions like Standard Chartered and HSBC. However, Asians in the city were reluctant to hand over their savings to those British banks as there was a cultural divide. In addition, the Chinese merchants had a tough time opening accounts in these banks.
Hoarding cash under mattresses was common. Some people handed over money to unlicensed saving associations. Oh changed that by amalgamating Chinese saving associations into a single bank. He helped create a bank that had the scale to welcome large savings from the Chinese community. The OCBC building that towers over Raffles Place was just a shophouse in 1919. OCBC gradually became a vast banking corporation with $581 billion in assets today.
Golding found fame through a book written by one of Oh’s descendants. In a strange twist, Golding may now power a similar change. Chocolate Finance is a fintech app that has taken Singapore by storm.
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Like OCBC in the last century, Chocolate Finance is making saving easier. It seeks to remove the friction between savers and financial institutions. Savings accounts in Singapore banks are guaranteed by the Singapore Deposit Insurance Corporation (SDIC). There are nearly $1 trillion in deposits. However, there are hidden costs. For instance, there are minimum deposit periods and penalties for early withdrawals.
Chocolate Finance was fully launched with the approval of the Monetary Authority of Singapore (MAS) a few months ago. It allows a customer to open an account in minutes through the app. There are no penalties and minimum holding periods. The deposits provide a return of 4.2% per annum for up to the first $20,000, which is about 40 basis points (bps) above the average savings deposit rate. Unlike savings deposits, Chocolate Finance deposits are investment products and are not guaranteed by SDIC.
Chocolate Finance is backed by Sequoia, Peak XV Partners and Prosus. These are top-tier venture capitalists. The venture capitalist business is a bit like the wedding in Crazy Rich Asians. Only the elite get invited to the prized deals.
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The app has had runaway success. Its assets under management (AUM) have swelled to $500 million in a few months.
The founder is Walter de Oude, a South African actuary. He was the force behind Singlife, which made insurance available to the masses through an app. Valued at $4.6 billion, Singlife was sold to Sumitomo.
Chocolate Finance is a fintech. The broad term includes companies that use technology to provide financial services. It includes payment giants like Stripe and Adyen and nimble players like MoneyHero.
Revolut, the big daddy among fintechs, will be listed on the London Stock Exchange. Revolut has 45 million customers that use it to send money across borders. It has morphed into a super app which provides lending and insurance. It is about to list at an indicative valuation of 23 times EV/Sales, placing it at US$45 billion ($57.6 billion).
The fintech sector was resilient in the 2022 tech meltdown when the average EV/Sales multiple fell from 30 times to 20 times. The multiples for other types of tech companies like Grab and Sea dropped by a much higher degree.
Chocolate Finance appears to have timed its launch well. The rate cut and the hunger for yield will be positive. The danger is if the established banks get into the act. That may take a while. Meanwhile, investors may get a small piece of the riches that the famous movie celebrated.
Nirgunan Tiruchelvam is head of consumer and internet at Aletheia Capital and author of Investing in the Covid Era. He does not hold any position in the stocks mentioned in this column. This column does not constitute investment advice of any kind
