Chinese online brokerage startup SoFi Hong kong, a company formed through the purchase of 8 Securities by US financial services firm Social Finance or SoFi, is planning to tap into the nation's younger traders through the release of enhanced app-based financial services.
SoFi Hong Kong announced that it will be rolling out new mobile app-based services using the platform developed by its California-based parent company. The services will include SoFi's fractional trading platform, which the company hopes will attract young Chinese traders in their 20s and 30s.
The company's executive chairman, Mathias Helleu, mentioned in a statement that SoFi's strong branding and experience should help SoFi Hong Kong better compete with Chinese tech giants, who are also now offering their own online wealth management and brokerage services. He added that younger traders in China remain underserved by traditional brokerage companies, which is where SoFi Hong Kong will come in.
Helleu explained that most traditional Chinese brokerages are not focused on young traders. Through the company's mobile-first strategy, it hopes to tap into that lucrative market. SoFi Hong Kong is also utilizing other strategies that are fit for young traders; this includes easy-to-use interfaces, lower minimums, and more affordable transaction fees when compared to traditional brokers. SoFi Hong Kong currently does not collect any commissions for trading US and Hong Kong stocks on its platform.
SoFi, which provides financial services such as student loan refinancing, mortgages, personal loans, investing, and banking in the US, acquired the Chinese firm for an undisclosed amount last month. The company and its services are not well known in Asia, but some of its particular services such as cryptocurrency and stock trading have begun to gain traction outside of the US.
The company's acquisition in Hong Kong was made after a series of closures among smaller brokerages in the city. Over the past 12 months up to March, a total of 35 small brokers had closed due to increasing technology and compliance costs and other factors such as the months of protests and the recent spread of the coronavirus pandemic.
While the months of shelter-in-place orders and lockdowns may have been bad news for traditional brokerages, the restrictions played in favor of SoFi Hong Kong's operations. The company revealed that the first three months of 2020 was its strongest quarter since its inception.
New account openings in March alone increased by more than five folds when compared to the same month in 2019. For the quarter, the company reported a total trading volume of more than $5 billion, also a five-fold jump when compared to the volumes recorded during its fourth quarter last year.
