Jay KimDavid Rosa is the co-founder and CEO of Neat, a Hong Kong-based fintech company that gives small and medium-sized enterprises (SMEs) an alternative to traditional corporate banking. The company provides access to credit cards and traditional banking services as well as startup-tailored solutions.
David and I talked about the challenges in Hong Kong that Neat is trying to tackle and how its product works.
David Rosa, co-founder and CEO of Neat
Tell us about your background.
I have 20 years of experience in financial services. I spent 16 years working at Citigroup in New York, then I moved to London. I moved to Hong Kong about 17 years ago.
I used to be Citi’s youngest managing director in Asia, then I moved to the buy side of the business, setting up my own asset management company. I ended up selling that business three and a half years ago, which was also the time when I met Igor Wos, who is my co-founder and the chief technology officer of Neat.
Why tackle the problem that Neat tries to solve?
There are two primary reasons. One is an extreme level of frustration with technology in general, whether on the sell side or the buy side. I noticed that systems were patchworks of older M&A transactions, where rubber bands were put around them to make them work and attractive to one another. It was ridiculous.
On the buy side, there’s a leaner system – but still a legacy one. I thought the best way to go about it was to start from scratch with an entirely new stack.
The second reason is that I noticed the regulations weren’t changing, especially in the UK. The environment was very pro-competition, which was a byproduct of the 2008 financial crisis. That created ripple effects across regulators around the world.
Typically, Asia is a follower. And to me, these licensing for e-money, banking, etc. would come online pretty quickly – and they did. This is why we launched in this space – it was a big opportunity.
What exactly does Neat do?
Simply put, Neat is an alternative to a traditional bank account. From a regulatory point of view, we cannot call ourselves a bank. Instead, Neat is a purely digital solution where you can remotely open an account. It’s all online.
It takes 10 minutes to apply for a business account, then we verify the application within 48 hours. For a personal account, it only takes five minutes to apply on the app.
It’s nearly impossible to set up a bank account for businesses with no banking history in Hong Kong. How does Neat break through this challenge?
First of all, I think the word that is typically used in this context is “compliance.” That’s why it’s so difficult to open bank accounts for average SMEs and startups. And that’s not necessarily because your average company is dodgy. It’s because of the costs that a traditional bank has to incur to put that application form through its own compliance processes to onboard and maintain you.
Those costs are widely prohibitive, especially for younger companies. Let’s face it: these companies are not going to generate a lot of revenue for whoever banks them, so the unit economics just don’t stack up. It’s basically a money-losing business for a traditional bank. Couple that with the fact that Hong Kong is ranked as the freest market economy in the world.
