Since the beginning of the year, coronavirus has gradually spread to the rest of the globe. By the end of April, the number of confirmed cases has almost reached 2.7 million.
While the coronavirus pandemic has most of the world staying at home, Taiwan has remained lockdown free and even reported zero new cases for three times within April. The name “Taiwan,” has appeared on multiple international media outlets as people are dying to know how a small island country of 23.78 million contained this highly infectious disease.
“Not only did the government mobilize quickly in response to the current coronavirus outbreak, but the people were also proactive about taking necessary steps,” said Amos Huang, the co-founder, and CEO of GDP Inc.
GDP (Global Digital Payments) is an Asia-based fintech company that assists the new economy sector and enterprises in financing loan and investment services. The company specializes in leveraging big data and data analysis techniques to evaluate the market valuation of a business.
With a well-established artificial intelligence (AI) background, ten years into the business, Huang realized that he could apply this technology to fields other than retail and e-commerce industries. Convinced that this technology will bring a breakthrough in the financial market, he and his friend, who specializes in big data, dived into this industry without a finance background.
Over the past few months, GDP Inc. has grown exponentially despite the coronavirus outbreak. PEZZALOAN, the cross-border payment platform released by GDP, achieved break-even in 3 months after launching. The platform is expected to reach $30 million in transaction value. According to Huang, the reason being as coronavirus gutting economies, Taiwan’s SMEs engaged in overseas operations are particularly looking for loan assistance.
Even though the Taiwanese government offers several stimulus packages to those affected by the pandemic, “it’s simply not enough.” While it’s possible to get by on such a meager amount, it won’t be enough for a corporate to survive in the long run.
With conventional loaning systems, borrowers must provide their cash flow or collateral to receive a loan. However, in a modern economy, where some companies might not have physical assets, it tends to be difficult for them when applying for a loan. It’s especially the case as the new economy in Taiwan rises.
For instance, an influencer with a million followers wants to get a loan, but the bank is unlikely to approve it because no function can analyze the value of the followers that person has.
“It’s only after founding this company when I realized that in protecting retail investors’ money, financial regulations are usually conservative and strict, which distinguishes itself from how the internet functions,” said Huang.
Huang said they believe that in the future, especially in an island of hi-tech industries like Taiwan, there will be more intangible assets, including digital content, patent, and AI. However, in the past, these assets aren’t properly evaluated. With that in mind, GDP commits to analyzing the valuation of their clients through data and match them with a suitable lender.
“This is an unprecedented method, especially in Asia,” said Huang. “There are a lot of P2P services, but rarely any uses data to evaluate their clients.”
Huang said that their service is especially suitable for e-commerce, advertising industry, application development, or live streaming. With GDP’s service, not only can the borrower match with a fitting lender based on the valuation of their intangible assets, but the lender can also be at ease as GDP would consistently check on the statuses of the borrower.
GDP’s next step is to expand to overseas markets. The company has already set up its overseas branches in Singapore, Japan, Hong Kong, and Phillippine. “We’re using our model in Taiwan as a demo, and hopefully, by the end of the year, we could copy it to our overseas branches,” Huang said.
The ultimate goal of GDP is to make cross-border lending available. Since every country has a different lending interest rate, investors who have a low capital cost may gain a good return on investment if they have the convenience to invest in other countries’ debt obligations.
Although GDP has undergone rapid growth in the past few months since the outbreak, Huang said they’re still taking things seriously at the company. “We’re stricter with cost control, but since we’re an internet company, we don’t have as much expenditure,” Huang said. Huang also pointed out that they’ve also implemented split operation, which splits the employees into two groups and has them come to work at different times. Due to the nature of its company and its web-savvy work culture, the employees of GDP feel content with a remote work lifestyle.
Huang further revealed that the government did not issue a split operation order amid coronavirus, it’s a more of a proactive response from the people. He said that many companies in Taiwan would share such information early on, so the companies would have a backup plan in mind when in need.
As an end note, Huang stated that in times like this, any company should implement the cash is king mindset because no one knows what will happen in the future.
“No one knows when the vaccination will be available, and even though it seemed like the outbreaks are slowing down, it’s possible to have a second wave in winter,” Huang noted. Corporates should limit their funding and save as much as they could. With investments, however, Huang said investors can consider other forms of investments.
Published on Kigyo Gaikyo May 2020
*Access Japanese version of this article here *