Mikaal Abdulla was the co-founder and CEO of 8 Securities, a Hong Kong-based online broker that launched in 2011 as a B2C wealthtech chasing the young, mass affluent. The founders sold that business to US-based SoFi in 2020, and Abdulla worked to grow the SoFi brand and business in Asia.
The SoFi business in Asia expanded rapidly, thanks to the boost that Covid gave to digital financial services in general. Abdulla says the business in Asia grew fivefold over the next three years, in terms of number of customers as well as wallet size.
But not everything was smooth sailing; he had relocated in Singapore to launch a local office, which Covid also complicated, and he left in 2023, keen to return to the fray as an entrepreneur.
But he wasn’t keen to repeat his experience as a startup co-founder. “8 was a VC-backed startup, which meant our decisions were reactive,” he told DigFin. “The priority was always to raise more money, not to grow the business.”
Reconnecting to Boom
He drew upon an even deeper history on the front lines of online brokerage, as head of Asia at E*Trade, a position he took up in 2007. He knew from that experience that E*Trade had become the first online broker in Asia back in the late 1990s, narrowly beating a local startup for the honor.
That local competitor was Boom Securities, founded in 1997 by Mark Duff and Jonathan Hakim as a dot.com-era pioneer. The business continued to operate after being acquired in 2010 by Japan’s Monex Group.
Abdulla, still in touch with some of the Boom staff (who had worked with him at E*Trade) knew the Monex management was keen to refocus their attention on the Japanese market. He and a partner (whose name he declined to divulge), behind an investment group called Ignition Holdings, entered into talks with Monex to buy the Boom brand and business.
Mature broker
Abdulla would not disclose terms of the sale. But he has acquired a mature online business with an older, wealthy clientele. He says Boom’s churn rate is only 1 percent, compared to 15 percent for most online brokers. Many of the people who first tried out an online broker in the 1990s and 2000s are still customers.
“Our customers are literally the first adopters of online broking,” he said. “And they’ve grown up.” The company manages $2 billion of customer assets; the average customer balance is $100,000, against the market average of $30,000, he said. “We’re not a private bank but we cater to high-net-worth individuals who are comfortable self-directing online.”
He could have jumped back into startup mode, but the field has become crowded. Mainland players Futu Securities and Tiger Brokers have become leaders for the mass affluent, while SoFi has become a large player and new, deep-pocketed entrants such WeBull and Robinhood from the US are jostling for market share.
Customer costs
Because those online brokers are fighting over the Zoomers and Millennials, they need scale. That has to come from geographic expansion as well as a broad product set – and expensive marketing offers. Within Hong Kong the market is about 2 million people.
That’s not a big pool considering online brokers chasing the mass affluent and the young need 100,000 to 200,000 customers to survive. Abdulla says the industry norm in Hong Kong requires three years to make a single customer reach break-even, as up-front marketing and promotion costs around $600 for a customer that brings in $200 or less of revenues a year.
Boom’s customers, however, return on average $1,000 a year of profit. They are a dependable group who aren’t interested in the kind of promotions that other brokers need to push to gain market share. That means they are both more lucrative customers on the top line who cost far less to acquire and keep.
Given that advantage, Abdulla intends to stay focused on the Hong Kong market instead of chasing new markets, with all the overhead and other expenses such a move would require.
Close competitors?
The business is highly profitable, he says. Unlike most startups, Boom in its early years built its entire tech stack to manage a multi-market, multi-currency investment business. This means it operates on a lean staff of 38 people, so out of every new client dollar, about 70 cents goes to earnings.
Its closest competitor is Interactive Brokers, but Abdulla says IB caters to aggressive, professional investors who like to trade, whereas Boom is focused on conservative, buy-and-hold clients.
E*Trade and Charles Schwab are comparable businesses that are also active in Hong Kong. Despite their bigger size and broader offering, Boom has managed to survive in Hong Kong with a local touch.
Abdulla says the company’s real competitors are banks, but as a native online business, Boom outcompetes them on digital service.
Virtual assets
That may be changing. He also considers ZA Bank a competitor – now that he intends to take Boom into the digital-asset space. The company has just received approval from the Securities and Futures Commission to offer virtual assets to its customers.
“Our investors are accredited,” he said. “We have no interest in becoming a crypto exchange, but we will consolidate equities, crypto and tokenized equities under one roof.”
He says this will be a big differentiator versus the other online brokers, because their retail investors aren’t rich enough to count as professional investors, limiting what those platforms can offer. “I could never have done this at 8 Securities,” he said.
But Abdulla says Boom will not be dipping aggressively into DeFi or offering memecoins and the like. The customer base is still buy-and-hold, probably more interested in the tokenization of securities and fractionalized access to new asset classes. Abdulla says Boom will stick with exchange-traded products, and avoid private-equity or other alternative funds and fractionalization schemes.
He sees virtual assets as critical because Hong Kong equities declined in value from 2021 to 2024. The market has recovered, delivering a strong 2024, but many investors moved into crypto to seek returns. Hence players like ZA Bank have catered to this need.
Although Abdulla is counting on virtual assets to drive growth, he says he is not interested in pursuing the growth-at-all-costs model of a VC-backed startup.
“We could raise outside capital and go faster, but we don’t need to grow 100 or 200 percent, like we did at 8 Securities,” he said. “We can grow by 20 to 30 percent annually by growing our assets or our accounts.”
Recalling the life of a startup founder relentlessly chasing VC funding, he says the slower, more established path means his team can think more strategically. They can take decisions over a two- or three-year span, instead of two or three months. “Patience is a strategic asset,” he said.
