CXA Group's Koo: We are the tech company that enables banks to change

If Rosaline Chow Koo, founder and CEO of CXA Group (CXA), has it her way, more companies, especially the small and medium enterprises (SMEs), and their workers will pay less and get more out of their employee benefits and corporate healthcare plans.

She founded CXA in 2013 as a one-stop, self-service flexible benefits and healthcare platform that allows employers to give their employees access to a wide range of health, wealth and wellness offerings, personalised based on the individual's health and life-stage data.

 In March 2019, the company raised $25 million in bridge funding as part of its latest expansion plan which it hopes will eventually see it join the league of unicorn platforms. Strategic Investors that provided the funding include HSBC, Singtel Innov8, Telkom Indonesia MDI Ventures, Sumitomo Corporation Equity Asia, Muang Thai Fuchsia Ventures, Humanica and Heritas Venture Fund

More significantly, this group of investors represents a new and potentially potent avenue to acquire new users that will vastly accelerate the company’s growth across Asia Pacific.

A closed and pre-funded network

The Singapore-based start-up insurtech company is looking to closely collaborate with the partners to design customised platform-led solutions for their B2B (business-to-business) enterprise customers, as well as the employees of the enterprises.

“One of the requirements for our strategic partners to come onboard as investors is that they have to license our platform. We white-label our solutions to their enterprise customers,” she elaborated.

“The partners will front the platform that their customers will see and use, it will not be CXA. We are just the tech company that will enable them to change. They will own the data and leverage our analytics engines to personalise and offer relevant solutions,” she added.

Koo shared that the platform offers exciting opportunities for growth because it operates as part of a closed and pre-funded network. Companies typically set aside a fixed part of their annual human resources budget – average of around 6% in Asia, for their employee benefits programmes which they have to spend within the year.

More crucially the inherent inefficiencies in the delivery model of incumbent players mean that there are opportunities to eliminate costs and improve margins. It becomes a powerful value proposition when a provider can offer a significantly lower cost or much more value-added solution.

“The key value proposition is when you can say, ‘this will cost you less than your former system or what your third-party administrator costs you’,” she quipped.

How it started

Koo had previously worked at Bankers Trust Company in her native New York before she moved with her husband to Singapore in 1996 to start a family. She subsequently joined the flexible benefits sector and headed Mercer Marsh Benefits in 14 countries and markets across Asia Pacific. She grew its revenue eight folds to about $1 billion in annual premiums, making it one of the leading third-party benefits administrators and insurance brokers in the region.

However, she saw the proverbial writing on the wall. The business was largely antiquated, paper-based, inefficient and undifferentiated. Everyone was offered and received a “one-size-fits-all” solution, and brokers did not add much value.

She saw that the existing business model could either be transformed or be disrupted by technology. But her warning to her bosses then to change felt on deaf ears.

True to her conviction, she left Mercer shortly after, and with $10 million of her family savings and money she had raised she started CXA. In a sense, it was fuelled by a desire to vindicate her vision of transforming the benefits administration and brokerage business. 

The company started with three Fortune 500 clients in the technology, financial services and manufacturing sectors. To access the insurance brokerage business, it needed a licence and so, acquired Pan Resources, then Singapore’s largest employee benefits broker. She transformed it into a digital broker and merged it into CXA.

Along the way, CXA bought other brokerages as it entered new markets such as Hong Kong and China. It established a partnership with Fosun and Howden to expand to 20 cities across Asia. It also acquired Shanghai and Beijing licences and Medi-Plus, one of the largest medical check-up aggregators in China.

Between 2015 and 2017, it raised a total of $33 million from two rounds of series A and B financing.  Today, the company has grown its corporate client base to 600 with over 400,000 users. It achieved revenue growth of 65% in 2018 and is expected to double that and be profitable by the end of 2019. The company is now valued at $100 million, albeit Koo wishes it to reach the size of a “unicorn”  in order to achieve long-term scale and sustainability.

Enabling banks to go beyond banking

At the same time enabling technologies in AI and APIs have become available to improve access for customers and users, to better analyse differences in behaviours, profiles and to predict needs, as well as to streamline and automate processes.

“The insurance companies never built the technology, neither did the banks. But we were not interested in disrupting them. We only wanted to disrupt the brokers and third-party administrators who did not add value,” Koo said.

So, banks can now use CXA’s technology to bring down the cost of administration, acquisition, and of healthcare itself by removing all the layers.

“They can go beyond banking, provide access to health, protection and lifestyle solutions to the employees of their enterprise customers,” she continued, “and they have the data to cross-sell loans – auto, mortgages, retirement, savings, wealth.”

Employees can purchase offerings by drawing down on existing insurance policies provided by their employers and using funds that are then released into the platform's eWallet to make transactions.

“It is a fixed wallet and the employees control it, they are personally responsible. This is also how we monetise the value of the services. We provide a wide range of services and options. They can use it on doctors, Teladoc, e-pharmacy, health screeners, wellness and chronic disease management. The aim is that they get heathier and yet save money,” remarked Koo.

Beyond that, Koo said that through the aggregation, anonymisation and analysis of digitised health and life-stage data, CXA helps employers get to the root cause of their workers’ health issues and design specific interventions - such as corporate wellness and disease management initiatives.

In addition, the benefits extend beyond employees’ current employment. For employees who have left a particular company, they can continue to use the platform by converting from company to individual insurance and continue to enjoy the services that they have been using.

Why compete with banks and insurers?

Koo is excited about the prospect of collaborating with the global banks and insurers that have become strategic partners. She does not see them as competitors.

“Why would I compete with them? The bank has 350,000 enterprise employers and we are their tech platform to connect to the whole health ecosystem.  We are also their sales and automation engines. We have 600 corporate customers and 400,000 users now, which I got one by one over the last six years. Why wouldn’t I leverage off them? To bring the platform across the region and world? What is the alternative? To go knock door to door?” she explained.

Koo acknowledges that to succeed, the ability to execute well and scale fast; the speed of execution, is key. Which is one of the reasons why she picked banking partners which have their own insurance business to be strategic investors.

“We noticed a trend. Banks without their own insurance business have a difficult time negotiating with outside insurers. Who shares what costs? Who shares what revenue? Those discussions can take years. Those that own their insurer move really fast because they are aligned. There’s no three-party negotiation,” she stressed.

Will the platform be disrupted?

What about being disrupted by other platform players, is she concerned about tech companies encroaching into the space?

“I have to navigate through many different elements; banks, insurers, agents, brokers, third-party administrators, healthcare providers, corporate HR. But, if I came from the inside of all those firms, it is easier. That is why I don’t think a tech company can come and invade this space because how will they navigate around a bank, an insurer, the healthcare network and HR. Only domain experts can,” she asserted.

Nevertheless, in the US where healthcare and medical insurance have become an acute social and political problem, Amazon and Warren Buffet owned investment vehicle, Berkshire Hathaway, together with JPMorgan Chase recently announced the launch of a joint venture called Haven that aims to improve access to primary health care, simplify insurance and make prescription drugs more affordable. It will start by targeting the 1.3 million employees and families of these three organisations.

In China, leading insurer, Ping An, introduced Ping An Good Doctor, a one-stop healthcare ecosystem platform that provides family doctor, consumer healthcare, health management and wellness services, as well as a health mall, to about 265 million registered Chinese consumers and made almost $483 million (RMB 3.34 billion) in revenue in 2018.

While it may still be far from being a crowded space, yet the pace of competition and innovation in the healthcare platform business will surely pick up. It will be intriguing to track CXA’s expansion journey against the Chinese and American tech giants and becoming a unicorn platform itself.

Rosaline Chow Koo will be speaking at the Future of Finance Summit 2019