i dont understand all of them but if you see something you like please say - clearly with jack mas connections to bkash and to unctad ant finance is a network worth studying- i believe this is probably where ying lowrey's new book may be heading too but that would need some confirmation by mostofa amy and yuxuan; i am confident that ma will love sdg development zones and as i say his values and investment funding are led by DAMO
By Allan Tan | 2018-06-12
There is an old expression: a leopard cannot change its spots. I’d like to draw this expression to recent events at Ant Financial Services Group,
In October 2014, Alipay Financial Services announced that it was changing its name to Ant Financial Services Group. The name change was a reflection of the company’s intent to accelerate the development of financial services and become an even bigger player in China’s financial services industry.
To be fair, the change didn’t happen overnight – nor was the intent an overnight inspiration for Alibaba founder and executive chairman – Jack Ma. Ant Financial did make it clear that it would become a platform for the delivery of business services tailored to the individual smartphone user.
In a Reuters article, Ant Financial Chief Executive Lucy Peng was quoted as saying: “China has never been lacking in banks; it has 200 of them. But we have an opportunity to use Internet methods, Internet technology, Internet thinking to disrupt traditional finance.”
Plans to change its spots are afoot!
Kapronasia analyst, Felix Yang, in a blog post titled “Faith can move mountains, Ant too” reviews the company’s recent announcement of a shift in the company’s direction – from a financial services company to a technology company. The new technology company will provide technology services and solutions to banks and other financial institutions, with the basic technology building blocks of blockchain, AI, Security, IoT and Cloud (BASIC).
The change may be a reflection of what the company has already observed in 2017: Ant’s technology related services accounted for 30% of its total revenue while sales of financial products dropped.
Drivers of change
Yang said the transformation may actually be a reflection of what is happening in the industry – regulation catching up with technology. Citing unnamed sources, Reuters wrote that regulatory pressure on Ant’s core financial businesses, including payments, micro lending, credit rating and wealth management.
“As regulations on payment and online lending are getting tighter, becoming a tech provider seems like a sensible move for Ant’s future. For its financial business, Ant will seek cooperation with banks and other partners. Recently, Huabei, the consumer finance product of Alipay, opened its API to banks. As a result, banks and other outside financial institutions now get access to all the financial products on Ant Finance’s platform, including Yuebao (wealth management), Jiebei (consumer cash loan), and insurance products, etc. It shows Ant communicates well with the Chinese government,” said Yang.
2018 and beyond
Yang noted that Ant Financial continues its overseas expansion. The company is investing in local payment companies in Southeast Asia with the aim of connecting all the digital wallets in different countries to provide a global payment infrastructure.
This is not unique to Ant Financial. Hong Kong-based TNG Wallet CEO Alex Kong shared a similar business strategy for the Fintech in early 2017.
“It is a risky venture, but if they manage to pull it off, it will tackle many of the pain points in the global payment industry at the moment. It would be a boost for global MSMEs business by creating easier overseas purchase channels, allowing merchants to sell products overseas, and eventually, putting Ant in every corner of the world. To achieve this global footprint, Ant will need more capital to invest, which explains its IPO plan,” said Yang.
Will a change by Ant Financial to a technology company alter the course of banking in China? Hard to say at this stage! Ant Financial’s success may not all be good news for the company. According to Reuters, “the sprawling firm has amassed a range of financial licenses and has become a crucial part of China’s massive and vulnerable financial system. That has concerned regulators, who want to make sure that the growing size of Ant and other private financial firms do not present systemic problems to the Chinese economy should they fail, the sources said.”
The company is the only online financial services firm undergoing a trial program to test stricter regulations on financial holding conglomerates.
And it may be this “visibility” that has prompted the company to change its “spots”. A shift to a technology services company selling “white-labeled tech-first financial solutions” to traditional banks and financial institutions will allow it to focus on technology-led disruption while leaving incumbents to deal with regulation.
Who says you can’t have your cake and eat it too?