Ant Group, the parent company of Alipay, is on course to raise more than $34 billion in an IPO next month, and with perhaps a tenth of that sum being earmarked for cross-border expansion, finance brands in emerging markets will be bracing themselves for a possible shake-up.
Ant Group, says The Economist, “is the world’s purest example of the tremendous potential of digital finance”.
The most integrated fintech platform in the world, it offers digital payments, lending, asset management and insurance and has benefited from the network effect within China, which continues to account for 95% of its revenues.
And while there is still plenty of room for growth within China through cross-selling and upselling, future growth will surely come from overseas markets – and not just from offering Alipay services to Chinese tourists. The South China Morning Post cites sources close to Ant Group looking at recruiting another one billion users from emerging markets across Asia, Africa and the Middle East over the next 5-7 years.
Those are markets where Ant Group’s model can most easily be replicated – targeting payments services at individuals and small businesses without bank accounts while at the same time using the data it accumulates to inform its credit practices. (Crucially, Ant does not lend money itself but rather “originates” loans, which are then independently underwritten by partner financial institutions from which it collects “technology service fees”.)
IPO proceeds are likely to be directed into acquisitions and new partnerships, with consolidation seeming inevitable among payments start-ups.
The effect of the arrival of Ant Group can be gauged from a tie-up with Russian internet company Mail.ru to develop digital payment services for Russian users. The SCMP noted how the move had led Russian banks to rethink way they connect with younger clients, “amid fears they could lose a generation of customers to digital ecosystems”.
Ant Forest - gamifying tech for good
The Alipay Ant Forest project, launched on the company’s mobile app, rewards its users with “green energy points” each time they take a step to reduce their emissions, such as by biking to work, going paperless and buying sustainable products. These green energy points grow into a virtual tree on the user’s app add-in, which Alipay matches by planting a real tree or protecting a conservation area, in partnership with local NGOs.
As of mid-2020, over 550 million people had joined the Ant Forest initiative, planting over 220 million trees and avoiding 12 million tons of carbon emissions.
Sourced from South China Morning Post, The Economist, Reuters, WARC