Ant Financial: A $150 billion "Fintech" Leader

 Photo by  Christine Roy

Photo by Christine Roy

  • Last week, as China-based Ant Financial raised about US$14 billion in its latest round of financing (valuing the company at about US$150 billion), Eric Jing, the firm’s CEO said “We are dedicated to building an open ecosystem with all our partners in China and beyond. We will continue to invest in technology and innovation in order to serve unmet financial needs of people everywhere and to enable them to benefit from the development of the digital economy.”
  • Investors participating in the financing included GIC and Temasek (Government of Singapore), Khazanah Nasional Berhad (Government of Malaysia), Warburg Pincus, Canada Pension Plan, Silver Lake, General Atlantic, T. Rowe Price and Carlyle Group
  • As various media sources suggested that Ant Financial is the world largest “fintech” player, the company’s website highlighted its technology focus in areas including: 1) using big data in loan processing and credit scoring, 2) developing biometric-based facial recognition technology for use in online identity authentication, 3) providing its Ant Financial Cloud platform to help financial institutions build more stable, safer, cheaper and more efficient financial-level applications, 4) using “Risk Control” technology to support rapid and secure handling of payment service requests and 5) applying artificial intelligence to various customer service and insurance claims processing services.
  • NOTES: Ant Financial: 1) was spun out of Alibaba Group in 2011, 2) has about 870 million users globally, and 3) has business partners in India, Thailand, the Republic of Korea, the Philippines, Indonesia, Hong Kong, Malaysia, Pakistan and Bangladesh.

 MY TAKE

  • To provide context to Ant Financial’s US$150 billion valuation, consider market caps of several publicly traded financial players: JP Morgan: $375 billion, Bank of America: $303 billion, Visa: $307 million, Mastercard $212 billion, Citi Group: $175 billion, Morgan Stanley $91 billion, Banco Santander: $88 billion Goldman Sachs: $87 billion, Credit Suisse:$39 billion. Also, Alibaba Group’s market cap is US$ 537 billion.
  • Given that financial services, at its core, is an information processing business; traditional financial institutions will increasingly face competitive challenges from technology driven firms, which in China includes Alibaba/Ant Financial; Baidu/Du Xiao Man,Tencent/WeChat Pay and JD.com.
  • As Walter Wriston (former Citibank CEO and early Fintech pioneer) said “Information about money has become almost as important as money itself.”

 

FPM Team