FINTECH LEADERS

ANT FINANCIAL

History

Ant Financial is a Fintech company founded in October 2014, it originated from Alipay which was founded in 2004.

Owned by Chinese e-commerce giant Alibaba, Ant Financial has market capitalisation of at least $60 billion, which makes it the most valuable Fintech in the world.

It’s CEO is Eric Jing. Ant Financial products are mainly their operation of electronic and mobile payment systems. It is most well known for Alipay, but it also operates one of the largest money market funds in the world.

Ant Financial has been known to have a very innovative use of technology and big data that has aided it's success. For instance, it provides small loans to Chinese citizens without a bank account. And they assesses a person’s creditworthiness based on his or her spending history and other data including friends' credit scores because Alipay is just so prevalent in China. So much so that it can be found from high class restaurants to wet market stalls.

Competition

It's biggest western competitor is Paypal. It was started in 1988 by parent company Ebay.

So why has Alipay succeeded?

While Paypal is minimalistic, Alipay capitalised on making it a daily tool for the Chinese as a replacement for cash on delivery payments.

-One of Chinese market’s main pain point is that very few people have credit cards.

-You have to apply for a Point of Sale System .

-Untrusted online sellers.

So, Alipay is free, easy to setup, you can accepting payment from anyone very quickly. And has the convenience without requiring people to have a credit card nor a PoS to process payments.

WECHAT

History

The application was launched in January 2011 by Tencent Holdings Ltd. Tencent, founded in 1998, has proved that it knows what China’s internet users want. It has shown this with popular games such as Arena of Valor and more recently, PUBG online.

WeChat was an instant hit; just over 400 days after its launch it already had 100 million users. In January 2013, the number of users had reached 300 million. By now, there are over 1 Billion active users, with WeChat being used in over 100 countries.

So why has WeChat payments grown so quickly?

It already had a base of users. Alipay had to fight to get users.

The sheer fact that WeChat users spend an average of 66 minutes on the app would also mean that they would have less reason to leave the app if there was a payment system built in.

Alipay's flaws and WeChat's success.

Alipay also loses out in more rural areas of China.

-Peopld don't use online shopping due to logistic costs which can be very high.

-However, these people living in more rural areas can still recognise the convenience that WeChat and WeChat payments can provide.

Ant Financial's Pushback.

That doesn't mean that Ant Financial is giving up. It recently signed a Declaration of Intent with the International Fund for Agricultural Development (IFAD) that stated that Ant Financial is geared toward advancing rural economic development to reduce rural poverty not just in China, but also in other developing countries. This means that Ant Financial will be helping out people living in rural communities by upgrading their technology.

'Cannot share to WeChat'

WeChat's Ban.

Necessity is the mother of invention and these two companies know that they have to fight to be on top or be left in the dust. WeChat has done so by banning the use of Alibaba apps such as their music app Xiami.

Tit for Tat

Alibaba responded by banning its customers from using Tencent Holdings’ popular WeChat mobile messaging app to do business on Alibaba sites such as Taobao.

This forces people to pick a side. WeChat or Alipay.

The Future Of Fintech and E-Payment

With these two Fintech giants competing to see who's going to be on top, it is no wonder why the Fintech industry in China is booming. As of now, it is hard to determine which of these two Fintech giants will one day rule the industry but we can only hope that their competition can only mean greatness and advancement for the industry, for the people of China and beyond.

Works Cited

Anderson, S. (2018, April 20). Alipay Mobile Payments May Make Rural Push With New Deal. Payment Week . Retrieved from https://paymentweek.com/2018-4-20-alipay-mobile-payments-may-make-rural-push-new-deal/

Brennan, M. (2017, April 25). 2017 WECHAT USER BEHAVIOR REPORT. China Channel. Retrieved from https://chinachannel.co/1017-wechat-report-users/

Brennan, M. (2018, March 8). One Billion Users And Counting -- What's Behind WeChat's Success?. Forbes. Retrieved from https://www.forbes.com/sites/outofasia/2018/03/08/one-billion-users-and-counting-whats-behind-wechats-success/#27299f61771f

Buckle, C. (2017, February 22). 1 in 3 use WeChat Pay in China. Global Web Index. Retrieved from https://blog.globalwebindex.com/chart-of-the-day/1-in-3-use-wechat-pay-in-china/

Company Profile. Ant Financial. Retrieved from https://www.antfin.com/index.htm?locale=en_us

Custer, C. (2015, February 4). War declared? WeChat is shutting out Alibaba’s apps. Tech in Asia. Retrieved from https://www.techinasia.com/war-declared-wechat-shutting-alibabas-thirdparty-apps

Hollander, R. (2018, March 6). WeChat has hit 1 billion monthly active users. Business Insider. Retrieved from http://www.businessinsider.com/wechat-has-hit-1-billion-monthly-active-users-2018-3/?IR=T

Knight, Will. (2017, June 16). Meet the Chinese Finance Giant That’s Secretly an AI Company. MIT Technology Review. Retrieved from https://www.technologyreview.com/s/608103/ant-financial-chinas-giant-of-mobile-payments-is-rethinking-finance-with-ai/

Mu, C. (2017, April). CHINA: WHY IS RURAL E-COMMERCE MARKET THE NEXT GOLD MINE?. L’Atelier. Retrieved from https://atelier.bnpparibas/en/retail/article/china-rural-e-commerce-market-gold-mine

Weinland, D., & Fei, S. (2018, April 14). China’s Ant Financial shows cashless is king. The Financial Times. Retrieved from https://www.ft.com/content/5033b53a-3eff-11e8-b9f9-de94fa33a81e

Yue, W. (2018, March 28).

Is Alibaba Losing To Tencent In China's Trillion-Dollar Payment War?. Forbes. Retrieved from https://www.forbes.com/sites/ywang/2018/03/28/is-alipay-losing-to-wechat-in-chinas-trillion-dollar-payment-war/#46c613068822

(2015, November 19). Alipay vs WeChat: War of Chinese Payments. Fintech Asia. Retrieved from http://www.fintechasia.net/alipay-vs-wechat-war-of-chinese-payments/

(2016). WeConquer: WeChat is turning its social network into a fintech empire. Nexchange. Retrieved from https://nexchange.com/article/5176

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