Alibaba Group Holding Ltd.’s financial affiliate has designs on becoming an all-round Chinese services juggernaut, and is willing to let investors join in as it takes on entrenched state-run institutions. The social security fund now has a 5% stake in Ant Financial.
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The investment amount was not disclosed, but it is landmark moment for China’s financial industry, where private internet companies like Alibaba are now competing against traditional state-owned banks such as Industrial and Commercial Bank of China-with the blessing of the central government.
Ant Financial operates China’s biggest money market fund, Yu’e Bao. The company has recently started to experiment with credit scoring, using criteria such as consumers’ online payment history to assess their credit worthiness.
While the opening of MYbank is no doubt a boost to the development of Ant Financial, the online bank is not the most valuable asset of the Alibaba empire. The credit agency, Sesame Credit, is seeking to expand services to banks, companies and embassies, Ant Financial said in a statement.
Ant Financial president Eric Jing was quoted by Bloomberg as saying, “We want to become the strongest growth engine for global Internet finance. We want to help more smaller businesses, consumers and partners and spark innovation”, Mr. Jing said. The approval of Mybank and Tencent’s Internet bank Webank, raised hopes that Beijing will accelerate reforms of its stodgy financing sector.
Jack Massachusetts says that he spun off Ant Financial from Alibaba in 2011 because of Chinese rules that were set to restrict foreign ownership of financial services entities.
The company also introduced “Le Ye Bao”, which allows businesses to buy insurance cover for staff at a relatively cheaper rate, said Jing, who was formerly Alipay’s chief financial officer. A year ago Alipay handled almost $800 billion in payment volume, while nearly 80% of the merchandise value ordered on Alibaba went through its payment processing service.
Ant Financial is now looking at foreign markets too, after confirming plans to offer financial services to other countries outside China.
Since, Ant Financial’s inception in 2004, it has grown to become the China’s largest online provider of financial services.
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Ant Financials is the world’s highest valued technology company, along with Xiaomi, and Uber; thanks to its investor’s support.
