The Rise of Ant Financial

The Rise of Ant Financial

DAN CHEN (301322243) ECON425

What is Ant Financial?

Rethink The Incumbent-Enterant game...

• Started as a third party payment intermediary between buyers and sellers online

To remain its domination in the industry,

Incumbent could:

• Increase the fixed cost (e.g. increasing the production capacity/the quality of services)

• Alibaba buys and finally owns 80% of its stock right (Vertical Merger)

• Diversify its services and products(e.g. building a full ecosystem)

• Rebranded as Ant Financial Service at 2014, providing multiple types of financial service

As a result...

Ant Financial Service remain a leader in the industry.

Challenges

1. Government Restrctions

Chinese government announces certain stricter regulations for Ant Financial.

• Plan to own the stake of the company to upervise their operations => reduces the growth rate of the company with the restricted ownership structures.

• Limits the amount of daily transactions => requires the company to have more capitals for the operating activities.

A Complete financial ecosystem

SESAME CREDIT

Core Financial Services

• Payment Platform

Real-name registration

ALIPAY

Reference

• Wealth Management Platform

• Identification card is reqiured

YUEBAO

Calculated by a complicated algorithm

• Credit Reference

• based on five factors

• unbiased result

SESAME CREDIT

• Consumer Finance

Information from big data

ANT CHECK LATER

• Purchasing preference, etc. from Taobao

ANT MICRO LOAN

Privacy protection

• Insurance Platform

• monitored by government

ZHONGAN INSURANCE

Acquaye, A. (2017). Why Sustainability is Important in Business. Kent Business Matters. Publishers: University of Kent. Retrieved from: https://blogs.kent.ac.uk/kent-business-matters/2017/05/22/why-sustainability-is-important-in-business/

Angrymoo. (2017). A Quick Guie to China's Sesame Credit. Retrieved from Angrymoo: https://angrymoo.com/sesame-credit-summary/

Ant Financial. (2018). Bring the world equal opportunities. Retrieved from ANT FINANCIAL: https://www.antfin.com/index.htm?locale=en_US

Asean. (2017). Local acquisitions – Alibaba and Ant Financials’ choice of expansion in Asean. Asean Today. Retrieved from https://www.aseantoday.com/2017/12/how-alibaba-and-ant-financial-increase-their-presence-in-asean/

Aulakh, G. (2015). Alibaba, Ant Financial invest about $680 million in Paytm, up stake to 40%. The Economic Times. Retrieved from: https://economictimes.indiatimes.com/industry/banking/finance/banking/alibaba-ant-financial-invest-about-680-million-in-paytm-up-stake-to-40/articleshow/49148651.cms

Bhasin, H. (2018). 7 reasons diversification strategy is better in the long run. Marketing91. Retrieved from: https://www.marketing91.com/diversification-strategy-better/.

Bloomberg (2018). China's Got Jack Ma's Finance Giant in Its Crosshairs. Retrieved from: https://www.bloomberg.com/news/articles/2018-05-20/amazon-helps-shenzhen-ex-googler-turn-mom-s-money-into-a-billion.

• no access without permission

Efficient and effective

• In terms of making loan

2. Limitation of Gobalization

• Limitations in developed countries

E.g. the US government restrictes foreign companies to do a merger or acquisition to expand their business in the US. => failed to merge with Moneygram

• Limitations in developing countries

E.g. In Southeast Asian

poor education => the lack of high skilled labors and expertises

=> need more technical support

poor networking faciliteis => hard for local people to adapt Ant's services.

=> need hugh investment in infrastructure

ALIPAY

Profit Making

• small transaction fees from users

• time gap of transaction

Ant Forest

An environmental friendly mini game...

From Online to Offline payment

• Collect points by lowering carbon emission

• QR code

(e.g. biking, walking. record and calculate by

footprint.)

• easy to set up

• Interaction with friends

Entering the world market

(e.g. a ranking system, helping each others to

get points)

• capital control in China

• horizontal merger in Indian market

• Plant real trees in dessert

(after achieving a certain point, the company

will donate a tree and plant it in dessert)

(owns 60% stock right of Paytm 2015

=> users growth from 25M to 250M in 2

years)

Result...

...870 Million Active Users in 2017

• 220 million users, 150 K tons of carbon emission reduced, 13.14 million trees planted till 2017.

Thank you!

YUEBAO

Taking advatage of a high saving rate in China...

Interest Rate Comparison