The Asian weaver ant can lift up to 100x its own bodyweight. That roughly equates to me being able to pick up a very large Asian elephant!
It’s a mind blowing thought, and some of the fintech news coming out of Asia over the past few months has been similarly astonishing. Having visited that part of the world in recent weeks, I can report first hand a sense of opportunity and optimism. And the biggest fintech news of the year (at least so far) was playing out not far from me, in China.
This was the news that Alibaba’s Ant Financial has raised more than $14 billion in funding, valuing the company at an incredible $150 billion. As CNBC reported, this ranked Ant Financial as the 9th largest company on earth. Goldman Sachs is worth a mere $88 billion in comparison.
We wrote about the rise of China last year, assessing how Chinese capital markets, especially in fixed income, were starting to do business with the world. Ant Financial’s rise is the latest stunning piece of news that confirms the emergence of China as a global fintech leader, too.
The rise and rise
It’s fair to say that the Chinese financial system as a whole continues to develop as the country’s population matures and grows in wealth. This will be transformational for the world, especially as we see more headline-grabbing developments in fintech and capital markets.
As we explored last year, the opening of the $9 trillion Chinese bond markets to both inflows and outflows could be the most revolutionary shift in global finance we’ve seen since the Berlin Wall came down. But, like in other global markets, traditional finance is being supported by developments in the Chinese fintech space, too, especially in payments and personal finance.
Thanks to the explosive growth in prosperity and change in attitudes amongst the 500 million strong Chinese middle class, technology and finance companies have been given a once-in-a-lifetime opportunity to service a market bigger than we’ve ever seen before.
Ant Financial offers financial products that are perfectly positioned to take advantage of the boom of this wealthy, educated and technology-savvy generation. Via its platform Alipay, it was able to undertake the classic strategy of leapfrogging an entire generation of redundant technology (plastic credit cards), moving a population straight from cash to mobile.
The payments sector is a perfect example of a transition from an old technology to a future technology in no time at all. Studying its adoption teaches us important lessons about why China has been able to get so far ahead so quickly, whilst the rest of us in the West remain wedded to our plastic, cash and coins. China never built the infrastructure for plastic, hence, by the time mobile phones and payments came around, the user experience of paying with your phone was, firstly, much better and, secondly, more natural to a phone-savvy population.
In China, mobile is the status quo. Our commitment in the West to old forms of banking is more deeply entrenched, hence harder to shift, so adoption of mobile banking will be slower. The slow and disinterested uptake and approach towards Open Banking in the UK is a case in point.
The mobile banking revolution in China proves that technology adoption generally skips a generation. It’s true in communications and social media, too. WeChat did something similar, taking advantage of a population who saw little of email and SMS, but immediately embraced messaging services on their mobiles. And WeChat’s product hasn’t stopped developing, with its platform now providing a plethora of services that is making it irreplaceable to 1 billion users.
Ant Financial and WeChat are now ubiquitous and their parent companies – Alibaba and Tencent – are locked in a ferocious competition to be the biggest and best company in China, if not the world. They’re already everywhere, but with war chests full of cash, their technology and services will continue to become the norm for the tech-savvy population of China and beyond.
Much like China, other ambitious and fintech-focused geographies in the region – India, Australia, New Zealand, Japan, Singapore, for example – are also all comfortable with mobile and using their engineering expertise to craft solutions that will, perhaps, be adopted in time the world over. Much like the Asian weaver ant, the strength, power and achievement of these booming fintech geographies is quite astonishing.