What China’s fintech footprint can teach the APAC
LAST year, venture capital-backed fintech firms raised US$39.57 billion across 1,707 deals globally. Investments into Chinese fintech giant Ant Financial accounted for US$14 billion alone — 35 percent of the total global figure.
To be honest, data suggests that the top 3 deals to venture capital-backed companies were all mega rounds (worth US$100 million or more), and were to support China-based companies.
In comparison, after excluding Ant Financial from the data, when global fintech funding growth was stacked up by continent, and Australia showed a 396 percent growth year-on-year, its total value of finding topped off at US$343 million.
Stacked against Asia, which grew phenomenally at 265 percent, beating North America’s 43 percent and Europe’s 24 percent, total fintech funding only reached US$8.65 billion.
All of those pale against Ant Financial’s accomplishments — but that’s not the only success story in China.
Lakala Payments and Tiger Brokers each crossed the US$1 billion mark in valuations, giving China two new fintech unicorns to boast of.
Lufax, Tuandaiwang, Caogen Touzi, and Tongdun also feature among the list of Chinese unicorns — ranging from US$38 billion in valuation, all the way to the threshold at US$1 billion.
All of this data, compiled by CB Insights, proves that China is doing something right, on the ground, and there are lessons that fintech companies in the APAC can learn.
# 1 | China is racing to becoming a cashless economy
While Alipay and WeChat Pay have been wildly successful in (and outside) China, the country itself has supported them in a big way.
Whether it was the country’s growing affinity for mobile or policies and protections put in place by regulators that made the transition to mobile easier, the reality on the ground is that China’s mobile payments volume has continued to surge dramatically, year after year since 2013.
# 2 | Chinese fintech companies made risky bets that paid off
Ant Financial, the company that was created to “support the little guys” made big risky bets more than a decade ago at a time when financial products and services were difficult to access for a majority of the population.
Complicated investment products such as mutual funds and insurance was a dream in the country for the common man as citizens struggled to get credit cards and secure financing for their business.
Over the past decade, Ant Finacial and other players in the market have made consistent bets in the financial services space, allowing consumers to “upgrade their lifestyle” with better products to suit and support their needs.
# 3 | A little bit of creativity and ingenuity helped create and ride trends
A lot of Ant Financial’s fortunes are tied to the country’s e-commerce ecosystem. It’s where the company first made a debut back more than one-and-a-half decades ago, in 2004.
Riding on the back of Alibaba’s e-commerce platforms, the company slowly became the leading digital payments processing platform in the country as e-commerce grew — and exceeded the volume in the US.
To help convert those who stayed away from digital and mobile payments, Ant Financial and WeChat, among other fintech players in the country, leveraged the country’s culture.
Ampao (red money envelopes) exchanged during Chinese New Year every year have now become a significant catalyst for the use of digital payments thanks to exciting offers and campaigns run by fintech companies in the country.
# 4 | If there’s one thing you learn, let it be data management and analysis
Ant Financial has a lot of data about customers and insights they produce can really help improve the CX while also radically creating new offerings.
Without needing to break any laws or violate privacy, the company — and its various brands such as Alipay, Ant Fortune, MYbank, Sesame Credit, Koubei, Huabei can leverage the gigabyte upon gigabyte data repository that it collects from customers every week to produce valuable insights.
Being a digital native, artificial intelligence (AI) and other cutting-edge data analysis technologies are woven into the DNA of the company, and is something stakeholders and investors are implicitly confident about.
# 5 | In the fintech space, long-term vision reaps big, global rewards
The Chinese company Ant Financial invested hundreds of millions into an Indian company. And then they repeated the same strategy in Thailand, Bangladesh, the Philippines, Malaysia, and several other markets.
The company’s bets paid off, not because it sought to simply expand its footprint across the globe, but because it looked at partners as part of a long-term vision for globalization.
In fact, the company provided technology and know-how to partners as a way to build strong bridges overseas — which was seen as a refreshing change from the way the financial services (and often fintech) industry works.
“If you have a network of partners that are all on the same technology stack, interoperability is not a problem. In the future, someone who uses the Philippines version of Alipay could come to Hong Kong and shop at any store that accepts Alipay. That’s the vision.” said Alibaba Group Executive Vice Chairman Joseph Tsai