Rishi Taparia

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The Ants Go Marching

Don’t let Ant Group’s name fool you, it is anything but small. The centacorn formerly known as Ant Financial finally filed to go public, jointly listing in both Shanghai and Hong Kong, and sharing more details on the business. Founded in 2004 as an offshoot of Alibaba, the far-reaching behemoth has come to dominate the payment and financial services markets over the last 15 years. The scale and scope of the company make it far more than ‘just another wallet’.

By the numbers:

Source: Ant Group filings.

Let’s break this down. In the last year, the over 1 billion Alipay users conducted over US$18 trillion (with a t) worth of transactions. To give you a sense of scale, Visa and Mastercard combined? US$16 trillion. Alipay’s payment volume already exceeds that of the two largest traditional card networks in the world, and that’s without non-Chinese nationals on the platform (that approval only happened last November). Bigger than Visa and Mastercard combined? That’s enough to make the business incredibly attractive. The crazy part? That’s not even the part of the business where they generate most of their revenue.

Source: The Economist

In addition to being the parent company of Alipay, Ant Group has a technology platform - lending, wealth management, and insurance offerings - that accounts for 63% of its revenue. It manages almost $600B in AUM and has lent over $300B to consumers and SMBs. It also provides the underlying technology stack to financial institutions around the world, powering banking and financial services infrastructure.

Source: Ant Group filing.

Furthermore, the Alipay app has become a ‘super-app’ with over 160,000 mini-apps bundled and accessible to the 711 million monthly active Alipay users making it (along with Tencent’s WeChat) one of the best application distribution channels in the world.

Ant Group positions itself as a ‘techfin’ company as opposed to a ‘fintech’ company. The technology comes first, the financial services they support second. In their filing, Ant Group describes its future growth strategy as:

Drive user engagement and expand user base;

Build value with partners;

Invest in innovation and technology; and

Expand cross-border payment and merchant services

While innocuous on the surface, these growth strategies have major ramifications for the global landscape. One doesn’t have to squint too hard to see a world where Ant brings transaction processing costs down to zero to incentivize merchants and users onto the Ant platform. In exchange, they gain access to purchasing data that then can be used to more effectively target other (technology supported) financial products and services to users.

In a world where he who has data has the power, Ant has been diligently amassing capabilities and access, both directly through its own app and indirectly through its white-label tech platform (which gives them broader reach than they would get on their own). Ant’s worldwide ambition, B2B and consumer reach, and ability to drive revenues across multiple channels and industries put it in a position reshape global financial services in an image of their choosing.

There are certainly risks to Ant’s future growth, not least of which are the rising geopolitical tensions between the US and China. However, this week’s filing has reinforced for me what I wrote back in January: I believe Ant will ultimately be a more valuable company that its e-commerce cousin Alibaba. They have been playing four-dimensional chess for a long time, with much more to come. It’s now a matter of when not if.

Thinking about Ant’s future during my last trip to their HQ in 2017.


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