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Nation's fintech companies expand their reach

Updated: Aug 3, 2020 Print
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The rise of Chinese financial technology companies as major market players in Asia is playing a significant role in shaping the regional fintech ecosystem.

"Chinese fintech companies have been expanding overseas," said Joe Ngai, senior partner at consultants McKinsey & Co, noting the country's increasing influence in the sector.

For example, in 2016, Ant Financial, the fintech arm of e-commerce giant Alibaba, announced globalization as a key strategy for the next decade. Alipay, the mobile payment service of Alibaba, now has more than 1.2 billion users worldwide, with partners spanning the region-from TrueMoney in Thailand to DaraPay in Cambodia and Paytm in India.

The impact of such collaboration can also be seen in the rapid growth of Ant Financial's partners. After receiving investment from the Chinese payment operator in 2015, the number of Paytm users rose from less than 30 million to more than 300 million in 2018, according to market research company EO Intelligence, based in Beijing.

As a result, Paytm became the world's third-largest digital wallet, surpassing PayPal to occupy a position below Alipay and WeChat Pay, the mobile payment service of Chinese internet giant Tencent.

Ngai said global expansion by mobile payment service providers such as Alipay will allow local customers to use their digital wallets overseas, and vice versa. Overseas expansion is a logical step as domestic customer growth will inevitably slow, he added.

"Where there are already established players in local markets, acquisitions and partnerships have sometimes been the business model of choice," said Ngai, who is also managing partner of McKinsey Greater China Offices.

Expansion is facilitated by exporting financial technologies to market players in other regions, Ngai said. He cited examples such as leading insurer Ping An, which provides fintech solutions through a business-to-business model.

As of March last year, OneConnect, Ping An's fintech arm, was serving more than 3,300 financial institutions, according to the company, which started expanding globally in 2018 in Southeast Asian nations, including Singapore, Indonesia, the Philippines and Thailand.

Many Asian financial institutions are adopting fintech solutions, such as facial recognition for KYC (know your client), which have been proven and tested in a large market such as China's, Ngai said.

Mobile payment transactions in China expanded at a compound annual growth rate of 123 percent from 2013 to 2018, exceeding 300 billion transactions in the latter year, according to McKinsey's 2019 Global Payment Report.

In the 2019 Fintech100 report by global accountants KPMG and venture capital company H2 Ventures, three Chinese fintech companies ranked among the top 10: Ant Financial, JD Digits and Baidu's Du Xiaoman Financial.

The report said four other Asian fintech companies made the top 100 list-Paytm, and ride-hailing platforms Grab in Singapore, Gojek in Indonesia and Ola in India. All four companies received capital from Chinese investors, including Alibaba, JD, Tencent and Ping An Capital, a Ping An Insurance investment platform.

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