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Commentary: Ant had such big ambitions. Then China authorities stepped in

Occupied with regulatory challenges at home, Ant’s distraction may be an opportunity for Southeast Asian Fintech players, says Li Jianggan.

Commentary: Ant had such big ambitions. Then China authorities stepped in

Composite picture of Ant Group and Jack Ma. (Photos: AFP, Reuters)

SINGAPORE: Ant Group has been through a roller-coaster year with the pandemic, the shelving of a much anticipated mega IPO in Hong Kong and Shanghai, and a digital bank licence in Singapore.

If the IPO had gone through, Ant and its associated company Alibaba would have had a combined market cap 12 times that of SEA Group, the largest internet company in Southeast Asia - which counts Tencent, Alibaba’s major rival, as its largest shareholder.

But Ant’s challenges are far from over.

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Since the shelving of Ant’s IPO, regulators in China have not stopped tightening laws. New antitrust regulations were drafted for public review. On Dec 18, regulators issued a new set of rules limiting Internet companies from taking in deposits.

Sun Tianqi, Director-General of Financial Stability Bureau of People’s Bank of China, explained in a speech just last week that local banks offering high interest rates to attract deposits nationally through Internet platforms have increased systemic risks in multiple ways.

While this was aimed at all FinTech platforms, big players like Alipay, JD Finance and Lufax took down their internet deposit product offerings within 24 hours after the announcement.

Other forms of FinTech with the potential for scale, such as insurance and wealth management, among others, might see greater scrutiny and attract more stringent rules from Chinese authorities in the years to come.

Just this past week, while the Chinese central bank lambasted Ant for poor corporate governance on Sunday (Dec 27), it also set out specific remedial actions for Ant Group to take.

A sign of wealth management platform Lufax is seen during an expo in Beijing, China December 11, 2015. (File photo: REUTERS/Stringer)

This includes Ant returning to its limited role as a provider of payments services, establishing a separate financial holdings company (mainly for lending which generates most of Ant’s profits), and restructuring its credit, insurance and wealth management businesses. Implementation timetables are being set for these herculean tasks.

The full impact of this wave of regulatory moves will take time to settle, and will keep the Ant leadership busy for a while. Ant’s other business plans, including international expansion, will probably be put on the back-burner.

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These developments could have a significant effect on the region. Over the past few years, Ant has been a major FinTech player in Southeast Asia. It has invested in mobile wallet joint ventures, paylater companies and vending machine operators.

In addition to eMonkey in Vietnam, Ant is also a major shareholder or joint venture partner for Dana in Indonesia, Touch N Go Wallet in Malaysia, GCash in the Philippines, TrueMoney in Thailand and Wave Money in Myanmar. Ant has also bought over Lazada’s payment services helloPay. 

For some time, observers watched and anticipated for Ant to eventually buy over or squeeze out leading FinTech companies as Ant made strategic investments in Singapore-based M-daq and Indonesia’s Akulaku.

A thermal imaging camera is seen in front of a logo of Ant Group at the headquarters of Ant Group, an affiliate of Alibaba, in Hangzhou, Zhejiang province, China on Oct 29, 2020. (Photo: REUTERS/Aly Song)

Digital finance is the next frontier for Asia’s Big Tech firms. However, the market is saturated and competition is tough considering the hundreds of independent remittance service providers, P2P lending platforms, paylater and B2B digital finance solution providers in the region.

It is rumoured that Ant is keen to invest in Grab’s financial arm for years, though such ambitions have been thwarted by Grab’s desire to stay independent of Ant’s control.

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All that expansion in the region is slated to slow, not least given China’s shifting regulatory landscape.

Ant’s leadership will focus on restructuring its business in the next year or more, meaning executives in regional offices may be more inclined to take a wait-and-see approach to any new strategic steps or big acquisitions.

As countries are sensitised to the risks FinTech bring, Ant may also face some challenges with regulators in Southeast Asia, where scars from the Asian Financial Crisis remain.

The shelving of Ant’s IPO has also prompted regulators in Southeast Asia to pay more attention to developments in China.

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Even without the challenges posed by the recent regulatory changes in China, Ant has faced an uphill climb in Southeast Asia, given the lack of use cases for its e-wallets and digital lending products.

Ant Group's Alipay platform has helped revolutionise commerce and personal finance in China AFP/Hector RETAMAL

For a payment service to be sticky, users need to be able to use it at multiple places and ideally with high frequency. 

For example, in Singapore, where one in two consumers have used contactless payments to pay in-store according to a survey in August, payWave has become one of the most popular and visible services because terminals were deployed to merchants.

Dana, the mobile wallet joint venture in Indonesia, had to use discounted movie tickets to acquire users before COVID-19, but struggled with providing more places to use its wallet. 

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The lower usage frequency of Lazada’s Alipay wallet - rebranded from helloPay - sent Ant executives scrambling for more partners to increase its use cases.


Ant’s latest win of a wholesale digital bank licence in Singapore, allowing it to cater to small-and medium-sized enterprises does not significantly change Ant’s business strategy in Southeast Asia though it gives Ant’s regional offices more certainty.

The license is, however, a reflection that Ant will probably hold onto its international ambitions but its window of opportunity in Southeast Asia is fast closing.

Competing FinTech companies and their investors will be emboldened by Ant’s shelved IPO to grab more pieces of Southeast Asia’s growing digital payments and financial services pie.

Grab is raising money separately for its Grab Financial Group, to consolidate its early lead in payment and digital financial services. It is also looking at a merger with GoJek that may provide users with use cases in Indonesia.

The Hawkers Go Digital programme helps stallholders kick-start their digital transformation journey with digital solutions such as e-payment. (Photo: Grab)

Working with SingTel, Grab’s win of a digital full bank licence in Singapore allowing it to serve retail consumers may be another greenfield for the ride-hailing’s company pivot towards financial services. 

Sea is also expanding its SeaMoney subsidiary, lumping an array of payment and lending services under one umbrella, and has received the only other digital full bank licence in Singapore.

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The fate of Ant’s joint ventures in the region will probably diverge.

Those with stronger local leadership with the know-how and autonomy to steer the company and grow localised products, where Ant’s role is limited to financing and technical expertise, are more likely to succeed compared to acquisitions that rely on Ant’s heavy lifting.

A case in point is Pakistan’s EasyPaisa - an Ant joint venture with Telenor. After Ant stepped back from funding and staff support in 2019 and left the payments start-up to succeed on its own terms, the company continued growing.

Expect many of Ant’s joint ventures in Southeast Asia to follow this path in 2021, as Ant focuses on managing its domestic stakeholders especially after Sunday’s move by the People’s Bank of China.

Li Jianggan is founder and CEO of Momentum Works, a Singapore-based venture outfit. He was also previously MD Singapore of Foodpanda, co-founder and Regional MD of Easy Taxi.

Source: CNA/sl