“We’re here to be disruptive. Who wants to write checks?”
When Alipay North America’s president, Souheil Badran, took the stage at Innovation Project 2017 for his fireside chat with Karen Webster, there was a lot to discuss. The Chinese consumer, remittances, Ant Financial’s push to create a truly global financial services platform — they hit all of it during the 30 minutes or so Badran had the stage.
But if you had to get it down to 10 words, Badran offered them himself when Webster asked if perhaps Alipay’s stated ambition to build a global payments network that connects 2 billion consumers and millions of merchants in all corners of the world could be just the slightest bit disruptive.
“So?” Badran asked, before noting that if the goal wasn’t advancement through disruption, we’d all still be writing paper checks.
But disruptive, he noted, isn’t the same thing as destructive — and at the end of the day, Alipay isn’t trying to replace established sets of rails like Visa and Mastercard.
“We don’t want to be Visa, we don’t want to be MC — we would like to ride on their rails if possible and if regulation will allow,” Badran noted. “This is an industry where rather than saying, ‘how can we knock someone off the rails,’ it is, ‘how can we collaborate to provide services in a better fashion?’ This is not a replacement strategy. This is an opportunity to serve a new set of clients.”
Clients, he noted, who are being served today — but not as well or as efficiently as they could be. People like Chinese consumers who come to the states to spend — and who can find themselves carrying unwieldy amounts of cash or an unreasonable number of prepaid cards. Or consumers in the Philippines who work abroad and need to be able to spend and send money. Or all the consumers in the developing world who live outside major urban centers and not within 15 minutes of a Walmart.
“What we’re trying to build is financial services for the many and not the few,” Badran said. “Over the years, we never had the roadmap of getting where we are today — we just evolved.”
Evolved with the changing needs of the Chinese consumer and of the world. What did that evolution look like — and what’s next?
What Everyone Should Understand About Chinese Consumers
Though Ant Financial began as Alipay — the payments arm of Alibaba — Badran noted that these days, building on that initial core of trust built out when Alipay was basically an escrow service that allowed buyers and sellers to trust each other, Ant Financial is focused on creating a service lineup for its 450 million Chinese consumers that goes far beyond just paying. These days those include lending, insurance, savings (via the world’s largest money market account) and credit.
“What we heard from our customers in China is ‘Let me pay in a way that is most convenient, and then offer me services that I don’t have to go look for because they come to me.’”
And for the 4 million or so Chinese consumers who come to North America each year to shop, that that ethos isn’t changing. They want a secure payment method, they want to be able to use it and they want attendant services to come to them while they use it.
And this is a change of experience for the Chinese consumers who previously could spend while they were here — but not easily.
“Think about a Chinese consumer who wants to buy a pair of Louboutin shoes on sale for $2K. Maybe in their wallet they have $1,500. Prepaid cards are limited often — and so now this customer has an issue.
That issues goes away with Alipay. We know who you are as a Chinese consumer, and we’ve created the largest credit scoring agency in China today — we can extend you credit on the fly.”
Instead of what Badran called a rather “siloed” experience in the States, Alipay has combined a series of capabilities to give the international customer a better experience.
It is spend worth catching — according to Badran, the 4 million or so Chinese tourists to North America is growing by 22 percent per year — and when they come, they are here to spend.
But increasingly, he noted, they are here to spend on their terms — and Alipay offers merchants a better way to reach out on those terms and ultimately close more sales.
“We are attracting them to drive and spend at the store. Within the app is the ability to discover your surroundings. We can tell you who can accepts Alipay and what merchants don’t. We can also help driving marketing campaigns that are specifically important to the Chinese. November 11, December 12, New Year’s.”
The goal through the transparent payments ecosystem is to help merchants encourage those consumers to do what they already really want to — and to make it easy to get done.
The Bigger Disruptive Picture
But, surely, Webster posited, Ant Financial is interested in much more than those 4 million Chinese consumers who come to the U.S. to shop today, right?
Yes, but, Badran said.
While much of Alipay and its early efforts in the states are focused narrowly on those 4 million consumers a year, Ant Financial is looking at that bigger picture and has been for some time. Bigger than that 4 million, bigger than their 450 million active users in China, in fact. Alipay wants to build the network for 2 billion people around the world — users like the 200 million Paytm customers in India and the 10 million Kakao Pay customers in South Korea.
“We are always looking for where there is volume and where we can serve a lot of consumers. It is more than what’s next — it’s what have we done well in China that we can leverage well overseas. Lending, credit insurance, savings — all these things we are doing,” Badran noted. “We are a network in our own sense. So now if I am a wallet user in the Philippines coming to the U.S., I have a way to pay.”
It’s a big goal. And as Karen Webster noted, “I don’t know, Souheil, it sounds pretty disruptive to me.”
But, Badran noted, it’s less a disruption and more of a work in progress — and a work that will take the collective efforts of a lot of players who are going to need to cooperate.
It won’t be easy, and it might be a little disruptive, he conceded.