Partnerships / Acquisitions

Ant Financial Adds Third Bank Partner This Month

Ant Financial continues its bank partnership streak, signing a strategic cooperation agreement today (May 30) with Shanghai Pudong Development Bank (SPD Bank). That is Ant’s third bank partnership this month, following deals with Huaxia Bank and China Everbright Bank (CEB) earlier in May.

The partnerships are intended to help advance each bank’s digital transformation something Ant happens to know a thing or two about. Alipay, Ant’s mobile payment and lifestyle platform, was processing 256,000 transactions per second at the height of 2017’s Single’s Day Shopping Festival. That level of scale and efficiency is something of which many financial organizations can only dream.

Ant Financial’s Executive Chairman and CEO, Eric Jing, has previously indicated the Chinese tech giant’s intention to open up its technologies to outside partners, and we are now seeing the fruit of his vision.

Jing’s only stipulation around these partnerships was that they must meet a level of innovation sufficient to deliver value to end users providing secure, convenient and efficient financial services for business customers, and driving improvements for consumers in online and offline payment service environments.

Ant’s Plans

According to a press release today (May 30), SPD Bank will be leveraging Ant’s financial-grade technologies in AI, supply chain finance and biometric identification in online risk management to help prevent loan, transaction and marketing fraud. The two also plan to collaborate on inclusive finance initiatives focused on user experience, security and support for small businesses.

That’s on top of Ant’s plans with CEB, where, according to a statement, it plans to help facilitate the development of private and hybrid cloud platforms, scalable open financial architecture, internet finance architecture, mobile architecture, AI-driven applications, smart risk management systems and biometric user authentication methods.

Finally, on the consumer side, Ant Financial subsidiary Huabei says it will be partnering with consumer financial institutions (FIs) to power solutions in that space. Also, Alipay has added two new third-party money market funds to its Yu’e Bao spare cash management platform within the Alipay app.

What It Says About The Space

It’s an interesting development in the banking space, where more traditional players still tend to see FinTech companies as disruptive upstarts. It seems that some FIs are now coming around to the opinion that working with FinTech firms, instead of against them, could deliver greater advantages for both.

It’s a shift from competition to collaboration, and Ant Financial isn’t alone in the change. By freeing up data and access across standardized formats and processes, the European Union’s recent batch of banking regulations under PSD2 have made the playing field less hostile for smaller companies and FinTech companies to get off the bench and into the action.

For example, India’s ICICI Bank is reportedly launching a digital micro-credit offering with Paytm and China’s Bank of Communications is using bank clients’ past transactions to develop intelligent, personalized investment guidance with FDT-AI. In addition, several FIs including Scotiabank  are working on business loans with U.S. FinTech Kabbage.

It seems likely that this collaborative attitude will become even more critical going forward. U.S. Comptroller of the Currency Joseph Otting previously said that banks must offer consumers the same functionalities as FinTech companies if they hope to retain their customer base and market share, while others painted an even more dire portrait of a future where banks, that don’t partner with FinTech firms, won’t last.

Mike Sigal, co-founder of consulting firm Upside Partners, said, “Smart incumbents realize that they can benefit from the insights and agility of startups, while startups have understood that the scale, reach, stability and regulatory management of incumbents can be helpful.”

It’s clear that Ant Financial is among those that have seen the light on this matter.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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