The parallels between Ant Group and bKash’s rise in the world of MFS

The name Ant Group has been flashing in headlines in recent times for a number of reasons - including its IPO fallout, conflict with regulatory authorities, and more recently, for its founder Jack Ma's mysterious disappearance. 

Nevertheless, the story of Ant Group resonates with the rest of the world, and even with Bangladesh, via bKash, one of our pioneering mobile financial service companies. Ant owns a 20% stake in Bkash. 

The group, formerly known as Ant Financial, famous for its brand Alipay, is the largest fintech company in the world, according to KPMG's 2019 Fintech100 Report. 

Ant Group closed 2019 with a record breaking RMB 120,618 million in revenues and a 20% operating profit margin.

The pandemic accelerated the half yearly earnings of Ant Group. At the end of H1, 2020, the giant posted a 38% Y-o-Y growth in revenue compared to H1, 2019.

Today, Alipay has more than 1 billion active app users annually. Between June 2019 and 2020, RMB 118 trillion worth digital payments were made through Alipay in mainland China only. 

While there are 711 million active users on a monthly basis, there are 80 million active merchants on a monthly basis to serve the  consumers.

It is without a doubt that Ant Group is a monolith in the world of fintech.

Alipay was founded by Jack Ma who founded Alibaba Group in 2004. Initially, the main purpose of Alipay was to act as an escrow when facilitating transactions between consumers and merchants of Alibaba.

Over the years, Ant Group has leveraged Alipay to scale into 200 regions around the world. Therefore, Ant's case acts as a blueprint for emerging companies like bKash.

Essentially, three key strategic decisions boosted Alipay's popularity in the early years.

In 2008, Alipay launched its e-wallet when it had around 100 million users.  In the next two years, Alipay was able to  double its customer base by 200 million users.

Next, Alipay introduced quick payment which allowed integration of Alipay with debit or credit cards. By late 2011, this feature was so popular that 40 million users were using it, and over 50 percent of all Alipay transactions were made using this quick payment.

Until this stage, Alipay's dominance was confined mostly to the online ecosystem in China. However, with the introduction of QR in 2011, Alipay was able to penetrate the offline retail channels.

The QR feature allowed consumers and merchants to generate their own in-app QR code. Upon scanning the QR, money can be received or sent. 

The QR was a great equalizer, as Alipay dominated the physical retail channels in the years to follow. 

These strategies became the foundation upon which Alipay was built.

In fact, bKash has been walking in the very trajectory of Ant Group's early years, long before Ant bought a 20% stake in bKash in 2018. 

bKash has successfully implemented all the aforementioned products that Ant implemented a decade ago.

As of 2020, Ant Group has three other product categories beside its dominant digital payments model which are:  Investment Tech, Credit Tech and Insurance Tech. All of these features are integrated with the Alipay app.

Ant noticed how a significant amount of cash sat idle in consumer accounts and decided to introduce wealth management. As a result, Yu'e Bao, an Investment Tech platform, was created.

Yu'e Bao is a feature in Alipay app which allows users to invest in the money market fund, which is managed by partnered asset management companies. A consumer can start investing with as low as 1 RMB (Tk13 only).

Right now, this platform has over 600 million users. By the Fiscal Year End (FYE) in  June 2019, total asset under management (AUM) was worth RMB 4.1 trillion.

Ant has also deployed the 'buy now pay later' policy by introducing Huabei, a consumer credit platform (Credit Tech). Huabei offers upto 40 days of time for delayed repayment, besides other EMI facilities. 

RMB 1.7 trillion worth of consumer credit has been disbursed via Huabei during the last financial year, which ended in June, 2020.

MYbank, another Credit Tech feature integrated with Alipay, is a virtual bank committed to serving small and micro businesses. MYBank allows merchants and small businesses to take microloans in less than three minutes without any human intervention.

A total of RMB 0.4 trillion worth of loans was issued via this channel in the last financial year.

Finally, with an initiative to provide health care plans for over 100 kinds of ailments, Ant Group launched Xiang Hu Bao, an Insurance Tech platform. The platform leverages blockchain technology to ensure safe and transparent claims.

FYE in June last year, total insurance premium and contributions via Xiang Hu Bao amounted to RMB 52 billion.

During the last financial year, 34.7%, 14.1%, and 7.4% of Ant Group's revenues were generated via Investment Tech, Credit Tech and Insurance Tech respectively. In total, 56.2% of all revenues were made via these categories. The success of these categories is, therefore, evident.

Going back to the 2018 investment round of bKash, the CEO of Alipay had commented, "We are keen to share our technology know-how with partners like bKash.".

Therefore, bKash's recent move to introduce QR code and consumer credit is no surprise. It is, in fact, just another step aligned with Ant's successful blueprint.

The size of the MFS market, in terms of number of active users, is 33.3 million, as of October 2020, and it's growing by the minute, and by the habits inculcated by the pandemic, fintech is surely here to stay.

By consistently innovating to create the best consumer driven solutions, Ant Group has made its place at the top of the list of largest fintech companies, but adaptation to technology and financial products is not the same in Bangladesh as it is in China.

So far, many of Ant's product developments have yielded rewards for bKash in Bangladesh, but the question remains whether bKash will be able to emulate the success of Ant Group, by following its blueprint, in the days to come.