IN 2004, JACK MA, the Co-founder of China's Alibaba, an e-commerce business then just five years old and yet to become a world-beater, launched payments platform Alipay for its retail customers and merchants. In a decade, Alipay (later reborn as Ant Financial) became China's leading financial services giant, offering a digital wallet, consumer credit, money market funds, wealth management, and a digital-only bank for small enterprises. Ant Financial soon had $600 billion in assets under management as it layered various financial services atop the e-commerce platform. What also worked was China's underserved and unbanked population, with an aspirational middle class and a surge in smartphone use. China's financial services sector, dominated by state-owned banks, was also ripe for disruption. Ma had struck gold.
Mukesh Ambani's Jio Financial Services, dubbed the group's 'fourth engine' after oil, telecom, and retail, aims to mirror Ma by leveraging its established consumer-facing businesses: retail and telecom.
The similarities with Ma's model are hard to ignore, as the key is the proprietary payments or retail transaction data that will help Jio create a business model around lending, asset management, insurance, and stock broking. The 66-year-old Ambani, Reliance Industries Ltd's (RIL) Chairman & MD, is taking one step at a time. Ambani established a beachhead in the financial services industry by acquiring a payments bank licence in 2015, two months after the Reserve Bank of India invited applications for this new class of banks. Payments banks are meant for payments and remittances, can accept small savings, and issue debit cards but not credit cards.
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