Ant Financial Is Too Big To Ignore

The Chinese fintech powerhouse scares banks but wants to make them customers

Eric Jing, chief executive officer of Ant Financial, gathered his management team in between meetings at the Chinese financial conglomerate’s Hangzhou headquarters on June 6. The company had just closed a $14 billion funding round, one of the largest in history, and Jing was ready to celebrate.

Sort of. “Let’s raise our tea cups and have a simple toast,” he said, before quickly bringing an end to the festivities. “This will be the entirety of our celebration.” Jing, who took the helm of Jack Ma’s Alibaba Group Holding Ltd. spinoff in 2016, was telling his troops to be humble. But the episode also underscored the tough road ahead for Ant as it embarks on a major strategic shift.

The company’s extraordinary rise over the past 15 years has come largely at the expense of traditional financial companies in China and, to a lesser extent, overseas. Ant’s wildly popular money- market funds have siphoned deposits from banks. Its online payment systems have disrupted card issuers. And its credit units have challenged lenders of all stripes.

But the company is increasingly turning the old model on its head. Instead of competing with banks and other financial firms, Ant sees its future in selling them computing power, risk- management systems, and other technology. Fees from such services may swell to 65 percent of revenue by 2021, from about 35 percent in 2017, according to a company presentation to investors seen by Bloomberg News. Some of Ant’s latest initiatives include upgrading Shanghai Pudong Development Bank Co.’s fraud detection systems and a plan to provide technology to help at least four other banks extend loans to small businesses.