Beijing to break up Ant’s Alipay and force creation of separate loans app

Update Ant Group

Beijing wants to break up Alipay, the more than 1 billion-user super app owned by Jack Ma’s Ant Group, and create a separate app for the company’s highly profitable lending business, in its latest iteration. the most obvious structure of the fintech giant.

Chinese regulators ordered Ant to split the back end of its two lending businesses, Huabei, which is similar to a traditional credit card, and Jiebei, which offers small unsecured loans, from the rest of its financial services and attracts shareholders. outside. Now officials also want the two businesses to be separated into a standalone application.

The plan will also see Ant turn over the user data that underlies its lending decisions to a new credit-scoring venture that will be partly state-owned, according to two people familiar with the matter. this process.

“The government believes that the monopoly power of big tech companies comes from their control over their data,” said a person close to financial regulators in Beijing. “It wants to end that.”

The move could slow Ant’s lending business, with the massive growth of Huabei and Jiebei partly fueling the company’s planned IPO process last year. The CreditTech unit, which includes both units, overtook Ant’s main payment processing unit for the first time in the first half of 2020, accounting for 39% of the group’s revenue.

The size of the unit, which helped issue about a tenth of the country’s unsecured consumer loans last year, has surprised regulators, who are worried about lending of this nature. Predation and financial risk.

Ant .'s growing share of loan revenue

Shares of Alibaba fell as much as 5.9% in Hong Kong trading on Monday. The Hang Seng Tech Index, which tracks China’s largest tech conglomerates listed in the city, fell 3.4% in the face of renewed regulatory pressure on the sector.

Ant has struggled to gain control of the new joint venture with regulators, but in June a compromise was reached when state-owned companies in its home province, including the Tourism Investment Group Zhejiang, holds the majority of the shares.

According to residents, the provincial government has supported Ant by promoting local state-owned corporations to become its new partners.

“With the mutual trust between Ant and Zhejiang, the fintech team will have a big say in how the new venture works,” said a former official at the People’s Bank of China. “However, the new setup will also ensure that Ant listens to the team when making important decisions.”

A person close to Ant said that for the time being, Ma’s team will be running the new project. “What does Zhejiang Tourism Investment Group know about credit scoring – nothing,” the person said, noting that Ant executives were still concerned they could lose control in the future. .

Reuters revealed for the first time The composition of the joint venture reports that Ant and Zhejiang Tourism Group will each hold a 35% stake with other public and private partners allocated smaller shares.

The new venture will apply for a consumer credit scoring license, something Ant has long coveted. China’s central bank issues only three licenses – all for state-run operations – preventing Ant make money completely the vast trove of data it has collected on Chinese nationals.

But under the plan under consideration, Ant will lose the ability to independently assess the creditworthiness of borrowers. For example, a future Alipay user who needs credit will see their request first go to the new joint credit scoring company where their credit record is kept and then to the app for new Huabei and Jiebei loans for credit.

The process is now fully integrated within Alipay, and Ant said it made a “credit decision within seconds” in the prospectus for its suspended IPO. The company did not respond to an email request for comment.

Ant will not be the only Chinese online lender affected by the new regulations. This summer, the central bank told industry players that lending decisions must be made based on data from an approved credit-scoring company, not proprietary data. , one of them said.

A senior executive at another online lender said this could translate into a “moderate” cut in their margins as the company can no longer use their data. own lending decisions.

Additional reporting by Hudson Lockett in Hong Kong

Weekly newsletter #techAsia

Your ultimate guide to the billions of people created and lost in the world of Asia Tech. A curated menu of exclusive news, crystal clear analysis, smart data, and the latest tech news from FT and Nikkei

Register here with one click

Source link


News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button