Ant Financial: The road to financial inclusion in China through QR codes and technology-as-a-service

• Main Authors: LIANG, Hao, WANG, Jialun, LIM, Gabriel Pang Keat, CHIU, Tzu-Kuan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: Finance; Financial technology; Financial intermediaries; Digital transfer services; Outsourced services; Community economic development; Asian Studies; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/293; https://smu.sharepoint.com/sites/admin/CMP/cases/SMU-20-BATCH%20%5BPDF-Pic%5D/SMU-20-0005%20%5BAnt%20Financial%5D/SMU-20-0005%20%5BAnt%20Financial%5D.pdf
• Institution: Singapore Management University

Set in January 2020, this case presents Ant Financial’s success in promoting financial inclusion in China through its Quick Response (QR) Merchant Growth Plan. Established in 2014, Ant Financial grew out of Alipay, a mobile payment provider that served Alibaba’s e-commerce customers. Inheriting Alipay’s huge customer base, Ant Financial grew rapidly and in 2019, it dominated 54.2% of China’s US$7 trillion mobile payment market. The QR Merchant Growth Plan was launched in May 2018, encouraging merchants to accept QR codes in payments. Also known as QR Merchants, these micro-entrepreneurs typically resided in China’s lower tier cities. The Plan progressed from offering ‘plain vanilla’ business loans to a multi-product suite, and has since served more than 12 million micro businesses. To scale further, Ant Financial has set a bold target of reaching out to 100 million small and micro businesses by 2021. However, China’s central bank had announced a new regulation requiring all merchants to use a universal QR code for transactions by 2021. How will it challenge Ant Financial’s dominance of the mobile payment market? In the face of impending regulatory pressure, how viable will the QR Merchant Growth Plan be in the mid to long term? Concurrently, Ant Financial’s foray into the digitisation of commercial banks presents new business opportunities. Through the provision of ‘technology as a service’ to banks, Ant Financial’s pivot from a competitor to a partner is timely as traditional banks realise the need for digital transformation. But will the new business model work in favour of Ant Financial to bring the next wave of growth? Students will learn how financial technology can contribute towards achieving digital financial inclusion through a discussion of Ant Financial’s innovative business model, the QR Merchants Growth Plan. They will be able to explain how social changes can be made by companies like Ant Financial, which combine the pursuit of profitability and creation of social impact at the same time.