World Bank rated Ant Financial as the most valuable fintech company worldwide in the World Development Report 2019 issued in October 2018. As a financial services company that has just spun off from Alibaba Group for four years, it can be seen that Ant Financial is growing rapidly and outperforming financial institutions that have been developing for decades in China and even the world.
Ant Financial cannot be labeled as a simple fintech or a financial company. In terms of the 15-year accumulation and development from Alipay to Ant Financial, both the innovation capability of its financial business and the technical output capability serving third-party financial and non-financial institutions are indispensable consideration factors for its current success.
EO Intelligence has sorted out and made an analysis of the development history, strategy and revenue structure of Ant Financial. At the same time, EO Intelligence has forecasted the revenue of Ant Financial and predicted whether it can achieve business transformation by 2021.
License and product information: Ant Financial has always been active in applying for financial business licenses, a prerequisite for conducting financial transactions in China, to comply with the requirements of regulation and business compliance. At present, it has 14 financial licenses which were obtained through subsidiaries established or companies controlled.
In addition to businesses related to Alipay, Ali Finance with small loan as its main business was also merged into Ant Financial after its inception. Ant Financial’s current businesses owned by itself and its sponsor shareholders, include Alipay, Yu'e Bao, MYbank, Ant Credit Pay, Zhima Credit, Ant Cash Now, Ant Fortune, My Loan, Ant SDAQ and Ant Financial Cloud. These business sectors involve payment, fund, financial management, insurance, banking, consumer finance, petty loan, cash loan, credit investigation and equity-based crowdfunding, etc.
Investment events: When Ant Financial originated from Alipay, it merely positioned itself as a third-party payment enterprise. However, driven by Yu'e Bao, it changed its direction of development and began to expand by investing externally while continuously enriching its own business system.
EO Intelligence has made summaries on Ant Financial's investment in China and other countries. Detailed investment events and data can facilitate a better understanding of the development strategy formulated by Ant Financial and the logic behind its strategy alteration in recent years.
Development strategy: A company’s business layout reveals its direction on developing strategy, decision on speed and quality and an understanding of its capability over a period of time.
In April 2016, after completing Series B financing, Ant Financial announced its three major strategic directions: international business, rural finance and green finance; later in October, Ant Financial announced structural adjustment and defined its three major strategies for the next decade——globalization, serving small and micro enterprises and building a credit system.
The strategy adjustment indicated a clearer development direction of Ant Financial. The globalization strategy with a focus on international business remained unchanged in the strategy adjustment, showing Ant Financial's determination to go global.
Revenue forecasting: Ant Financial's revenue mainly comes from three sections: payment connection (payment and withdrawal service charges, as well as interests on provisions), financial services (revenue from credit, wealth management, insurance and other financial business) and technology services (revenue from Zhima Credit, applets, universal and industrial vertical solutions of BASIC).
EO Intelligence has predicted the online and offline payment markets in China, considering that the transaction scale of online and offline payment will be around RMB 201 trillion in 2018. Based on the historical performance of the market and current development trend of mobile payment, EO Intelligence conservatively has projected that by 2021 China's domestic transaction scale of online and offline payment will stand at RMB 322 trillion, with a compound growth rate of 17%.
By referencing to the average market performance, EO Intelligence has estimated the transaction scale of Ant Financial's payment business Alipay, based on its historical performance of, the transaction scale is always lower than the market composite value in terms of growth rate. Take the stage of Alipay business and the development trend of the industry into considerating, EO Intelligence takes the compound growth rate (17%) of transaction scale in the market by 2021 as a median and divides that of Alipay into five grades with an interval of 3%.
According to the median value, the transaction scale of Alipay will amount to RMB 157 trillion in 2021. Combined with the potential trend of rising comprehensive rate mentioned above, EO Intelligence predicts that the variable range of payment connection revenue of Ant Financial in 2021 will be RMB 94.2-125.6 billion. Based on the comprehensive analysis, Ant Financial will not compress its payment business in the short term amid the growth of current payment business.
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