Ant Group vies for a slice of SE-Asia's SME fintech market

CLINCHING a digital wholesale bank licence in Singapore is one of Ant Group’s biggest moves in South-east Asia. But this did not come out of the blue. 

As far back as 2016, the Chinese tech giant has been investing in South-east Asian fintechs, including e-wallet operators Ascend Money (Thailand), eMonkey (Vietnam), TNG Digital (Malaysia), Dana (Indonesia) and GCash (The Philippines). 

Ant’s steady build-up of activity in this region all point to a broader ambition: to be the go-to fintech partner for small and medium enterprises (SMEs) in this region. 

“South-east Asia is a vast region with a large, urbanised, digitally savvy, yet underbanked population. Cash has been, and in many ways remains, a dominant feature of everyday life. Inclusive digital financial services are in demand,” said Angel Zhao, president of Ant’s international business group.

This is especially so against the backdrop of accelerating digital adoption, combined with a positive outlook for post-pandemic recovery among the major markets here.

Ant declined to comment on regulatory developments in China and the potential break-up of its payments app Alipay, amid the country’s tech crackdown. 

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As The Business Times previously reported, observers do not see this dampening the company’s ambitions in South-east Asia; some think it may in fact add momentum to Ant’s growth plans outside of China, where it is focused on the business-to-business segment. 

Serving e-wallet operators is one key aspect of Ant’s strategy in this region. Tapping on its experience of building Alipay, the company has developed a suite of e-wallet solutions.

“We have started to provide these solutions to external customers, which they can leverage to build and develop digital wallets, with a shortened learning curve and reduced costs of error,” said Zhao. 

One such solution is AlphaRisk, an intelligent risk control engine which has kept Alipay’s fraud loss rate under 0.42 per ten million, said Zhao. Ant has since provided AlphaRisk to GCash, a Philippines-based e-wallet that the Chinese company has also invested in. 

Ant sees e-wallets as critical infrastructure, given that large segments of South-east Asia lack access to traditional financial services. 

The region’s high smartphone penetration rate and openness to trying out new digital services further enhance the proposition of e-wallets here. 

“We are proud to lower the barrier of entry for digital wallets, which contribute to more accessible and inclusive financial services to both merchants and consumers,” said Zhao, adding that the company is committed to helping its e-wallet partners succeed. 

Ant also remains active as an investor. In early October, it contributed to the US$150 million Series C round of e-wallet operator Ascend Money, which it had backed earlier in 2016. This took Ascend’s valuation to US$1.5 billion and turned it into Thailand’s first fintech unicorn. 

Beyond startups, Ant also serves large corporations such as Google, Apple and foodpanda. It also supports Alibaba-linked e-commerce platforms Lazada, Tmall and AliExpress.

Ant is now doubling down on the SME segment. Last year, it introduced Alipay+, a suite of cross-border mobile payments and marketing solutions, especially targeted at SMEs. The payments solutions allow SMEs to accept various digital payment methods from around the world. 

Another offering is Alipay+ Rewards, a digital marketing tool that allows e-wallet users to redeem or purchase vouchers from merchants. 

GCash has already rolled out Alipay+ Rewards, and more e-wallets are set to do so in the coming 11.11 shopping festival, Zhao said. 

Ant is also extending other types of software solutions to the companies it works with in South-east Asia. 

For instance, it has provided restaurant-booking platform Chope with its “mini program” service, which allows other businesses to integrate into the Chope app. This partnership came on the back of Ant’s US$15 million investment into Chope in August. 

On the blockchain front, Ant has introduced Trusple, a smart contract platform for cross-border trade that can help SMEs obtain financial services from partner financial institutions. 

In March this year, DBS closed a trade financing transaction on Trusple, valued at over US$40,000, on behalf of a Singapore manufacturing SME. 

While rolling out innovations like AlphaRisk and Trusple, Ant is also focused on imparting tech know-how in this region. 

“In the process of working with customers, we have also trained more operation and product talent” in the e-wallet space, noted Zhao. 

Singapore, where Ant has had a presence since 2013, plays an important role in the company’s vision as a gateway to Asean, she added. 

This role is likely to be amplified as Ant rolls out its digibank here. While not disclosing specifics, Zhao emphasised that it will focus on making financial services more accessible to “unserved and underserved” SMEs. 

Emphasising Ant’s commitment to the region, she said: “South-east Asia represents many opportunities in further accelerating the digital economy and financial inclusion, hence it remains an important region for Ant to contribute to.” 

For all our coverage of the Singapore FinTech Festival 2021, go to bt.sg/sff2021.