A few years ago, I wrote about the inexorable rise of Google and Amazon in finance. The conclusion from the piece was “if you prefer fast action and major Fintech disruption from tech powerhouses, then forget Amazon, Google or Apple, and watch Alibaba or Tencent…. Ant Financial, the finance arm of Alibaba, is valued $50bn.”
This was 2.5 years ago, and since then, watching Ant Financial grow could have been a full-time job…
Just have a look at this chart:
If one removed the reference to Ant Financial, it wouldn’t look like a Fintech company, but a diversified financial institution of very large scale – which it is. From payment to wealth management, lending, insurance, and even its own credit scoring agency, Ant Financial is simply a major financial institution.
Of course, this is not a normal financial institution. If only because it was created 14 years ago, and not 200 years ago like some traditional banks. And it is before all a tech company that grew to become a financial institution, from its origin as a Chinese equivalent of Paypal.
From a $50bn valuation 2.5 years ago, it has now reached $150bn last month. Ant Financial is still a private company (unlike parent company Alibaba), so the market capitalisation is of course a subjective number, based on private funding numbers.
Based on this number, Ant Financial would be the 10th largest banking group in the world, as evidenced by the table below:
(Methodology: I did an analysis of the largest banking groups by market cap by using Bloomberg data, and converting into USD when required. There is no standard definition of “banking group” – and it’s likely to be even less clear in the future – and a more precise analysis might include companies like Ping An. That’s however the best I can do between planes, and I’d welcome any input from smart analysts…)
Despite its stratospheric growth, a very good question would be whether Ant is a Chinese only story, or whether it could be a global group. My personal opinion is that it’s definitely not Chinese only, and it’s at least an Asian story, as evidenced by all the multiple acquisitions of Ant in Asia, from Thailand to Singapore and of course Paytm in India. Whether it’s a global story, I’d say Ant definitely has the ambition for it, and that will depend on the competitive reactions of both banks and tech companies in the rest of the world.
For those who were wondering what a Fintech world looks like, this is unfolding in front of our eyes with a tech company that has built the 10th largest bank in 15 years. But this is of course not the only example: the fastest growing financial institution in the UK is now a 5-year old startup valued $1.5bn, while some banks are not staying idle and investing very heavily in technology too. We knew the next few years would be exciting in finance, and this has truly started.
PS: for readers of Disruptive Finance, you’d have noticed that my last post was from 6 months ago… A lot of things have happened at CFTE and The Disruptive Group, which is great, but running two companies leaves me no time for blogging, which I regret. I use Linkedin much more now, so don’t hesitate to follow me there (just say you come from Disruptive Finance in the message and I’ll connect you).
Also, if you re looking for interesting content, have a look at my presentation at Money 20/20 about “How to build a bank from scratch” – I spent quite a considerable amount of time to prepare it.
Finally, the chart above with the different activities from Ant was copied from the very detailed Bank of the Future report of Citi, led by the excellent Ronit Ghose (disclaimer: he is on the board of CFTE). Have a read if you want a great overview of what’s happening in finance today.
If you want updates on Disruptive Finance and Fintech: