Here’s how Ant Group is charting its path to ASEAN dominance
Ant Group, the fintech affiliate of Chinese e-commerce giant Alibaba, is pursuing its expansion plans across Southeast Asia, boosting its operations in a region characterized by a fragmented payments market and no clear leader.
In Southeast Asia, the group has been working to expand the foothold of Alipay+, a suite of digital payment and cross-border marketing solutions for businesses it launched in 2020.
The goal here is for Alipay+ to become the dominant digital payment ecosystem, connecting the region’s digital payment market with a simple QR code-based system supported by various payment apps to allow both online and in-store payments.
Jia Hang
“We are very focused on [the region] because we think it’s time,” Jia Hang, Ant Group’s general manager for Southeast Asia, told Nikkei Asia in a recent interview. “We would like to invest more and partner with more businesses to better serve local people.”
To this end, the firm has actively pursued partnership and investment opportunities, and has entered into a number of agreements over the past year.
In April, it claimed a majority stake in Singapore-based payment acquirer and processor 2C2P, a deal Hang described as “a crucial piece” to expanding its merchant base in the region.
2C2P helps businesses in Southeast Asia move money across borders and has a presence in key markets including Thailand, Singapore and Malaysia. It offers services such as payment receipt, issuance and payment.
As part of the deal, a strategic partnership was formed between Ant Group and 2C2P to connect the latter’s extensive pool of merchants and brands with Alipay+.
Most recently, the firm signed a deal with Indonesian fintech company Akulaku, adding another company to the Alipay+ ecosystem. The partnership brought the total number of digital partners of the Alipay+ ecosystem to 13, according to Nikkei Asia.
Akulaku’s BNPL solution now among payment methods supported by Alipay+
Digital wallets that are part of the Alipay+ ecosystem include Touch ‘n Go eWallet (Malaysia), KakaoPay (South Korea), GCash (Philippines), Alipay HK (Hong Kong), TrueMoney (Thailand), bKash (Bangladesh) and EZ -Link (Singapore) ). Many of these companies are ventures Ant Group has invested in.
Ant Group’s focus on the Southeast Asian market comes at a time when Beijing is increasing oversight of China’s digital payments and technology sectors.
The crackdown, which began in 2020, has forced Ant Group to revamp its business by selling stakes in top-performing units such as lending and credit scoring to other groups, including state-owned companies. It also had to shrink some of its businesses, including its flagship money market fund, Yu’e Bao, which was once the world’s largest.
In November 2020, Ant Group had to suspend its long-awaited initial public offering (IPO). The IPO was set to raise $34.5 billion in the world’s largest initial public offering at the time, valuing the company at $313 billion.
With massive smartphone penetration, relatively low banking penetration and over 600 million young new consumers, Southeast Asia has become a top destination for consumer fintech companies.
According to Chris Yeo, CEO of Indonesia’s payments platform Doku, more than six out of ten people in Southeast Asia are still unbanked and only around 17% of transactions are cashless, opening up plenty of opportunities in the digital payments and finance space.
Market Intelligence and Research International Data Corporate (IDC) estimates that 250 million people in Southeast Asia will use mobile wallets for the first time by 2025, when digital payments will account for 91% of total e-commerce payments.
In addition to expanding the reach of Alipay+ digital payment and commerce offerings, Ant Group is also pursuing digital banking opportunities. In 2020, it became one of the two groups to receive a wholesale digital banking license from the Monetary Authority of Singapore (MAS), allowing it to serve SMEs and other non-retail segments. Ant Group then soft-launched Anext Bank in June 2022, a digital bank focused on providing financial services to small and medium-sized enterprises (SMEs).
Other ongoing projects include a collaboration with Malaysia’s Kenanga Investment Bank to launch a super app for the domestic market, as well as a partnership with Proxtera in Singapore to create an open framework for collaboration with financial institutions.
Featured image credit: edited from Pixabay
