Alibaba’s Banking Strategy

Alibaba has eight major businesses — Taobao Marketplace,, Juhuasuan, Alitrip, AliExpress,, and Alibaba Cloud Computing — but most of its revenue comes from online Chinese marketplaces, Taobao and Tmall.

You would think by all the noise you hear that they will completely disintermediate banks. In fact a survey we jointly did with Misys, they were the most feared competitor (Amazon as well).

So where are they in banking? A few weeks ago, Alibaba’s finance arm rebranded their “Small and Medium Financial Services Company to “Ant Financial Services Group” (AFSG).  AFSG is comprised of various businesses:

  • Alipay – online payments platform including the Alipay Wallet,
  • Yu’eBao – Alipay’s money market fund
  • Zhao Cai Bao – A platform for financial products and services (including 3rd parties). Products offered on the platform include loans for small and medium enterprises, individuals, universal insurance and structured funds.
  •  Ant Credit provides micro online loans to small and micro enterprises and individual online entrepreneurs, evaluated based on data. The products include credit loans, online merchant loans and loans for Taobao seller
  • MYbank – the new private bank to be launched by Alibaba with Shanghai Fosun Industrial Technology

So you have a payment processor, tiny business loans, a private bank, an investment fund and other services rolled up into Ant. AFSG is a financial services provider, rather than a financial institution with major financial holdings. According to Lucy Peng, CEO of Ant Financial. “Ant Financial will focus on serving small and micro enterprises, as well as individual consumers. Building on Internet-based solutions and technology, we plan to work with ecosystem participants such as financial institutions to create an open ecosystem, as well as provide support to the financial industry to realize our vision ‘To turn trust into wealth’”.

I have already talked about the problems Amazon’s sellers have getting paid - Sellers blossom on Amazon’ Marketplace, but face Working capital challenges

Alibaba has done an amazing job of picking pieces of financial services leveraging their marketplace strategies.  It should be interesting to watch them develop working capital products for their marketplaces.

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