Today, there is more of “Tech” in FinTech than there is of “Fin.”[1] The journey to a borderless tech industry – encompassing every aspect of innovation in the financial world and beyond – started years ago when the term FinTech wasn’t even coined. FinTech then served as a transitional stage in the mindsets of innovators in the financial services industry, and now, technology is a dominating transformational force across niches, with the ‘finance’ part fading into the background.
Just about a decade ago, we would have a precise classification in mind for which industries Apple, Amazon, Walmart, and Morgan Stanley represent. Today, these corporations and a broad range of rapidly emerged cross-industry behemoths are all technology-first companies with a diversified business model. And that became possible because of technology and data.
E-commerce and lending is the hottest tie-up there is right now. Online purchasing and even browsing behavior became the key for e-commerce giants like Amazon in the Western world, and Alibaba in Asia, to accumulate enough knowledge and data to build the best match for online shopping (whether from a business perspective or consumer) – an online loan. Today, lending services of Amazon and Alibaba, while vastly on different levels, are massive, billion-dollar businesses.
In 2011, Ant Financial spun out of Alibaba as its financial arm, and today, Ant Financial’s consumer lending has reached at least $95 billion[2]. Ant has become a financial giant that was said to be valued at $60 billion and currently has more outstanding consumer loans than China’s second-largest bank. Ant Financial’s outstanding consumer loans are almost 3.7 times the size of China Construction Bank Corp.’s.
In comparison to Alibaba, Amazon is shy some billions but nonetheless, an illustrative case. According to Forbes[3], Amazon Lending has made more than $3 billion in business loans ranging from $1,000 to $750,000 since 2011 to help SMBs selling on Amazon grow their enterprises. In February, CNBC[4] reported that Amazon had partnered with Bank of America Merrill Lynch to expand its small-business lending efforts.
Ant Financial Services, in addition, is one of eight companies approved to pilot commercial experiments with social credit scoring in China, which assigns ratings based on information such as when customers shop online, what they buy, and what phone they use.
I won’t go into the Samsung, Apple, and Facebook cases[5] which were widely dissected and speculated around. Instead, let’s look at more unorthodox entrants – a Singapore-based ride-hailing company Grab, for example. To be precise, Grab is a technology company that has built a popular ride-hailing app, but it’s not all the company aspires to be.
After gaining success in ride-hailing, Grab (which has more than 86 million downloads) Co-founder Anthony Tan is pushing his startup into a new challenge, Bloomberg[6] shared a day ago:
