Source: Zero One Think Tank

Although the Internet finance boom since 2013 has developed amidst controversy, it has propelled China's financial technology application level to a globally leading position and enabled overseas expansion.

Recently, Ant International launched Bettr, a service platform providing micro, small, and medium-sized enterprises (MSMEs) with micro-loans, and established its first embedded financial cooperation with AWC, Thailand's leading commercial real estate group, to provide digital loan services to SMEs on its platforms. This marks another step forward in the overseas expansion of leading platform financial businesses.

Looking back at the overseas development history of financial technology, we can see several key stages. In around 2016, payment businesses led by major Internet platforms began to expand overseas. During this period, Ant Group not only promoted the internationalization of Alipay but also deployed micro-loan services targeting small and micro enterprises in Southeast Asia. Subsequently, around 2018, cash loan businesses also began to go global, mainly led by loan facilitation companies.

In addition, thanks to years of technological accumulation, technology export has become an emerging force in China's financial technology going global.

According to the "2023 China FinTech Enterprise Chief Insight Report" jointly written by the Financial Technology Development and Research Committee of the China Internet Finance Association and KPMG China, 52% of the surveyed enterprises have either already "gone global" or plan to do so, a significant increase of 9% compared to 2022. Among them, 32% have already conducted overseas businesses independently, through cooperation, or investment, while 20% plan to do so, with both percentages steadily increasing.

01 

Ant Going Global

Originating from Alibaba and starting with Alipay, Ant Group has the genes of microfinance services. On June 25, 2015, MYbank, which was initiated and held a 30% stake by Ant Group, officially opened. It is a bank dedicated to serving small and micro enterprises and is also the first Internet bank in China. As of the end of 2023, its micro-loan balance accounted for over 70%.

MYbank is an essential part of the vast Alibaba ecosystem, with its business closely related to Alipay and Taobao/Tmall, and it is also extending to platforms outside the Alibaba ecosystem. According to financial reports, in 2023, MYbank provided financial support to over 4 million e-commerce merchants. Besides Taobao and Tmall, it also identified and granted credit to business customers on JD.com, Pinduoduo, Douyin, and Kuaishou, providing credit support to over 1.1 million cross-platform e-commerce merchants throughout the year.

Nowadays, Ant's microfinance "tentacles" are extending overseas, seemingly replicating the MYbank model by cooperating with platforms to provide loans to small enterprises.

According to media reports, AssetWorld Corporation (AWC), which is collaborating with Bettr, is a comprehensive lifestyle and real estate group in Thailand and a member of Thailand's major real estate group TCCGroup. The first phase of their cooperation will involve AWC's food wholesale center, Phenix, which is expected to open on June 26. Subsequently, the cooperation between Bettr and AWC will expand to merchants in AWC's hotel, retail, wholesale, and other business areas.

In June 2022, Ant Group launched Anext Bank, a digital bank in Singapore, which focuses on "providing digital financial services to local and regional micro, small, and medium-sized enterprises, especially those engaged in cross-border business." In 2023, ANEXT Bank's customer loan amount grew by 434% to US$165 million, and deposits increased by 368% to US$219 million.

MYbank's nine years of operation and accumulated technology and experience give Ant a comparative advantage in cooperating with platforms overseas to provide financial services to small enterprises. Furthermore, small enterprise financial services are part of the overseas extension of the Alibaba ecosystem, complementing the overseas expansion of payment businesses.

The overseas expansion of payment businesses, as a pioneer, undoubtedly provides synergistic support for the later expansion of small enterprise loan businesses.

In July 2016, Ant Group launched a global cross-border payment technology solution in Singapore, covering Asia, Europe, and North America. In Southeast Asia, besides Singapore, Alipay+ has been deployed in Malaysia, Thailand, and the Philippines, with many small and medium merchants joining Alipay+ to accept direct QR code payments from users of electronic wallets from multiple countries. Yang Peng, CEO of Ant International, said in April this year that Ant Group plans to introduce Alipay+ to the Indonesian market.

02

Payment as the Vanguard

Domestic financial technology's first emerging third-party payment business is also the pioneer in going global.

Payment institutions represented by UnionPay International, Alipay, Tenpay (WeChat Pay), and Baidu Wallet have become the first to explore overseas markets. According to media reports, in the past decade, large Internet institutions and financial technology platforms have deployed overseas payment businesses through equity investment and technology export, along with equity investment, exporting digital technology, standards, and "China's solutions."

In early 2004, with the approval of the People's Bank of China, UnionPay launched POS consumption services, ATM inquiry and cash withdrawal services for Mainland China UnionPay People's Cards in Hong Kong, marking the beginning of payment going overseas. BATJ's payment going overseas started eight years later.

Tencent Tenpay began its overseas layout in 2012, forming a strategic partnership with American Express to provide services to the former's customers for overseas online shopping. In 2014, Tenpay entered South Korea and Japan. At the end of 2015, WeChat Pay opened cross-border payment functionality to overseas merchants. In August 2016, WeChatPay, a subsidiary of Tencent, obtained Hong Kong's first batch of third-party payment licenses. In 2017, WeChat Pay expanded into the US and German markets.

In April 2016, Baidu Wallet's QR code payment entered Thailand, allowing consumers to complete overseas payments by scanning QR codes through Baidu Wallet. In July, Baidu signed a strategic joint venture agreement with the international payment company PayPal. According to the agreement, Chinese consumers can make online purchases and payments to international merchants on PayPal's website through Baidu Wallet within China.

In July 2017, JD Finance established an overseas business department. In September, JD.com, JD Finance, Thailand's largest retail enterprise Central Group, and Provident Capital announced the establishment of two joint ventures in Thailand, providing e-commerce services and financial technology services, respectively, with a total investment of US$500 million. The joint ventures plan to focus on payment services, utilizing JD Finance's mobile payment technology and combining it with Thailand's consumption reality to provide more localized payment products and services.

In addition, there are also players like Xiaomi Pay, which entered India in 2019, but with a lower market share. Accompanied by the prosperous development of cross-border trade, in recent years, over 20 payment institutions, including LianLianPay, Newland Payment, and PingPong, have obtained licenses globally to expand B-end service scenarios.

03

Technology Export of Financial Institutions

In addition to the financial technology export of Internet companies, financial technology subsidiaries and new digital Internet financial institutions are also actively exporting financial technology overseas.

Represented by ZhongAn Online (06060.HK, hereinafter referred to as "ZhongAn"), a Hong Kong-listed Internet insurance company, it established a wholly-owned subsidiary, ZhongAn Technology (ZhongAn Information Technology Service Co., Ltd.), in 2016, focusing on domestic business.

In 2017, ZhongAn International (ZhongAn Technology (International) Group Co., Ltd.) was established, focusing on international business and technology export. ZhongAn International's subsidiary, ZA Tech, was established in 2018, registered in Singapore, and its business has reached markets such as Japan, Hong Kong, Southeast Asia, and Europe.

In 2023, ZhongAn achieved a total technology export revenue of RMB 829 million, an increase of 40.0% year-on-year, but it did not disclose its international business revenue.

OneConnect Financial Technology (NYSE: OCFT/6638.HK), listed on the New York Stock Exchange and Hong Kong Stock Exchange, is a financial technology subsidiary incubated by Ping An Insurance. In recent years, its business has also expanded overseas. According to reports, its business has covered 20 countries and regions, including South Africa, Singapore, Thailand, Malaysia, Indonesia, the United Arab Emirates, the Philippines, and Vietnam, serving a cumulative total of 186 overseas financial institutions.

In 2023, its overseas business achieved higher growth, contributing RMB 182 million in revenue (excluding Ping An OneConnect Bank in Hong Kong), an increase of 37.2% year-on-year. Its executives said, "Our products are highly regarded overseas. In 2024, we will continue to actively develop overseas markets and expand our overseas sales network."

In the first quarter of 2024, OneConnect's overseas business revenue from third parties increased by 14.8% year-on-year, but the financial report did not disclose the specific amount.

In addition, China's first Internet bank has also begun to export technology services externally. According to Ma Zhitao, Deputy President and Chief Information Officer of WeBank, based on WeBank's distributed technology architecture, its domestic technology partner has built a core banking system for an Indonesian digital bank, helping them create a brand-new technical foundation and enabling their inclusive financial business to achieve about 5 million customer growth within a year.

04 

Aggressive Lending

Synchronizing with the tightening of domestic Internet lending regulations, a wave of cash loan going global emerged around 2018 and reached its peak around 2019. A group of players, including domestic loan facilitation platforms, Internet platforms, and new data technology companies, went overseas to find new market space and regulatory dividends (see Zero One Finance article "China's Internet Lending Goes Global Aggressively").

Among these players going overseas, Lei Jun, Zhou Hongyi, and Zhou Yahui were among the first to explore new territories. Xiaomi and Shunwei invested in college student installment loan platforms in India and launched "Xiaomi Loan" in India. The cash loan platform Mobike Magic, jointly created by Zhou Hongyi and Zhou Yahui, once occupied a leading position in the Indonesian and Indian markets.

This wave of going overseas heavily focused on Southeast Asia, especially Indonesia. According to media reports, the top five players in Indonesia's cash loan market are all from China, including Easycash from Yangqian Guan, Adakami from PPDai, Rupian Cepat from Mobike Magic, Kredit Pintar from ADVANCE.AI (controlled by Lingchuang Group), and Adapundi from Yinshan (controlled by Wang Yige and invested by Sequoia Capital).

Among listed loan facilitation platforms, CreditEase Technology (NYSE: FINV), Jfintech (NASDAQ: JFIN), and Qifutech (NASDAQ: QFIN/03660.HK) are pioneers in going overseas. And this year, LexinFintech (NASDAQ: LX) has also begun to show interest.

Among them, CreditEase Technology's overseas business has developed the fastest, becoming a new growth point, and relevant disclosures are relatively sufficient. In 2023, its international business transaction volume reached RMB 7.85 billion, and the loan balance reached RMB 1.26 billion, increasing by 84.7% and 57.5%, respectively; in 2023, its international business generated revenue of RMB 2.14 billion, an increase of 85.9% year-on-year, and its revenue share increased to 17%.

According to public information, CreditEase Technology is about to become profitable in Indonesia. However, the profitability of other players has not been publicly disclosed.

Amid the overseas lending boom, platform companies such as BAT have remained relatively calm. In terms of lending business, Baidu and Tencent have not released relevant public information, and whether Ant Group's layout of small enterprise lending business in Singapore and Thailand will spark a new wave remains to be seen.