Hundsun Technologies (恒生电子) has announced on March 30 that Ant Financial (蚂蚁金服) plans to buy out 100% equity of the company.

Hundsun Technologies provides financial software and network services in Mainland China, USA and Hong Kong. Following the announcement, Hundsun’s stocks jumped around 9% from CNY 87.5 to CNY 96.3.

Ant Financial is continuing to broaden its global Fin-Tech network by partnerships and several forms of investments. Based on the data taken from CBInsights, Ant Financial raised around USD 14 billion worth of Fin-Tech venture investment in 2018; amount corresponds the value of the investments in Fin-Tech industry initiated by entire North American and European companies combined. Most recently, Ant Financial has invested in an Indonesian Mobile Payment platform, Blue Mobile.

By means of Hundsun’s purchase, Ant Financial aims at improving the technical capability of its existing services.

Ant’s Revenue Streams

Ant Financial has several revenue streams coming from four main services, namely, Alipay (支付宝), Ant Fortune (蚂蚁财富), MyBank (网商银行) and Sesame Credit (芝麻信用).

Alipay provides a mobile payment gateway, and it is the most significant service of Ant Financial. Unlike the popularity of NFC in Europe and the USA; Chinese mobile payment providers WeChat Pay and Alipay use QR code method to link the transaction. Alipay’s unique selling point does not come from its technical sophistication; but instead, it depends on a widespread user network, regulatory green light and a highly penetrated communication networks. For now, China has all. Unless an expected regulatory problem hits, Alipay stands out perfectly safe to keep its hegemony going in the Mainland.

Ant Fortune was released in 2015, aiming to pull Ant Financial out from being a ubiquitous fin-tech company to a financial services giant. Using Ant Fortune, users can engage in numerous forms of investment operations, such as P2P loans, stock market investments, crowdfunding projects, etc. Alternative individual financing channels are seen as highly risky financial actions in China unless an eminent company like Ant Financial provides a platform. From this respect, Ant Financial is playing the role of a catalyzer for the healthy development of Fin-Tech in China.

MyBank is an actual bank challenger, without a single branch. With regards to Network Effect, MyBank's business model is explicitly stronger than traditional banks. MyBank targets middle-class individuals and SMEs with a variety of lending options for small amounts. When it comes to lending in small amounts; larger banks and state-owned financial institutions are failing due to time-consuming due diligence processes. MyBank’s lending process is self-described as 3-1-0; submitting a credit application in 3 minutes, getting the results in 1 minute and with 0 human interaction. To make it happen, Ant Financial utilizes loads of AI and Big Data; which requires a great deal of technical capacity.

Sesame Credit is a third-party Big Data credit rating service. Sesame Credit collects individual personal data, processes that data by individual and share the final note with the third parties. Ant Financial claims no use and collection of data without prior permission from the individual; just like any other company who collects personal data. Ant Financial controls and partners with a wide company network in China; Sesame Credit brings compelling benefits to its users in many of these companies’ services through cheaper or sometimes free access to these online and offline services. This incentive convinces Chinese users to share their personal data with Sesame Credit. 

Ecosystem Inclusion of Ant Financial

As can be seen from the above-mentioned revenue generation models, Ant Financial is not a typical Fin-Tech company; form due diligence to the execution of payment, Ant Financial aims at providing a large financial services ecosystem. To do this, Ant Financial is partnering with and investing in umpteen companies.

Hundsun’s financial software library will further intensify Ant Financial’s very comprehensive services.