What a whirlwind vacation for Jack Ma and his Fintech Rich. The People’s Bank of China, the country’s central bank, invited the Ant Group to regulatory talks on December 26 and announced a comprehensive plan for the fintech company to “correct” its regulatory violations.
The meeting took place less than two months after the sudden collapse of the Chinese financial authorities stopped This could have been a record-breaking IPO for Ant in terms of regulatory compliance for the company. The company, which started as a payment processor for Alibaba’s online marketplaces and was spun off in 2011, lacked a solid governance structure, defied regulatory requirements, was illegally involved in arbitrage, excluded and injured competitors who were taking advantage of their market advantage consumer rights. said the central bank.
At the same time, Jack Ma is e-commerce giant Alibaba examined by China’s supreme market regulator for alleged monopoly behavior.
The banking authority set a five-point compliance agenda for Ant, which is overseen by Alibaba’s billionaire founder Jack Ma. The fintech company should return to its roots in payments and create more transparency in transactions. Obtain the necessary licenses for its lending operations and protect user privacy; establish a financial holding and ensure that it has sufficient capital; Revision of credit, insurance, asset management and other financial transactions in accordance with legal requirements; and improve compliance with the securities business.
After the closed meeting, Ant said It has set up an internal “rectification workforce” that meets all regulatory requirements.
The change could take months and probably Review by dent Ant, which exceeded $ 300 billion when it was supposed to go public. For example, the government recently announced plans raise the level for third-party technology platforms like Ant to provide credit to consumers, a segment that accounted for about 35% of Ant’s annual sales. The proposed change, part of Beijing’s efforts to control the country’s debt risks, also requires online micro-lenders to provide at least 30% of the loan they co-fund with banks, which could put pressure on Ant’s cash flow.
Some remain optimistic about Ant’s future. “[Ant] creates a lot of value. In the long run, the temporary IPO suspension will have limited business impact, ”said Bill Deng, founder of the cross-border payments company XTransfer and a former manager at Ant said to TechCrunch.
“From the regulatory authority’s point of view [Ant’s] Lending is getting so big that it goes beyond the old regulatory limits. To some extent, it has also harmed the core interests of traditional financial players, ”he added.
The crackdown on Ant has undoubtedly sent a warning to the rest of the industry. In a surprising move, JD.com’s fintech unit, a challenger to Ant, appointed its former chief compliance officer to manage the fintech company as the new Chief Executive Officer.
Tencent has one too extensive fintech businessbut it may not get the same level of control because the social and gaming giant is “not nearly as aggressive” as Ant in its fintech push, said a partner at Tencent’s overseas fintech business, who asked not to be named.