The details for Ant’s overhaul have arrived. Ant Group, the fintech affiliate of Alibaba controlled by Jack Ma, will become a financial holding company that will bring more regulatory scrutiny over how it lends and generates profits, China’s central bank said on Monday.
Ant started as an online payments processor for Alibaba marketplaces and has over time blossomed into an empire of payments, lending, wealth management and insurance. Its encroachment onto the existing financial industry had not been particularly welcome in China, and a few years ago, the giant began positioning itself as a “technology provider” rather than one competing with big banks and conventional wealth managers.
Despite these efforts, the government wanted to further rein in the fintech giant.
As part of what the government dubs a “rectification plan” for Ant, of which initial public offering was called off in November as regulators sought to curb the power of the country’s internet giants, Ant will “correct its anti-competitive practices.” That entails giving consumers more options in payment methods and removing unscrupulous tricks that lure users into getting loans.
Ant, which has over 1 billion annual users around the world, most of whom are in China, is also asked to end its monopoly on user data and ensure the information safety of individuals and the nation.
As a financial holding company, Ant will also need to control the liquidity risk of its financial products and shrink the size of its money-market fund, one of the world’s biggest.