China's brick-and-mortar state bank looks to Alipay for help to embrace fintech

Alibaba affiliate will help lender with cloud computing, mobile payments and artificial intelligence-driven applications

PUBLISHED : Wednesday, 23 May, 2018, 7:03pm
UPDATED : Wednesday, 23 May, 2018, 11:07pm

Ant Financial, an affiliate of Chinese e-commerce giant Alibaba Group Holding, said on Wednesday it had signed a strategic cooperation agreement with China Everbright Bank and its financial technology affiliate Everbright Technology, to help the state bank with its digital transformation.

Under the agreement, Ant Financial will share its financial technology capabilities and know-how with China Everbright to help the bank develop cloud computing, internet finance, mobile payment, artificial intelligence-driven applications, smart risk management systems, as well as biometric verification, said the Hangzhou-based company.

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“Fintech is becoming core competence for financial institutions in the pursuit of transformation and innovation,” said the Beijing-based lender. The three parties will also establish an innovation lab to incubate new financial technology applications.

Eric Jing, the Ant Financial executive chairman and chief executive, has vowed to maintain an open stance on collaborating with partners in technology, to “deliver value to users”.

Ant Financial’s Alipay and Tencent Holdings’ WeChat Pay had the lion’s share of China’s 109 trillion yuan (US$17 trillion) mobile payments market in 2017, according to data from Beijing-based consultancy Analysys.

These technology companies are, on the one hand, threatening to disrupt traditional banks’ financial services, with offerings from mobile payments to assets management services.

There are also growing signs that, on the other hand, traditional banks and internet majors are joining hands to tap the vast potential of the mainland’s financial sector.

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China’s “big five” state banks, which account for more than a third of the country’s total banking assets, had all formed alliances with technology giants by 2017.

“For banks, self-driven innovation and collaboration with technology majors will go parallel,” said He Fei, a senior researcher at the Bank of Communications in Shanghai. “The cooperation is well set to continue.”

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Also on Wednesday, the China Securities Regulatory Commission, the top securities watchdog in mainland China, said it had held the first meeting of its regulatory technology experts panel, in an indication of the growing clout of technology with regard to financial institutions and regulation.

The panel included experts from Ant Financial, JD Finance, the financial research arm of the central bank and the Institute of Computing Technology, Chinese Academy of Sciences.

Alibaba Group owns the South China Morning Post.