Tencent CEO Pony Ma asks fintech unit to cede share in payments market to avoid challenging banks

Tencent should modify its products so that the firm will be viewed as ‘a partner of banks’, Ma is quoted as saying in a staff meeting
The founder has also warned staff to focus on ‘safety, not speed’ when venturing into new fintech services like loans and insurance

Tencent

Iris Dengin Shenzhen

Published: 9:26pm, 30 Jan 2024

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Pony Ma Huateng, founder and chief executive of Tencent Holdings, told employees that the firm’s financial technology unit needs to reduce its share in China’s payments market, as the social media and video gaming giant tries to avoid ruffling the feathers of banks, according to Chinese media reports and a person familiar with the situation.

At a staff meeting on Monday, Ma reviewed Tencent’s business segments and said that the payment service was the only one that “was requested to” seek a smaller slice of the market, according to a report by Chinese media outlet Jiemian.

A person who attended that meeting and asked not to be named as the information is not public, confirmed the report with the Post.

Tencent did not immediately respond to a request for comment on Tuesday.

The Tencent headquarters in Shenzhen, southern China. Photo: Bloomberg

While Tencent’s WeChat Pay and Ant Group’s Alipay jointly account for over 90 per cent of China’s mobile payment market, Ma said half of the transactions conducted through WeChat were bank account transfers rather than payment services. He said Tencent should modify its products so that it would be viewed as “a partner of banks”.

“We are just a channel, a pathway, and we are not engaged in a rivalry [with banks],” Ma was quoted as saying by Jiemian.

Beijing maintains stringent scrutiny over Big Tech’s involvement in financial services after years of regulatory tightening. Ant, the fintech giant affiliated with South China Morning Post owner Alibaba Group Holding, has undergone a major business reorganisation and ownership changes to satisfy government requirements.

China’s central bank last year fined half a dozen firms involved in fintech, including Tencent and Ant, for consumer protection violations and other malpractices. Ant received a penalty of 7.123 billion yuan (US$997.5 million). Tencent’s Tenpay was ordered to pay a 2.99 billion yuan fine.

Tencent has been venturing into new fintech services that have huge potential, such as loans and insurance, but these could also leave the company vulnerable to problems seen in those industries, said Ma, according to the report.

“In finance, the key is always safety, not speed,” Ma was quoted as saying during the meeting. “The faster you are, the more dangerous it is.”

Tencent has previously underscored its cautious approach in rolling out new financial services and its focus on risk management. Company president Martin Lau Chi-ping told analysts in a conference call in November that Tencent was growing its new fintech businesses “in a measured way, so that we don’t take on too much risk”.

In the third quarter of 2023, Tencent’s fintech and business services segment – which includes cloud computing for enterprise clients – grew 16 per cent from a year earlier to 52 billion yuan.

Tencent noted that its fintech revenue posted double-digit growth year on year, thanks to increased commercial payment activities and wealth management revenues.

During his company-wide address to staff on Monday, Ma also urged employees to find new opportunities in the video gaming and social media businesses, particularly in WeChat, saying that “an old tree should still form new buds”.