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Asia fintech: Ant heads west for next phase of expansion

Ant Financial is best known for domestic mobile payments dominance and its steady expansion into emerging markets – what’s it doing in Scandinavia?

Readers of our landmark cover story on Ant Financial will be familiar with the company’s global theme: bringing its extraordinary domestic fintech capability to the emerging market masses in places like India and the Philippines.

But September saw an altogether more developed set of locations, with memorandums of understanding struck in Finland (finpro on the 18th), Sweden (the Swedish Trade Federation on the 20th), and Denmark and Norway (Scandinavian Tourist Board on the 22nd). The Singapore Tourism Board followed on the 25th and Greece on the 30th. 

All of this comes while Ant’s bid to buy MoneyGram in the US navigates the Committee on Foreign Investment in the United States (CFIUS).

Markets don’t get much more savvy and developed than Scandinavia, so what’s happening?

Ant’s model of overseas expansion comes in two forms: using the Alipay payment application to serve Chinese tourists all over the world, and developing a presence in local markets usually by buying a chunk of a (licensed) local business and putting Ant’s tech into the back end to create an e-wallet, with the local partner doing the marketing.

As a general rule, with exceptions, the developed world ventures tend to fall into the first category and emerging markets into the second, though there are places such as Japan, Korea and Hong Kong that fit into both camps.

 douglas feagin 160x186
Douglas Feagin,
Ant International

“Some of the recent agreements you will have seen with the Scandinavian countries are part of our work with tourism and government organisations to encourage merchants in those countries to accept Alipay,” says Douglas Feagin, president of Ant Financial International. It’s a natural approach: it combines the expertise gleaned in the world’s most mobile payments-savvy market, China, with the trend of Chinese tourists going further and further overseas. Chinese people took 126 million overseas trips last year, with a particular increase in long-haul, developed-world destinations.

“And on vacation, they are there to shop,” Feagin adds.

Feagin says that in Japan, for example, merchants tell him that Alipay users are now accounting for 30% to 40% of total spend.

“Mobile payments is going from being an interesting curiosity to something with very much mainstream adoption,” he says.

So what’s next? For the moment, expansion into local markets will remain an emerging market priority. The standouts to date, all of them built with local partners, would be India (PayTM), Thailand (Ascend Money), the Philippines (Mynt), Indonesia (Emtek) and Hong Kong (AlipayHK, under its own licence).

“As to the next countries, you will see us filling out our footprint in Asia,” Feagin says.

Increasingly, to enable its expansion, Ant is incorporating itself into tourist promotion. On September 26 it hosted a forum called Smart Tourism in Beijing, seeking to connect tourism boards, government officials and merchants.


Although Ant Financial’s international expansion is one of the most talked-about in financial services, it doesn’t necessarily equate to a huge amount of work for banks.

“Most of these are not large M&A transactions,” says Feagin, who spent 22 years at Goldman Sachs (a happy hunting ground for Chinese fintechs). “They tend to be partnerships in local markets to build a business. Ant Financial is quite an international organization and we do have a good number of people who are internationally minded and able to engage in conversation with these partners. But we have used teams in more complex structures.”

One area banks and lawyers are very much involved is in the bid for MoneyGram, which Feagin can’t discuss as it is awaiting approval both of state-level regulators and the black box that is CFIUS. Citi is advising Ant on that deal, with Bank of America Merrill Lynch on the other side; Simpson Thacher & Bartlett is Ant’s main lawyer, opposite Vinson & Elkins.

Citi and other banks close to Ant – among them Credit Suisse and Goldman Sachs – are angling for the IPO when it comes, though Feagin won’t be drawn on timing.

“We focus on growing our business organically and through partnerships,” he says. “We are really much more of a tech firm, so there is not much pressure from a capital perspective to pursue an IPO. We have access to the capital we need through other means.

“We see the benefit of an IPO potentially, but there are no specific plans or timetable towards that.”