Let Indian Fintech Grow Into (Gi)Ants-Economic Times-

Clipped from: https://economictimes.indiatimes.com/blogs/et-editorials/let-indian-fintech-grow-into-giants/

There is much that India’s financial regulators, besides financial technology companies, can learn from Ant Group Company’s forthcoming mega initial public offering. Ant, spun off from parent Alibaba, China’s giant ecommerce platform that handles business-to-business and business-to-consumer sales, in 2011, will raise more than $30 billion, dethroning Aramco, the Saudi oil giant as the company to have managed the biggest IPO, and achieve a valuation in excess of $300 billion. That is comparable to the market cap of JP Morgan Chase, for example.

Ant has, broadly, four different business divisions: payments, credit, investment distribution and insurance distribution. It does offline payment, online payment and deferred payment on the lines of a credit card. It gives consumer loans and processes small business loan applications for banks. Reportedly, it processes 3,000 data points in about three minutes to sanction or decline a loan request. Alibaba’s sales yields multiple kinds of real-time data: company turnover, customer profile, customer lifestyle and spending power, supplier volumes and sales, customers’ customers, and so on. Past loanservicing behaviour, network of transactions, solidity of commercial interlocutors, and other data can be processed, along with all kinds of external data to arrive at credit decisions. It sells investment products.

Mini-sites on its investment platform can be used by asset management companies to interact with potential and actual customers. It also sells insurance products. The union of data, technology and money can transform finance, especially at the small end of the spectrum of individual borrowers, investors, and businesses. Credit cards stare at extinction. It is open for central bankers to ditch putting generalised liquidity in the hands of banks in favour of lending, through one Ant-like intermediary or just a few more, directly to small businesses gasping for the oxygen of credit. India’s fintech sector looks stunted. Regulation of finance and data must empower Indian fintech.

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