Following his participation to this year’s edition of ICT Spring which notably focused on Fintech, but also on business relations between China and Luxembourg, BEAST met with Douglas Feagin, President of International Business, Ant Financial. The expert discusses the Chinese company’s mission, how it actually makes use of technology but also its presence in Europe and notably in the Grand-Duchy of Luxembourg. Moreover, he tells us more about financial inclusion and Ant Financial’s most recent initiatives in that direction.

How would you describe Ant Financial’s mission? How are you leveraging technology to provide your clients with new solutions and services?

Our mission is to bring the world more equal opportunities. We focus on five strategic technology areas: Blockchain, AI, security, IoT and cloud computing (BASIC) to help us reach our mission of making financial services more inclusive for all. Our technology has enabled our partners to provide financial services in a safer, less expensive and more efficient way. The technologies also underpin our financial services to serve SMEs and individuals to have more equal access to the digital economy.

Can you tell us more about the origins of Ant Financial and Alipay? What are the main demands and challenges faced by your clients and how do your services help overcome these challenges?

Alipay launched in 2004 in China as a digital escrow service to bridge the trust gap between online buyers and sellers on an online marketplace. There was very little traditional payment infrastructure at that time. Credit card use is not as high in China as it is in the West and the other option of cash-on-delivery did not guarantee a mutually satisfactory transaction where a refund could easily be facilitated if the buyer wanted to make a return.

In 2014, we established Ant Financial – which includes Alipay and a full range of other inclusive services from facilitating digital payments to microloans for small businesses. Today, Alipay is the world’s leading third-party digital payment and lifestyle platform.

The biggest challenge for our users was the lack of access to banks or being underserved by the traditional banking system. We were able to bring a huge population of consumers online to participate in a burgeoning digital economy. Ant Financial has also helped the digital transformations of over 200 financial institutions, including over 100 banks, approximately 60 insurers, and 40 wealth management companies and security brokerages.

What are your ambitions in Europe, and more specifically in Luxembourg where you now have an electronic money license? How are your end-customers going to benefit from your presence here?

The electronic money license in Luxembourg announced in January 2019 makes it easier for our users to spend overseas.

Our strategic goal in Europe is to focus on partnerships to help connect local merchants to Alipay. This enables these merchants – large and small – to accept payment from Chinese living abroad or travelers. This ultimately connects the merchants with new customers or customers that may not have been able complete a transaction with the merchant. It’s also good for Alipay users because they are able to enjoy the kind of payment convenience they are used to at home.

Some of our recent partnerships include one with Barclaycard announced in March 2019 that opens 110,000 UK merchants to accept Alipay through a phased roll out in stores across the UK. In late 2018, UEFA named Alipay as its official global payment partner and official global digital wallet for all men’s national team events. Not only will this provide our Chinese users a seamless payment method across Europe, it will help UEFA reach and interact with a potential audience of billions in Asia.

What are the next steps in the development of the Alipay ecosystem? Which financial services trends are you keeping a close eye on?

Ant Financial now serves over 1 billion users globally through our global partnerships with local digital wallets. In the Europe and the U.S., we are focusing on increasing partnerships with local merchants to connect to Alipay and ultimately, Alipay users. In emerging markets closer to China, such as Southeast Asia and India, we are focused on the value we can add and the technology expertise we can share. We see a lot of characterizations that made Alipay a success in China in the last 10 years with those markets − a fast-growing mobile penetration, a rapidly developing internet economy and a growing base of middle-class consumers. In these markets, there is great opportunity to forge partnerships with local leaders to collaborate and best serve local users.

For example, we see great opportunities to bring the benefits of blockchain technology to individuals who need the access the most, particularly around security, sustainability and financial inclusion.

In the Philippines, we worked with GCash to launch a blockchain-based cross-border digital wallet remittance service, offering a fast, secure, convenient, transparent and low-cost way to transfer money directly between individuals in Hong Kong and the Philippines. We addressed the pain point of Filipino workers’ time spent remitting funds back home, shortening of the time taken for remittance and fees saved with lower costs. We launched a similar service between Pakistan and Malaysia, another popular corridor for cross-border remittance.

How is Luxembourg perceived from abroad, and especially from China? According to you, what are the main advantages of the country?

Luxembourg is a cultural and historical destination in Europe, and a great place to visit! I have had a wonderful time here at ICT Spring and have been welcomed by wonderful conference organizers. From what I can gather, Chinese tourism has risen in Luxembourg over the past decade due to interest in the historical, central and convenient location in Europe. According to the 2018 Nielsen Report on Trends for Mobile Payment in Chinese Outbound Tourism, Chinese tourists in their 20s are leading the trend for exotic destinations. It is one of our goals to continue to serve Chinese tourists overseas with payment options that they are used to at home.

Can you tell us more about your initiatives to further develop financial inclusion?

According to the World Findex Report issued by the World Bank in 2018, the number of globally unbanked has been reduced by 15 percent, from 2 billion to 1.7 billion, a large part due to Chinese and Indian digital wallet access. Still, a large majority of individuals and SMEs from emerging economies still lack access to formal savings and credit; they have no safe way to save and invest their money, and must rely on informal lenders and personal networks for credit. We are interested in collaborating with local partners to bring more consumers into the financial ecosystem, whether it’s by backing homegrown local champions or lending our expertise and resources to help them create even better local products. Many are affected positively by the world’s increasingly connected financial system. This includes unbanked and underserved populations, who have more opportunities to access financial services than ever before.