Chinese innovation in financial service poses an opportunity for the wider fund management industry, according to Porter Erisman, former vice president at Chinese ecommerce platform giant Alibaba Group.
When considering the parallel rise of ecommerce and fintech in China, “the two are inseparable”, Erisman said at Fund Forum International. He is the author of Alibaba’s World: How a Remarkable Chinese Company is Changing the Face of Global Business.
With the rise of Alibaba in China came AliPay, an escrow system that held buyers’ money until the transaction was complete, and then sent it on to the seller. From AliPay grew Ant Financial and its money market fund, which raised $90 billion in assets in just three years.
Through development of mobile payments capabilities, fintech is now “part of the daily fabric of people’s lives” in China.
Going forward, Erisman suggested that “data is going to drive the revolution”. In China, there is a lot of data available on the cloud, without the same sensitivity around data protection seen in other parts of the world.
Regulators have, for the most part, embraced fintech in this area, “allowing it to grow”.
Similar developments are coming about in India and Southeast Asia, and in these markets digital is “going to be the core of how things are done”. According to Erisman, this creates an opportunity for the fund management industry by offering “access to all these new investors”.
“I don’t see Chinese ecommerce companies coming here and taking, head on, the financial institutions,” he said.
“More than anything, it’s a way for you all to tap into the hungry Chinese investors.”
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