This comes after Ant Group—which has one billion users of its Alipay mobile payment app—began offering customized investing advice in a joint venture with US-based Vanguard back in December. Ant is the fintech affiliate of Tencent rival Alibaba and is gearing up for an initial public offering later this year. Meanwhile, ByteDance, which owns TikTok, has plans to expand into the online stock brokerage and wealth management business in Hong Kong.
The moves are in line with the tech giants’ relentless search for ways to monetize their huge user traffic, says Vey-Sern Ling, a senior analyst with Bloomberg Intelligence who covers Asian internet businesses.
“The most traditional ways are to get users to play games, or show them ads, or get them to shop,” Ling tells Wunderman Thompson Intelligence. “Traffic redirection, or referrals, are another way to make money off them. I think all the finance-related businesses for these Internet companies can be classified into this bucket, whether its fund advisory, money market funds, wealth management products, brokerage, even online banks.”
The world’s biggest savers
Since local regulators began opening up China’s asset management industry a decade ago, its scale has grown ten-fold to about $16 trillion in assets under management by end 2019, according to a report by the World Economic Forum, “China’s Asset Management at an Inflection Point.” At the same time, Chinese are the biggest savers in the world, with $28 trillion sitting in bank deposits, ripe for investing opportunities.
The stock market is currently dominated by retail investors, which can lend a casino-like feel to trading. Last year, the government issued fund advisory licenses for the first time, as part of efforts to develop the sector.
Traditional banks and financial institutions both Chinese and foreign are jumping in. So are tech companies, who are likely to introduce innovations not seen elsewhere, or at least not at this scale.