The app was launched by Alibaba's Ant Financial subsidiary on Tuesday and contains the famous Yu'ebao product that arguably set off the online finance revolution in China. It also contains a number of other financial products from Zhaocaibao including some P2P lending products. On the face of it, you could see that Ant is just creating another financial app / platform, but what it could also be is a move to start separating the businesses.
At the end of July, regulators rattled sabres about more tightly enforcing online payment regulations. Among the different potential regulations, buried in the text, was the separation of online payments from wealth management or P2P activities. Sensing the shifting sands, Alibaba could be purposely moving ahead with separating the platforms and pre-empting any issues that may come further down the line.
What remains to be seen is how tightly the Alipay payments platform and the Ant Fortune platform will be tied together in the future. One of the the unique selling points of Yu'ebao was the ability to very quickly move money onto the platform from your Alipay account. If the new post-regulation process slows this down, it could be challenging for Alipay to keep up the same level of customer adoption.
It will also be interesting to see how this integrates with Ant Financial's MyBank. The trend in western markets is consolidation of platforms. So moving P2P payments, wealth management, etc onto one mobile or online platform. Here, that was the trend, but regulations seem to have thrown a wrench in the mix. We think that the separation will be a short-term focus for all the players until the regulations are in place and then we'll likely see things solidify again onto singular platforms.
That being said, with the way the Shanghai stock market is going right now, a measly, but relatively safe, 3% return on a product of of Ant Fortune is likely looking pretty good to a lot of Chinese investors.
Now, where's my xiaomi mobile. I need to make a fortune...