2022 FinTech's "5 Breakthrough Directions"

Produced | Tiger Sniff

The author | Zhou Zhou

Design | Wang Nannan

2021 is the "year of outbreak" of global fintech financing, mergers and acquisitions, and IPOs, as well as the "harvest year" of fintech leaders in various countries.

Brazil's Nubank and the United States' Coinbase just went public last year, and their market capitalizations both exceeded $50 billion; "Indian Alipay" Paytm and "Korean Alipay" Kakao Pay also had a market capitalization of more than $20 billion... Blockchain, cryptocurrencies, etc. as a new direction of financial technology in the global development trend is gratifying, new star companies mushroomed.

In contrast, domestic financial technology star companies are either shrinking their business like ants and rectifying non-stop, or like Ping An Group and its financial technology companies, they have experienced the pain of transformation and their stock prices have fallen endlessly... Unlike the IPO boom in the first half of 2020, everyone is talking about wealth freedom.

Star companies are often the "barometer" of an industry, through which the future can be seen. So what layout did the star companies in the financial technology industry do last year, and in which areas will they make breakthroughs next year?

Ant Group: Rectification into the "countdown"

In the first half of last year, everyone gave the ants a "pinch of sweat".

In October 2020, Ant Group suspended its IPO, and since then, ant group's publicity work has been suspended for most of the year, replaced by various compliance rectifications.

In terms of major personnel changes, Ant Group replaced Hu Xiaoming, who was mainly engaged in IPO work, in March last year, and officially pushed Chief Compliance Officer Li Chen to the forefront in July last year, in addition, "rectification" also allowed Ant Group to slow down the pace of business expansion, shrink some of the business that is not close to the actual revenue, and in November, Qi Yuan, chief scientist of Ant Group and leader of the AI team, left the Internet industry.

In the first half of last year, an obvious phenomenon was that all the publicity activities of Ant Group "disappeared", and instead announced various rectification contents: Huabei Borrowing was included in Ant Consumer Finance Company; Huabei Borrowing was credited and renamed; and the third domestic credit reporting company was established as a joint venture.

In the second half of the year, ants have finally gradually "become active": in corporate publicity activities, Yunqi conferences, green finance conferences, ESG, agricultural assistance, etc.; in business activities, ants have also begun to try to start new business expansion in blockchain, NFTs and other fields.

The most important problem that Ant Group will solve in 2022 is still rectification, so that its business meets the requirements of various regulatory authorities, so as to start new development. According to the current progress, the short is half a year, the long is one or two years, and the rectification of the ants will be completed.

In 2022, Ants still has two rectification tasks to complete:

1. Rectify financial activities such as illegal credit, insurance, and financial management, and control high leverage and risk contagion

Second: control the liquidity risk of important fund products, and actively reduce the balance of the balance treasure

Finance belongs to finance, and technology belongs to science and technology. Ant Group's rectification may be nearing the end of this year, but the adjustment of its related business will continue for a long time. At present, Ant's core business, Huabei Borrowing, is included in Ant Consumer Finance Company, which will affect the rapid growth of its business. When a company's business growth slows down, many previously absent problems will gradually emerge.

In 2022, in addition to actively completing the rectification requirements of supervision, Ant must also prove its value in the technology business. After the small loan business, the ant wants to hatch a "technology business" that can truly create value and profits.

Ant doesn't have many options, blockchain or its focus of development in the next five or even decades. Blockchain is a "combination" of a series of technologies, and the digital yuan and NFTs are closely related to it and will become its opportunities.

Ant Chain is to Ant Group what Alibaba Cloud is to Alibaba.

The blockchain-based NFT has proven to be a "profitable" business abroad, and Ant Group has a clear advantage in this regard. In the NFT business, Ant is still the best and most profitable company in China, according to incomplete statistics, ant chain released nearly 3 million NFTs in only half a year, and sales were close to 40 million yuan, which is still the result of Ant Group's low profile. With the popularity of NFTs in China, this business may become an important source of income for it.

China Merchants Bank: Can you keep 100 million monthly lives?

If any domestic company can benchmark Ant Group in the field of financial technology, people in the industry often think of not JD Digital or Du Xiaoman, but China Merchants Bank.

In 2021, China Merchants Bank launched the APP 10.0 version, and from 2010 to 2021, China Merchants Bank will carry out a major upgrade of the APP version almost every year. By last year, the phased goal of the China Merchants Bank APP had been completed. As of the end of June last year, the cumulative number of users of China Merchants Bank APP reached 158 million, and the number of monthly active users was 61.4 million.

However, China Merchants Bank also has its own traffic anxiety. How to continue to keep more than 100 million users using the APP every month has become a problem that China Merchants Bank needs to pay attention to in 2022.

China Merchants Bank has two major APP: China Merchants Bank APP and Pocket Life APP. At the end of 2020, the number of monthly active users of the two major apps of CMB was 107 million, and in the first half of 2021, its monthly active users did not increase but declined, becoming 105 million.

The "Pocket Life" APP of China Merchants Bank has declined year by year in the two indicators of monthly active users and the peak number of daily active users for three consecutive years.

In a way, CMB's APP is CMB itself. When financial institutions have launched their own apps and provided various preferential policies, how to maintain the loyalty of their users will be a big problem.

To this end, China Merchants Bank launched its own "Zhao Cai Number" against Internet financial platforms such as Alipay, inviting fund companies to settle in, helping fund companies to promote key wealth management products, and providing users with investment and research services. By building a big wealth platform, the ecology is richer and attracts more users to use. It is reported that at present, its Zhaocai number has released more than 5,000 contents and activities, and will serve 4 million customers in the third quarter of 2021.

Oriental Wealth: The market value has reached the top, and it is difficult to compete with the merchant ants

Traffic, in essence, is guided by user thinking and is mutually causal.

From a single perspective, if Ping An Group loses in ecology or traffic, then Oriental Wealth can be said to have won in traffic. The experience of financial information websites has made Oriental Wealth have a user base that is very envied by traditional brokers, and it has accumulated a large number of registered users through websites, APP and other channels.

In 2021, the number of monthly active users of Oriental Wealth is about 15 million, and according to the statistics of Analysys Qianfan, there are only two traditional securities companies with more than 5 million monthly active users in May 2021: Huatai Securities and Guotai Junan, which are 8.16 million and 5.48 million respectively. Oriental Wealth has more monthly active users than the first two traditional brokers combined.

The attributes of Internet finance also make Oriental Wealth "like a fish in the water" in A shares. In 2021, Orient Wealth surpassed CITIC Securities and was promoted to the "New King of Securities Companies". As of December 27, the market value of Oriental Wealth was 380 billion yuan, CITIC Securities was 335 billion yuan, and the traditional securities companies Huatai Securities and Guotai Junan, which ranked in the top two in the number of monthly active users, had a market value of about 150 billion yuan.

If compared with traditional brokers, the traffic advantage of Oriental Wealth can be reluctantly called its "moat", but Oriental Wealth faces opponents such as ants and Zhao Bank, and the traffic advantage will be eliminated.

Brokerage is an industry with obvious cyclicality and a large gap between bull and bear markets. Open for three years, open for three years, often described as a broker. However, Oriental Wealth has crossed the bull-bear cycle in recent years, which is related to its performance in wealth management. In recent years, the Daily Fund has sat firmly in the top five in the fund sales industry, making the Oriental Wealth drought and flood protection.

However, the opponent of the daily fund is no longer the traditional brokerage industry, and Oriental Wealth will directly compete with "Internet finance big names" such as Ant Group and China Merchants Bank in the field of wealth management. Facts have proved that in 2016, the "big flow account" Ant Group quickly surpassed the daily fund after making efforts in the field of fund sales.

Oriental Wealth has bet on the ever-increasing cake of wealth management, from financial information websites, transformation to securities companies, it has now become a brother of the market value of securities companies, and will also transform into a wealth management platform with a richer ecology. This time, its opponents are ants and recruits, and traffic is no longer its advantage, it can only strengthen and develop its own moat in more areas.

Ping An Group: There is no ecology, we can only fight for ourselves

Different from Ant Group and China Merchants Bank's "APP is ecology", Ping An Group is characterized by: a business, that is, a company, is an APP, but they are all fighting for each other and have not formed an ecology.

Ping An once had four technology unicorns: Ping An Good Doctor, Lu Jinsuo, OneConnect, and Ping An Medical Insurance Technology. For example, its largest fintech company by market capitalization, Lu Jin, has its core businesses of lending and wealth management, similar to Alipay. However, its APP monthly active users are only more than 2 million, while JD Finance has more than 20 million, and Alipay's monthly active users exceed 700 million.

The gap of ten times and a hundred times makes Lu Jinsu and OneConnect have no power to fight at all, and can only focus on the TOB business or the market with low profits.

Technology companies such as Lu Jinsuo and OneConnect have been listed, each forming an independent ecosystem, which is difficult to integrate with other companies in ping an group. Therefore, the quality of the online services they provide (mainly APP) is uneven, and the users are mixed.

Ping An Group, which has no ecology, has fallen behind in the Internet era, and there is no aggregate APP, which makes him miss the traffic business and miss the opportunity to let the vast majority of consumers stay in its ecology. To this end, it has paid a great price in 2021, not only the group's stock price has been slashed, but also many of its subsidiaries have suffered heavy losses.

In 2020, the value of lu jin and one account is 270 billion yuan and 49 billion yuan respectively, and both were rated by Hurun Research Institute as China's top 10 financial technology enterprises in 2020. Today, Lu Jinsho is 91 billion yuan (about US$14.3 billion) and OneConnect is 6.1 billion yuan (about US$970 million). One share price shrinks to one-third, and one share price shrinks to one-tenth of the highest point.

Ping An Group's vision is to become a "finance + technology" two-wheel drive company, but the "technology" tire is not yet full of gas on the road, which is destined to drive for a period of time.

In 2022, the core problem to be solved by Ping An Group is still how to stitch and stitch together its own ecological continent through science and technology.

At present, Ping An Good Doctor has nearly 6 million monthly active users, Ping An Bank APP has more than 40 million monthly active users, and the number of annual active users of Ping An Group has exceeded 300 million. Although the opportunities in the Internet era have been missed, Ping An Group's scientific research strength, financial strength and other "ammunition is sufficient", when the data barriers are broken one by one, especially with the development of blockchain, privacy computing and other technologies, Ping An is still likely to return to the first echelon in the field of financial technology.

ZhongAn: Internet insurance is a brother, there is no moat

ZhongAn is a mirror of China's insurance technology.

As the world's first Internet insurance company, with the blessing of three horses (Ma Yun, Ma Huateng, Ma Mingzhe), he was born with an aura.

As of the end of June 2021, ZhongAn Online ranked first in the premium scale of the Internet property insurance industry, accounting for 21% of the market share. The second and third places are Taikang Online and PICC P&C Insurance, which have market shares of 12% and 11% respectively.

At present, the main growth point of the Internet property insurance industry lies in the Internet non-car insurance business, namely accident health insurance, credit guarantee insurance, etc. These two major businesses, which are also the top priorities of ZhongAn's growth points, accounted for 43% and 12% of the Premium Income of Internet Property Insurance in the first half of last year, respectively. He also mentioned in his financial report to create a healthy ecology and a digital life ecology.

However, when ZhongAn creates these two ecosystems, it does not have the traffic advantages of Ant Insurance and WeChat Insurance, nor does it have the financial advantages and platform scale advantages of giants such as Ping An Health, Ali Health, and JD Health in the market.

In addition, ZhongAn does not have a life insurance license, and can only do short-term insurance at present, and cannot intervene in serious diseases. In the past two years, short-term insurance has been eaten up by Huimin Insurance for a large part of its market share, which has reduced its source of income.

Nowadays, the Internet insurance industry also has serious problems of homogeneous product competition, in the Internet insurance business, ZhongAn not only needs to compete directly with Taikang, PICC, Ping An, Huixuan; in internet medical treatment, it also competes with Ping An Good Doctor, JD Health, Ali Health and other brands, although ZhongAn continues to build its own brand and channels, but in the face of so many strong opponents, there is no deep enough moat, whether it can always stay in the first echelon, need to mark a question mark.

Write at the end

There are 139 fintech unicorns in the world in 2021, becoming the industry with the most unicorns in the world for many consecutive years. Globally, this is one of the most likely industries to generate billionaires and one of the most prone to bubbles.

From P2P, ICOs, small loans, and now Defi, NFTs... Many concepts are dubbed fintech, which is just a technology in itself, and if it is used well, it can become a weapon, and if it is not used well, it will hurt itself. Although there are many employees in China's financial industry, there is a huge gap between them and developed countries in terms of national financial education, stock market, financial supervision, and the application of financial technology.

If you can't improve the shortcomings in the financial field, even if there is a prominent direction, such as P2P, small loans, it is also a seedling to help, for the entire ecology will not help. At present, China is lagging behind again in the new financial technology field, but this is urgent and incomparable. Domestic financial technology can only be compared with itself and self-breakthrough. Only after cultivating the entire ecology and soil is the time for the international competition of financial technology.