Alibaba Arm’s ‘Fortune’ App Helps Rookie Chinese Buy Funds

Updated on

Alibaba Group Holding Ltd.’s finance affiliate unveiled a wealth-management app on Tuesday to help less well-heeled Chinese buy into hundreds of funds and track stocks from Hong Kong to the Nasdaq off their smartphones.

Ant Fortune complements the PayPal-like Alipay and other services proffered by Zhejiang Ant Small & Micro Financial Services Group, a conglomerate controlled by Alibaba co-founder Jack Ma.

The app lets users buy some 900 fund products from more than 80 Chinese financial institutions commission-free. The company said that feature will help lower entry barriers for the 70 percent of the population who now do not invest in financial products because they’re either too expensive or difficult to understand.

It also reflects Ant Financial’s ambition to become the country’s premier online financial services provider. The unit’s ties to Alibaba give it ammunition to challenge powerful state banks on their own turf.

The company wants to “target the 80 percent of Chinese population that holds 20 percent of the nation’s wealth,” Ant Financial’s General Manager for Finance, Yuan Leiming, told reporters in Shanghai. “The company itself is evolving with investors who’re starting from simple and low-risk product, and that takes time.”

Ant Fortune was conceived by the company over the Lunar New Year holiday in February.

Staying Simple

In creating a standalone app for investment, Ant Financial hopes its more prominent Alipay, which handles an estimated four-fifths of online Chinese transactions, remains simple and uncluttered for users. The product has morphed from a payment service into one that allows people to invest, pay for utilities and book movie tickets.

“If we put all those complicated products on the Alipay app, users may be overwhelmed,” Yuan said.

Ant Financial is now in discussions with Hong Kong funds about the possibility of providing indirect access to global financial markets, taking advantage of the China-Hong Kong mutual fund recognition program, the company said on Tuesday.

The growing clout of new operators like Ant Financial in banking and finance services has caught the eye of regulators.

China’s central bank is considering draft regulation that proposes a cap on the amount individuals can pay via online payment services to 5,000 yuan daily, unless their identities are verified by a security token and electronic signature.

Regulation Concern

The draft rules are seen by Chinese banking analysts as dealing a blow to the booming business of Internet finance.

Among other things, they require people to provide at least five methods of verification before opening “comprehensive accounts,” which allow users to purchase, transfer funds and buy financial products.

It is “not aimed at restricting payment services, it’s aimed at promoting long term sustainable growth of the industry,” Yuan said Tuesday. “The road ahead will be wider, not narrower.”

Ma’s company already controls China’s largest payments provider and the biggest money market fund.

More than 200 million users buy financial products through Ant Financial via services like Yu’E Bao, a money market fund, and Zhao Cai Bao, a platform that lets small businesses and individuals borrow from investors.

The new app allows Zhao Cai Bao to focus on tacking on more functions for mobile users, after its trading volume soared to 260 billion yuan ($41 billion) at the end of July compared with just 14 billion yuan about a year ago.

Ant Fortune will also let users check stock performance on the Shenzhen, Shanghai and Hong Kong exchanges. It’s linking up with the U.S. Nasdaq to provide real-time trading information, the company said.

You might like: