How Ant Fortune Grew to Provide Affordable Wealth Management Services in China
Ant Fortune is an online wealth management platform under China’s Ant Group, which allows users to invest on its platform from as a little as 1 RMB. It traces its roots to Alipay, its parent company which began in 2004 as an electronic third-party payment system to facilitate online sales, eventually growing to service one billion active users and 80 million merchants by 2021.
Social drivers of growth
In the late 1970s, China embarked on economic reforms that led to buoyant economic growth rates of nine per cent annually. As a result, between 2000 and 2017, some 800 million Chinese were lifted out of poverty. At the same time, the Chinese tech sector grew by leaps and bounds in the 2010s as the Chinese used their smartphones to shop, communicate and do business. By 2021, the Internet penetration rate of China was 73 per cent and most Chinese were avid online shoppers.
The success of Ant Fortune arises from its objective of making investing affordable, cost-effective, and sustainable for its customers. Most of Ant Fortune’s early adopters tended to be under the age of 36 with little financial management experience. Nonetheless, they benefitted from China’s economic progress in the last 50 years and were keen to invest their hard-earned money.
Ant Fortune benefitted from both the rapid economic development, and the demand for financing and investment solutions that arose with the establishment of the Shanghai Stock Exchange and the Shenzhen Stock Exchange in the early 1990s. High-net-worth individuals could invest in wealth management products that included stocks, bonds, commodities, and real estate. Those who did not have the funds to invest in equities and property found Ant Fortune attractive, as it offered comprehensive wealth management products on its platform from as little as 1 RMB.
Leveraging digital solutions for insights
Ant Fortune went on to partner with many asset management companies. It offered them access to its Artificial Intelligence capabilities to help the latter connect better with users, optimise their operations and harness smart marketing tools. It also used robot advisors to help partners understand customers’ pain points and communicate complex financial information with them, due largely to Ant Fortune’s development of a large research team and heavy investment in tech-enabled investor services on the Ant Fortune platform.
These efforts reaped significant benefits. First of all, Ant Group lowered investment barriers for customers. In addition, it increased the ROI for fund providers to sell on the platform, encouraging them to offer more financial products. Furthermore, as all financial products hosted on the platform were offered by third-party partners, Ant Fortune could offer live streaming by partners to customers, as well as data analysis and tools to manage their own investor relations which permitted more customisation of suitable financial products to customers.
Fast forward to May 2022, Ant Fortune is a resounding success, having served 500 million active users with assets under management at 4 trillion RMB (US$605 trillion).
User-centricity as Ant Fortune’s DNA
To make investing sustainable for its customers, Ant Fortune ensures that it takes a user-centric approach in its commercial arrangements with its partners. Ant Fortune does not believe in increasing trading frequency to earn fees from customers, but to help them invest sustainably over the long term.
When the market is facing volatility, for instance, Ant Fortune’s standard procedure is to publish an article to explain the reasons for the volatility in two hours. Customers who are key opinion leaders in the investment space can also share their thoughts and drive discussions on the platform.
Going forward, Ant Fortune aims to shape a more sustainable future for users with higher service standards. As the investment landscape in China changes over the years, Ant Fortune plans to drive more efficient investing through more comprehensive research.
The case, “Ant Fortune: Providing Universal Wealth Management Services in China” is written by Associate Professor of Finance Liang Hao of the Lee Kong Chian School of Business and CW Chan, Senior Case Writer at the Centre for Management Practice from Singapore Management University. To read it in full, please visit the CMP website by clicking here.