Ant Financial Services Group plans to focus on technology services instead of payments and consumer finance amid increasing regulatory pressure on the company's core financial businesses, Reuters reported June 5, citing sources with knowledge of the matter.
The Alibaba Group Holding Ltd. affiliate will shift its focus to technology services within the next few years, sources said. Technology services, which involves helping financial institutions with services like fraud prevention, will make up 65% of the company's revenue in five years, compared to an estimated 34% in 2017, according to company projections seen by Reuters.
The company's revenue from financial services is expected to shrink to 6% from an estimated 11%, while the contribution from payments will be reduced to 28% from 54% in 2017. The company's overall revenue is expected to grow at 40% annually until 2021, the company's figures show.
Meanwhile, Ant Financial's financial businesses are facing increased scrutiny from Chinese regulators. The company's microlending business is facing tighter regulatory control on key funding sources such as asset-backed securitization, said sources. The banking regulator also keeps a close eye on the company's financial services almost daily at its Hangzhou, China, headquarters.
In addition, the company's online payment app Alipay was required by China's central bank to raise its reserve funds ratio to 50%, with the expectation that it could be raised to 100% eventually.
