Ant Financial said it will share artificial intelligence with asset managers and help them in their digital transformations. The move undermines wealth managers who choose to remain opaque.
Caifuhao, or «wealth» in Chinese, is an AI-managed interactive service launched by Ant Financial last July. So far, it helped 27 asset managers in China increase operational efficiency by 70 percent and reduced costs by half, according to the company's statement.
Ant's approach seeks to provide the missing link: asset managers in China lack channels to reach their customers effectively, or gain clear insights about them. In other parts of Asia, asset managers tend to rely on banks' wealth management divisions, financial advisory firms, or local online portals to distribute them.
Watch Out, Wealth Managers!
More than 100 asset management companies - including Minsheng Royal Fund Management, and Bank of Communications Schroder Fund Management- have set up an account since Caifuhao's inception in 2015. They represent over 90 percent of all fund management companies in China.
With the platform, asset managers can directly interact with clients or find out relevant information on their clients. Insights can then pave the way for recurring sales or new customized products, Ant Financial said.
«China’s asset management industry is experiencing an incredible digital transformation, with customer service becoming increasingly more important than sales functions,» said Guoming Zu, vice president of Ant Financial's wealth management business group at a company event.
Friend or Foe?
Five Banks - Huaxia Bank, China Everbright Bank, Shanghai Pudong Development Bank, China CITIC Bank, and Bank of Tianjin have signed strategic cooperation agreements with Ant Financial to drive their own digital transformations. This comes as Ant Financial ramps up the sharing of its technological capabilities with banks as part of a shift to be seen as a technology company rather than a financial one, as reported by finews.asia earlier this month.
However, the stickiness of the platform and pace of innovation may leave banks' wealth divisions in the dust. Besides offering asset managers insights into their customers, Caifuhao also support in the areas of operational optimization, content generation, compliance and risk management - services typically not provided by smaller financial advisory firms or even banks.
Accessibility Is Big Draw
Caifuhao, accessible via Ant Fortune, the company’s investment smartphone app, offers end users information about stocks, access to Ant Financial’s money market fund Yu’e Bao, and more. Currently, more than 4,000 wealth management products are already available to tens of millions of individual Ant Fortune users, the company said. Modelled like its consumer platform Tmall, it could eliminate the need for end-users to go to a bank for financial advisory altogether.
Earlier this month, Ant Financial said it raised $ 14 billion in Series C equity financing which will help it invest in innovation and globalisation.
