Yesterday, buried beneath the headlines of Trump’s Chinese trade-war was a curious announcement from the media firm, Caixin Global. Alibaba’s affiliate, Ant Financial, has set up a joint venture with the Shanghai subsidiary of US financial giant, Vanguard.
While Congress and the S.E.C. continue to debate whether America’s conflicted wealth managers have a fiduciary responsibility to their clients, communist China is moving very fast to democratize finance. The contrast of bungled U.S. bureaucracy and haphazard regulation with China’s innovation could not be more pronounced. Through Alipay, Alibaba’s mobile payment solution, Ant has access to 700m Chinese consumers, who already have invested in nearly $175 billion in Ant’s money market funds (which pay much more interest than traditional banks). If you then add Vanguard’s ability to invest in global stocks, bonds and real-estate, you can understand how this J.V. could totally disrupt traditional financial services in China.
Imagine in the U.S. if Amazon, Paypal and BlackRock launched an integrated payment, banking and investment solution with the mobile elegance of Venmo. When it comes to financial services most Americans under 40 trust brands such as Apple, Amazon and Facebook over Wells Fargo and Chase to manage their finances.
Yet most American’s are still stuck in a very 20th century world of high-street banking, hand-written checks and snail-mail statements. It seems ironic that the country known for individualism, exceptionalism and capitalism is falling so far behind the communists. As Robert Kennedy said in 1966: “Like it or not, we live in interesting times. They are times of danger and uncertainty; but they are also the most creative of any time in the history of mankind.” We need to fight hard to maintain our competitive edge in FinTech. The Chinese curse can be reversed.