An Ant Group logo is displayed at the company’s headquarters, a subsidiary of Alibaba, in Hangzhou, Zhejiang Province, China on October 29, 2020.
Aly Song | Reuters
BEIJING – Vanguard’s experiment with financial technology in China shows early signs of success.
In less than a year, more than 1 million users have signed up for ‘BangNiTou’, a smartphone-based investment advisory product run by the US mutual fund giant’s joint venture with the Alibaba-affiliated Ant Group.
This is according to an announcement from BangNiTou on Thursday, just four days after Vanguard said it would abandon its own pursuit of a mutual fund license in China. Instead, the company plans to focus on its partnership with Ant.
Ant operates Alipay – one of the two dominant mobile payment apps in China – on which BangNiTou sits.
The Vanguard branded product means ‘help you invest’ in Chinese and will be launched in April 2020. It’s a form of robo-advisering, automated financial planning that uses data analysis to determine how a client should invest based on factors such as age and income.
While such automated investment products have increased in the US, the concept of personal finance, whether by human or automated advisers, is still much less common in China. Most residents save a lot for an investment in the housing market or for medical treatment in case of serious illnesses. This is partly due to the limited implementation of health insurance, volatility in the stock market and high minimum funds.
For BangNiTou, the minimum investment is 800 yuan ($ 123), about 10% of the officially reported average monthly wage in cities.
In July, Vanguard told the Financial Times new customers allocated a significantly higher amount, averaging about $ 1,575 for a total of $ 315 million in assets of 200,000 users. Updated figures were not available.
Ant owns the majority interest
“While the number of BangNiTou users has increased rapidly, the fund investment advisory market in China is still in an emerging stage with significant potential for further growth,” said Peter Zhang, CEO of the Vanguard Joint Venture with Ant. said a statement.
Foreign financial institutions received a long-awaited green light last year to takes full ownership of local Chinese enterprises in futures contracts, mutual fund management and securities. It is not clear which rules may apply to financial technology or fintech.
Vanguard’s joint venture with Ant was launched at the end of 2019. Ant holds the majority stake at 51%, according to Chinese business base Qichacha.
The Alibaba affiliate company claims about 1 billion users worldwide. It played an early role in the wealth management industry in China with the Alipay-linked money market fund “Yu’e bao”, which had about 1.7 billion yuan in assets at its peak in early 2018.
Late last year, the Chinese authorities abruptly suspended Ant’s plans for the largest initial public offering to date. Beijing subsequently increased its regulation on fintech, saying the industry should be under the same rules as banks.