Banking 4.0 is characterised by digital innovations, fusing the physical, artificial, and biological worlds, affecting societies, industries, and companies with ever higher speed and intensity. In the process to a new world order with new competitive forces and uncertainty, where goals are continually changing, and resources must be flexibly reorganised, there is no room for traditional ways of strategic thinking. With old management concepts, linear value chains, and rigid and closed organisational structures, established firms will be the losers. This article explains why the banking industry is ripe for disruption. It introduces a conceptual framework based on a case study research of Chinese juggernauts, including value constellations, platform business models and super-apps. Our journey from the industrial economy to the digital era opens up new vistas on how to create and capture value for businesses and clients of the next generation. We describe why modern leaders must embrace change, learn from Asia, and develop strategies through the lens of the ecosystem theory. Digital ecosystems focus on clients and data and consolidate interconnected goods and services. To achieve sustainable financial growth, we suggest an agile management approach that takes the digital transformation as a chance and builds upon partnerships to connect with diverse actors—technologically, socially, and culturally.

The Golden Triangle of Ecosystems

One effect of the digital transformation is increasing collaboration and interaction with more and more services becoming interconnected. Our research found that global and robust ecosystems evolved from a core business, expanding the network and portfolio to other areas to create and capture value. Alibaba has made considerable efforts to unite e-commerce, logistics, and finance. All three dimensions are essential for the success of the ecosystem as a whole and stimulate and support each other. Therefore, we suggest to rely on seamless process integration between these dimensions that connect across what we call the golden triangle of ecosystems. With increasing convergence and blurring business lines, the golden triangle may vary from industries, but the dimensions include similar services. While e-commerce is clearly defined, logistics is a broader area where we added social media and messaging services. For our purposes, we analysed the financial dimension, where convenient and mobile payment services are central to ensure the flow of goods (see Figure).

Ant Group, former Ant Financial Services, acts as the financial arm of the Alibaba Group, dedicated to bringing the world more equal opportunities through building a technology-driven open ecosystem and collaborating with hundreds of financial institutions to support the future financial needs of society. The network also includes the big four Chinese banks, among many other financial institutions across the globe. A strategic partnership with Standard Chartered Bank aims to boost financial inclusion in countries targeted by the Chinese government’s Belt and Road Initiative (BRI).

Ant runs five primary lines of business: payment, wealth management, insurance, credits, and financing. Noteworthy, the firm raised in 2018 as much venture capital as all US and European fintech firms combined and plans its IPO. Ant is aiming for a valuation of US$ 200 billion which is about the same as the combined market capitalisation of the largest banks in Switzerland and Germany. Ant Group counts about 9000 staff and is about to expand its ecosystem with offices in Japan, Korea, Singapore, Thailand, Germany, France, Italy, the Netherlands, Australia, United Kingdom, and the United States. As of September 2020, Ant would be the fifth largest financial conclomerate in the world with twice the market capitalisation of Citigroup with its over 200,000 employees.

Years ago, Jack Ma coined the term “TechFin” as a countermovement to fintech. We assume he wanted to set an example, demonstrating that all financial services firms such as Ant evolved from emerging technology with the attempt to primarily collect data on clients and secondly analyse and learn from the data collected, and thirdly translate these into business models and solutions that create value to clients. In 2020, the firm changed its name from Ant Financial to Ant Group, to emphasise that it is a digital and innovative, rather than a financial services, firm. Overall, the core strength of the TechFin company is its global digital financial service platform, leading breadth and scale across the financial service spectrum, its unrivalled technological capabilities, and that they are an integral part of the Alibaba ecosystem. Relevant for our study is the ecosystem among Ant’s businesses, where we can learn much about disruptive business models, its value creation logic, and how to harness technology for business purposes.

Alipay, the payment solution of the Alibaba Group, was founded in 2004 and spun off from the group in 2010. Ant Financial was officially founded in 2014 and originated from Alipay. In 2007, Alipay had over 50 million users, while China only had 30 million credit card users at that time. During the financial crisis, they kept innovating and launched a voice-controlled payment for mobile users in China. After first payment services for water bills and utilities, the consumer version of Alipay, including payment with barcode, was launched. Today, Alipay is the world’s leading third-party payment platform with one billion active mobile users and over 300 partners, offering payment services for around 20 million small and micro-merchants covering 54 countries and regions. Its market share of China’s mobile payment market based on transaction value reached 70%.

One reason for the rising mobile payment market in China with innovative solutions such as the QR (quick response) code payment systems is due to the limited credit and debit card infrastructure and the high mobile device penetration. Cashless settlement and processing by scanning QR codes at the point of sales became the norm for many young Chinese. In many cases, they exclusively use online bank accounts. In other words, they do not need cash, credit cards, and no brick-and-mortar bank, which, to a certain extent, support the safe and secure transfer of money. Alipay is continuously striving to make online finance simpler and comfortable. The latest innovation includes gamification technology for payments. Savings strategies become a competition when users’ returns can be compared with those of others. As the user base is getting younger, they demand even more intuitive solutions and financial transactions that are perceived as fun. This was realized with the ability to add voice messages, pictures, or emoticons to their peerto-peer money transfers.

Alipay has evolved from a digital wallet to many other services, spanning from travel arrangements, book movie tickets, make appointments with doctors, pay utility bills, or buy wealth management products directly from the app. For instance tax reimbursement via Alipay is supported in many countries around the world, including a network of overseas financial institutions and payment solution providers to enable cross-border payments for Chinese tourists. Alipay has recently expanded offshore payments in and outside of China with tens of millions of merchants accepting Alipay. Recently they got an e-money licence in Luxembourg and are about to introduce their payment app to European clients without a bank account in China (see Chinesische Touristen wollen anders bezahlen). By using big data technology while penetrating many consumption scenarios and touch points, over time, they can (automatically) generate more comprehensive client profiles. If the firm feeds its algorithms with new data sets from European customers, Alipay may soon be able to offer customised products and services for this new client segment.

The value-generating potential of this kind of digital supermarket for other players is huge because everybody that transact via Alibaba’s marketplaces is generating turnover. Alipay earns interest income while proceeds of transactions are temporarily deposited, in addition to commissions to merchants and advertisement fees. Alipay found its way into Alibaba’s growing e-commerce and logistic services just 6 years ago. Its transition from a digital provider of financial services to an aggregator of a billion consumers for other firm’s services was exemplary. Alibaba’s considerable consumer and merchant-funded platform is today fully driven by data technology and while it is generating revenues, it has significantly contributed to the global payment network.

"The golden triangle of the ecosystem includes e-commerce, logistics and social networks, and finance - all required to thrive each dimension"

The all-in-one integration of logistics services with the other two dimensions, namely, e-commerce and financials is pivotal. Domestic as well as international consumers, value rapid and fault-free delivery of goods and services. Alibaba’s early strategy to develop a smart logistics network with Cainiao, including express delivery providers such as Best Logistics, Star Express or YTO paid out. Since they are mutually dependent, Alibaba thoughtfully maintains a good relationship. Also, to reduce its dependence, Alibaba is steadily increasing its investments into external delivery companies. Logistics becomes a collective strategic impact if large areas must be equipped with e-commerce capabilities. Since this is part of the Chinese government’s socio-economic development plans for rural areas and to fight poverty, Alibaba is also a strong ally in support of these efforts.

Chinese e-commerce giants have adopted a social model where their business is anchored by a social pillar that drives user engagement and growth. To complete the dimensions discussed, messaging services providers can leverage their infrastructure as one-stop shop to combine everything a company has to offer but also to enhance its offering. Accordingly, we consider social networking as a lever to complement the other dimensions of the golden triangle, even though it appears to be shedding younger users only. From banking, we know the importance of data privacy. In Europe, this is, for the time being, slowing down the progress of the monetarisation of client information. However, regulations will come along and soon address the shortcomings. Social media and messenger services will become increasingly crucial for human-machine interactions, and that is why we assign these services to logistics. Conclusively, our analysis confirms that the golden triangle works; hence, it should become a fundamental part for designing ecosystem strategies.