Ant Financial forms partnership with FinTech Wave Money

Ant Financial Services Group (Ant Financial) and Digital Money Myanmar (Wave Money) have announced the formation of a strategic partnership to promote banking services in Myanmar.

The partnership combines Ant Group’s expertise in mobile payment and digital financial services with Wave Money’s existing technological capabilities to offer Burmese users greater convenience and security in mobile financial services across the country, according to a press release.

Wave Money is a joint venture between Telenor Group, a Nordic-headquartered telecommunications company, and the Yoma Group, a diversified Myanmar-focused conglomeration.

As part of this partnership, Ant Group plans to invest USD73.5 million into Wave Money to become a substantial minority stakeholder, alongside the aforementioned existing contributors.

Wave Money runs a network of more than 57,000 agents, or “Wave Shops,” as described by the firm, in urban and rural areas across 295 out of 330 townships nationwide, thus spanning 89% of the country. In 2019, Wave Money’s transfer volume more than tripled year-on-year reaching USD4.3 billion. During this same period, revenue and transaction numbers also tripled, says the firm. Wave Money became EBITDA (earnings before interest, taxes, depreciation and amortisation) positive in September 2018, just two years after its launch and continued to maintain its profitability.

Ant Group is an innovative technology provider that aims to bring inclusive financial services to the world. It is the operator of Alipay, an online payment service launched in 2004 which has since evolved into a leading digital lifestyle platform connecting merchants and its users. As of 30 June 2019, Alipay, together with its strategic e-wallet partners serves 1.2 billion global users.

As part of the strategic partnership, Wave Money will leverage Ant Group’s experience building mobile payment platforms to enhance its digital competence, capabilities, user experience and service offerings to better address the needs of users in Myanmar.

Brad Jones, CEO, Wave Money, said: ““Wave Money is excited to announce this partnership and look forward to accelerating our digital journey with the support and expertise from Ant Group. Myanmar is ready for mass adoption of digital payments with a connected population and high smartphone penetration. This partnership will be transformative for Wave Money and Myanmar.”

Melvyn Pun, CEO, Yoma Strategic, said: “Myanmar’s population is still massively underserved by formal banking institutions with only a quarter of people having a bank account. Ant Group brings a wealth of expertise in mobile payment and financial services. The covid-19 situation is accelerating the trend towards a cashless society and drives the growth of ecommerce, and we expect this strategic partnership to massively boost Wave Money’s capabilities to support these trends.”

Eric Jing, Executive Chairman, Ant Group, said: “"Ant Group and Wave Money share a similar vision in making financial services more accessible for everyone. The partnership will enable Wave Pay to tap into the experience of Alipay to promote financial inclusion and better serve the unbanked and underbanked individuals and SMEs in Myanmar. We look forward to working collaboratively with Wave Money to build on its success in Myanmar and support the company to improve the well-being of local users and merchants.”

The Myanmar Government plans to increase financial inclusion in the country from its current 48% to 60% by 2022, according to the press release. With financial technology and mobile solutions expected to play a significant role in this growth, Yoma Strategic will look to strengthen its interest in Myanmar’s digital financial services sector, which includes exploring the possibility of increasing its shareholding in Wave Money.

The potential of Myanmar

In a 2017 report by The Dragon Banker, the nation’s ultra-high-net-worth (UHNW) population is set to increase six-fold by 2030. This falls in line with the greater trend being witness in Asia-Pacific, with the region reportedly being accounting for 92% of wealth creation from 2011 to Q2-2019, as expressed in an article by Business Times.

With a young population, with over 50% of the population aged below 30, some may view the Republic through a similar lens to that placed upon Vietnam, in terms of raw potential, as the latter nation continues to emerge more strongly onto the global stage.

A Knight Frank report labelled Yangon as a key city to watch, naming the location as a potential UHNWI hub for the future, noting that it has emerged as something of a “bustling economic hub” since the country restored its Presidency in 2011.

“Yangon is a classic example of emerging market wealth creation,” said the report. “[The city] is benefiting from the gradual opening up of its economy. Following the introduction of democratic reforms in recent years, the city has seen strong employment growth and inward investment, with annual GDP growth at a national level predicted to eclipse that seen in India and even China in 2015 and 2016,” the report noted, as covered in an article by the Gulf Times.

An article shared by the International Business Times was similarly bullish on the country, reporting that the “number [of UHNWIs] could grow by 687% by 2022” from 2013 levels. The nation has instated a number of economic projects, aiming to drive the amount of foreign direct investment (FDI) it receives.

This approach is gradually increasing as the country slowly re-integrates into the global economy. “Most western sanctions have been lifted, the country has tripled the number of its official diplomatic relations in less than four years,” written by Chenyang Li, Chaw Chaw Sein and Xianghui Zhu in the book ‘Myanmar: Reintegrating Into the International Community.’

However, there is arguably a long road ahead for the country: “It was never intended to be a speedy process… The prime minister… was adamant that this was a necessary transition period that would take from 10 to 20 years,” the authors wrote.

Even with this timeframe, the Myanmar Investment Commission (MIC) remains positive, according to a piece written by the Myanmar Times, published in less virus-challenged days, with the amount of approved FDI invested in the country in the first three months of fiscal year 2019-20 was double that seen in the year prior.

U Thant Sin Lwin, Secretary, Myanmar Investment Commission, said: “Currently, FDI in the country shows obvious growth in the current fiscal year. We have received around USD 500 million a month so far for this fiscal year so it shows promise of good growth.”

The largest investor into the country was Singapore, according to the piece, with Hong Kong and China also looking for investment opportunities in the nation.

FDI reportedly rose from USD4.2 billion in the 2018-2019 fiscal year, to a projected USD5.8 billion in the 2019-2020 year, although this would have been impacted by the Coronavirus.

Furthermore, according to a World Bank report on the country, sustaining FDI inflows depended on the nation’s ability to ‘improve the business environment to attract capital flows in the context of diminishing global flows and Myanmar-specific country risks.’