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In December 2020, Beijing presented a directive to Ant Group to “rectify” its business after it canceled its IPO, which could have been the largest initial public offering in history. In the plan, regulators asked Ant to revamp its lending business, among other changes that would subject them to the same set of regulations governing financial institutions. In other words, Ant can no longer cope with its freewheeling practices by calling itself a “tech” company.

Nearly a year later, the Alibaba-affiliated fintech powerhouse showed it was almost done restructuring its popular consumer credit products.

Credit products contributed nearly 40% of Ant’s revenue in the six-month period ended June 2020, according to the company’s prospectus filed last year. The two main products are Huabei (Spend), launched in 2014 for daily consumer spending, functioning as a virtual credit card. A year later, Jiebei (loan) was introduced as a credit product for larger consumer transactions.

In the old model, Ant created loans that were then taken out by third-party banks and other financial institutions. As of June 2020, approximately 98% of Ant’s credit balance from its platform was underwritten by its partner financial institutions or securitized, according to the company’s prospectus.

Jiebei has split into two brands, users reported earlier this week. Lines of credit from third-party banks are now called Xinyong Dai (Credit Loan) on Alipay, Ant’s flagship financial services application. Those provided by Ant’s consumer finance company, which was recently created at the behest of regulators, remain under the Jiebei brand.

Huabei has also started a restructuring, which will show users which loans are independently granted by banks and which by Ant’s consumer finance company. Huabei will focus on “low cost” daily transactions, he said in a Weibo article.

“As a result of brand differentiation, users who apply for credit loan services will have more information about their credit providers to avoid brand confusion. “

Huabei also noted that he now submits consumer credit information to a database overseen by China’s central bank. He started the routine in September after setting up his consumer credit company, which, like banks, must report its credit information to the central bank in China.


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