E-commece giant Alibaba wants to create bank

E-commece giant Alibaba wants to create bank

Chinese Alibaba wants to become more than a mere web shop for physical products, as it wants to expand into the travel, insurance and even banking sector.

From phsyical products to an array of services

"In five to ten years we're still going to be an e-commerce business, but the kind of things we sell on our platform will be a lot more diverse than just physical products. We're going to be selling digital content, there's going to be services that will flow through our platforms," he said. "Our vision is to become more a part of people's lives and fulfil all of their needs", executive vice chairman Joe Tsai told press agency Reuters.

 

Tsai envisions consumers using the Alibaba app to book trips, buy shares, insure their houses with an Alibaba insurance policy and to use their Alibaba credit card to buy things abroad. Obviously, he would like people to use his fulfilment service to get these items delivered.

 

An actual bank soon

Alibaba, which currently employs 25,000 people, dominates the Chinese e-commerce market for individuals with an 80 % market share, a market worth an astonishing 2.45 trillion yuan (some 300 billion euro) according to iResearch. The company services some 300 million customers through two major channels: market place Taobao and Tmall.com, the Chinese answer to Amazon where parties like Nike and Gap have their own "storefront".

 

Linking everything together is Alipay, which handles the online payments between seller and buyer. The service also aims to be a third party payment service, which is turning Alipay into a serious competitor for Paypal (an eBay subsidiary) and Belgian Ogone.

 

Joe Tsai does not think it has to end there for Alipay, as he wants to turn it into an actual bank. The Alibaba subsidiary already is a majority shareholder at a local fund management firm and it is currently paving the way for a private bank. "We want to provide financial services to our customer base because we see that as an extension of what we do", Tsai said.

 

Alibaba had confirmed in March that it would head to the American stock exchange and its IPO could bring in over 11 billion euro, which would value the company at over 100 billion euro - higher than Facebook. The move would also mean that Alibaba would get an additional financial punch to carry out its plans.

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