The labor migration from the Philippines to Hong Kong has created the world’s third largest remittance market with the inflow of $33 billion in 2017. This money flow has become a significant source of income for the traditional remittance services. But the situation may change as Ant Financial, the payment affiliate of the world known e-commerce platform Alibaba, has just announced the launch of the blockchain-based money transfers between Hong Kong and the Philippines.
The new cross-border settlement service will integrate Ant Financial’s AlipayHK with its Philippine-based analogue GCash. The banking partner of the project is Standard Chartered. Ant Financial has chosen reliable partners: GCash is owned by Globe Telecom, the leading provider of telecommunication services in the Philippines; Standard Chartered already has experience in the blockchain sphere as it is a part of a cross-border payments pilot alongside Thai banks.
Jack Ma, the founder and chairman of Alibaba Group Holding Ltd., has high expectations of the blockchain-based payment service. During the press conference on the new cross-border settlement service he said “Blockchain technology could change our world more than people imagine.” The Chinese business magnate believes that the usage of the distributed ledger technology can change the existing model of traditional financial institutions. Nevertheless, Jack Ma lacks trust in the most popular product of the blockchain – bitcoin. Among other things, he said that “Bitcoin however could be a bubble.”
Ant Financial is no stranger to money transfers: it has already partnered with Indonesian media company Elang Mahkota Teknologi on providing mobile payment services. The affiliate of Alibaba Group Holding is also involved in similar collaborations with companies from Thailand and Philippines. This expansion outside China was expected to continue with the MoneyGram merge. However, that scenario has not materialized due to the reject from the Committee on Foreign Investment in the United States. That deal got broken – but it did not stop Ant Financial. On the contrary, it stimulated the development of the new financial service that solves the problem of over-charging for cross-border payments.
“At the time we wanted to [buy] MoneyGram and overhaul it to help people all over the world solve this issue. Due to reasons from the US our deal with MoneyGram did not succeed, so I said, ‘Let’s make one better [than MoneyGram]’ that uses the most advanced technology’,” Ma said.
The new solution by Ant Financial has all the chances to gain incredible popularity as the initial three-month trial period will be free from transaction fees. It may be seen as an unprecedented fit of generosity, but Ant Financial has just announced that it raised $14 billion in Series C round funding. The blockchain-based money transfers service is not likely to become the most profitable project of Ant Financial, but it has all the chances to change the industry.
“Traditional financial institutions serve 20 percent of people and make 80 percent of profits. New financial institutions should service 80 percent of people, and make 20 percent of profit,” explained his position Ma. The new service of Ant Financial is definitely a representative of a new blockchain-based financial model.