Alibaba Big Data 2014

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Alibaba Big Data 2014

  1. 1. Big Data and Financial Inclusion: An Alibaba Profile Leesa Shrader January 23, 2014
  2. 2. How can Big Data be applied to delivery? Marketing Onboarding Risk Screening Cross/Up Selling The Front End Of Service Delivery • Target Clients & Predict needs • Adapt pitch to high uptake • Pre-fill data client • Rapidly complete KYC (UIDAI India) • Reduce loan losses • Insurance screening efficiency • Improve “suitability” of product suite • Enhance client profitability
  3. 3. How far can Big Data drive down costs of delivery? 3 Costs Capex Staff & Operations Cost of Funds Channel Management Loan Losses
  4. 4. The Alibaba Story 4
  5. 5. Backstory – China and Ecommerce China’s Enabling Environment • Rapid adoption of technology • Low barrier access to accounts • Strong policy focus on inclusion • Social transfers to 900 million people • State support for technology-driven experimentation, piloting and regulation • Quickly developing banking and communications infrastructure • Players like CUP driving interoperability; • Highly competitive third party payment industry with 220+ players • 90.2% the population with mobile connection
  6. 6. Backstory – China and Ecommerce The Alibaba Story • Ecommerce is the leading driver of China's digital payments. • World’s largest ecommerce market by 2015 – growing at 4.1 times GDP • Alibaba includes 25 Internet-based companies working across 240 countries/ regions • Group combines Amazon, Ebay, PayPal and Angie’s List models • Tmall and Taobao, biggest C2C and B2B online platforms in China. • Key success factors are merchant rating system, escrow accounts & robust digital payment system
  7. 7. The Alibaba Story: So What? Potential Development Impacts • Alibaba estimates created 2.67 million jobs directly and indirectly • Track rural impacts in “Taobao Villages," where at least 10% of village households are using the Taobao. See benefits: • Providing low income, remote and other populations access to broader range of goods and services at lower wholesale and retail prices; • Providing small scale producers with new sales channels; and • Reducing operational and startup costs for micro small businesses. • Interviews with RCCs suggests access to Alibaba is key driver for financial inclusion and branchless banking
  8. 8. Backstory – China and Ecommerce Alipay • Key to the Alibaba group’s expansion is Alipay, linked with 108 partner banks in China and players like VISA • More than 800 million registered users processing 1 million transactions per day. • Online payments dominate, but mobile payments grew from 10 to 20 percent of total last year • Underdeveloped regions experiencing fastest growth  Diverse payments: utilities, medical insurance, airtime, goods and services, credit card and microloan repayment, charitable donations  Alipay Wallet’s investment vehicle, Yuebao, attracted 2.5 million users in the first month, 57% accessing through smart phones, often transacting in very small amounts
  9. 9. Alibaba + Alipay = Alifinance Ecommerce, Big Data and Microfinance • Taobao has 16 million participating vendors • Nearly 90 % are small and microenterprises • In 2011, AliFinance was established • Provides loans to vendors on the Alibaba platforms. • Alibaba has built its own credit scoring model • Taps over 1,000 data sets related to each client, including:  Revenue growth  Transaction data  Position/rating of the client in their own industry  Changes in rating within industry  User ratings and purchases  Any experiences with poor behavior and “punishment records” on Taobao  How many users rate the seller as a favorite  Usage levels and repeat buyers. As of mid 2013, had 409,444 borrowers spanning the country with average loans size is 20-30,000 RMB ($3,500 to $5,000)
  10. 10. What can we learn from China & Alibaba Experience? • Growth of internet, ecommerce, payments and social media created efficient digital platform reaching millions • Efforts to build client protection and trust yielded benefits • A growing division between online banking and internet finance beginning to take shape • internet-based finance may reach deeper down market, leveraging big data, offering interesting products for low income groups • Outstanding regulatory issues and shadow banking • Evolving business models: banks and social media players • Can ecommerce be a meaningful driver of financial inclusion? • If so, how best to promote this moving forward?
  11. 11. Advancing financial inclusion to improve the lives of the poor www.cgap.org

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