The future of Ant Group remains up in the air after its dramatic fall from grace. Regulators seem to have stopped short of dismantling it and the company is considering a transition to a financial holding company, willing to be regulated like a bank. It’ll be tough. What could Ant ultimately look like?

Bank-like companies don’t command tech-like valuations. Unless, of course, you’re in the booming consumer finance market in China, which is expected to hit 3 trillion yuan ($612.29 billion) in volumes over the next four years. That’s where credit demand is —and that’s where Ant’s reach is. More importantly,  state planners are trying to generate domestic demand and supply, keeping with their so-called dual circulation strategy. For that to work, credit will have to flow to households effectively.

Beijing knows that too. Growing disposable incomes drove consumption growth for the better part of the last decade but have been slowing. That means the authorities need another way to keep its economy humming along. In 2019, consumer finance customer numbers swelled to almost 130 million, up over 50% from the year before. The state also knows that’s good for the economy. Data show an increasing correlation between the growth of consumer loans and retail sales in the country. Ant could potentially play an even larger role here than it is already doing, with more skin in the game.

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