The vast majority of people outside of China don’t understand how popular Alipay has become. They are a subsidiary of Ant Financial, which is in turn owned by Alibaba. The specifics of the company aren’t as important as how popular their “bankless” business model has become.
Last year Alipay handled around USD 8 trillion in transactions. That is twice as much as MasterCard handled and larger than any of the GDPs in the EU on an individual basis. In fact, it is more than two times Germany’s 2017 GDP, and more than half of the entire Eurozone’s 2017 combined GDP. However one looks at it, Alipay is a force to be reckoned with.
The business model that Alipay uses can easily be translated to blockchain or even cryptocurrencies. Alipay isn’t alone in adopting a financial model that shuns established banking practice and empowers its users via their smartphones.
Alipay is best in breed, for now
Part of what has made the bankless model so effective is accessibility. Most retail banking clients don’t need advanced features in their bank account, which is why stripped-down platforms like Revolut have enjoyed success in the UK retail banking market. For now, these platforms deal in fiat, but their infrastructure is a perfect fit for blockchain and cryptocurrencies.
While the UK, Western Europe, and the USA have an established middle class that is used to dealing with full-service banking, emerging economies may be a better fit for the bankless-blockchain financial model. The minimum deposit that many banks charge is simply too high for many in emerging economies, and bankless models allow the economically disadvantages to gain access to most of a bank’s services, at a fraction of the cost.
Alipay is an example of how a bankless model can appeal to a wide range of demographics, and allow people to use a payment and savings platform to their best advantage. Many consumers simply don’t need to have all of their financial products bundled together, and poorer people are excluded from an expensive system entirely.
Blockchain technology makes bankless a breeze
Alipay and Revolut have built up their platforms using established technology. Blockchain brings smart-contracts to a sector that could benefit in terms of efficiency from the further elimination of bureaucratic layers. The cheaper a platform is, the lower the barrier to entry is likely to be for the poorest among the global population.
Bankless banking is a very new idea, but platforms like Alipay demonstrate how viable they really are. As long as regulations continue to support the development of FinTech that benefits the masses, the bankless platform will probably continue to grow.
Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.