Thursday,13 June 2024

Ping An Group’s Larsen: “We’re constantly looking at new businesses that can create value”

5 min read

Interviewed By Emmanuel Daniel

Veteran banker Jonathan Larsen, who ran Citibank’s global retail bank and mortgages, came out of retirement to head Ping An Group’s chief innovation office. He is now on the lookout for innovative fintech business models that are complementary to Ping An’s core businesses in insurance, banking and investment

  • Ping An is creating new businesses in different areas of finance, such as fintech SaaS provider OneConnect and online lending platform Lufax

  • 10x Future Technologies, one of the company’s first investments, is looking into replacing the bank’s legacy system with a cloud-based modular API-based one
  • Ping An runs its entire computing business in cloud

Ping An is branching out. After what seemed to be an exceptionally interesting conversation with Peter Ma, the man behind the major finance conglomerate, Jonathan Larsen decided to set aside his hopes in taking a mythical sabbatical and step forward to take on the role as the bank’s chief innovation officer, whose mission involves deploying the company’s enormous assets.

Before joining the company, Larsen spent 18 years working at Citi, running their global retail bank among other things. He’s been with Ping An Bank for two years now.

Armed with his healthy skepticism, an ability to tell whether there are real capabilities, technologies and uniqueness to the business model and an urge to make sure that customers are getting something of value, Larsen goes on the lookout for new businesses and opportunities that can be useful to Ping An.

This interview will present Larsen’s role with the fund and the company’s focus, coupled with its goal of building a corporation that offers a range of services that create value and prioritise the consumers.


Emmanuel Daniel (ED): Jonathan Larsen is someone we’ve known since he was a banker. Today, he is the chief innovation officer of Ping An Group and chairman and CEO of Ping An Global Voyager Fund. So, you’re the man who goes around the world looking how to deploy Ping An’s enormous assets. Ping An is what, $300 billion?

Jonathan Larsen (JL): A $1 trillion company.The fund is a $1 billion fund. It’s a corporate venture capital fund. So we have a lot of other venture capital activities that are commercial in nature and deploy client money, but this particular one deploys Ping An money. What we’re trying to do is look around the world at companies that have capabilities that could be either helpful to Ping An or complementary to Ping An. It could be a business that we’re in. It could be a white space where we haven’t thought through what the new model is. And, it could be a technology that we’re working on. We just find somebody else that’s further ahead.

We have no illusion that we have any monopoly on innovation. There’s a huge world out there and our job is to go and find those leading elements of new thinking, innovations and new business models that can be helpful to Ping An, both in China and, as we expand internationally, in other markets as well.


The driving force behind the bank’s success

ED: Describe Ping An to me as it was, as it is, and as it is going to be. As it was, insurance, as it is, a number of ecosystems that are boiling, that are in the hot pot, and then as it is going to be.

JL: I’ve been with the company for two years. I left Citi after 18 years of running their global retail bank amongst other things, spending a lot of time in Asia of course, which is when you and I interacted last. I knew what Ping An was. I knew it was a very successful, very well-run and very large company centred around insurance, but with a broader range of businesses. Until I met Peter Ma, and he was able to sort of articulate both the story in detail and the vision. I came away from that with a very different understanding.

ED: Why was Peter Ma cultivating a banker like you?

JL: I left Citi, hoping to take a year off. I had turned 50. It’s that mythical sabbatical that you promise yourself, but in most cases, never happens. I was trying to do that, and a mutual friend who had actually worked at Ping An and run Ping An Bank for quite a number of years, a gentleman called Richard Jackson, introduced me to Peter Ma and said to me, “Listen, if you want to work for another big financial institution, why not speak to Peter Ma?” I said I’d be delighted to speak to Peter Ma and it was a very interesting conversation. The short summary is that after that conversation, I was working for him a month later. It obviously had an effect.

The story is this, that Peter started this company from zero in 1988 in Shenzhen. Anyone who knows the history of China knows that Shenzhen was a radically different place at that time. The company had very modest beginnings, started out in the property and casualty (P&C) insurance business and became a life insurance company. Peter always had this idea that first, there was this opportunity to build a range of services around the consumer and be a single provider across many different need groups. Many have tried that strategy, of course. Many have failed. Ping An is one of the success stories in the world in pursuing that vision.

Second, he had the view that in a government-dominated economy, licence optionality is very important. To this day, Ping An has the widest range of financial licences of any companies in China. If you look at a business like asset management, it’s a good illustration of why that’s important. We manage a lot of third party assets and a lot of our own assets, so in the aggregate it’s $1.3 to $1.4 trillion, excluding the bank balance sheet, which is about $500 billion.

But we use many different vehicles to do that. You can’t simply aggregate all of the assets from life insurance, P&C, trust and the asset management subsidiary, and put them into one vehicle and manage it. The licencing system simply doesn’t work that way, so having that optionality is quite important. That was the foundation. The company grew very well. Peter is a natural entrepreneur and a natural business person.

ED: If he was a true-blue insurance man, he would have built on the insurance asset and insurance balance sheet. What he’s done is grown on the data balance sheet more than the insurance balance sheet, or so it seems. He was adding up the assets and the group structure, and you had the bank in there. For a long time, he didn’t know what to do with it. The bank was the smallest thing.

JL: It’s now a big business. It’s competing against these big state-owned companies. To this day, Ping An is the only large scale, non-state owned and non-state controlled financial institution. In around the year 2000, the company decided to integrate all of its databases to look at the customer as a single entity across all the different platforms to introduce net promoter score (NPS) as a fundamental metric. So they’re the first company in China to do that. We still use that as a fundamental metric to introduce cross-selling or relationship depth key performance indicator (KPI). That was a very important stage and it’s an early instance of thinking about the data assets.

ED: What are those numbers now? What’s cross-sell now? What does it look like? What are their goals like?

JL: We have about 180, just under 200 million financial customers. We have about half a billion digital users across all of our ecosystems. About a third of our new customers in the financial business come from the digital ecosystem. In some way, probably 90% of customers come from some kind of digital connection with the company. Our agents sell about 30 different products, and so cross-selling is a fundamental driver of that, their agenda and incentives.


Creating value for the state health system and private sector

ED: What is Ping An today? How would you best describe it?

JL: I would position it and explain it as a very large financial institution that has embraced technology very deeply and has begun to build a very significant health ecosystem, starting from its insurance and health insurance business, bridging into telemedicine and using health data to try and create value both for the state health system and private sector.

Who has found that it is able to create new businesses in many different areas of finance. OneConnect and Lufax would be very good examples. Beyond that, has found that the capabilities it has acquired in areas like visual artificial intelligence (AI), natural language processing and the ability to create integrated cloud services that can be sold as verticals to other financial institutions. We’re finding that that concept has very broad applicability.

For example, the smart city space. Smart city is one of our five ecosystems that we’re focused on. In addition to providing, let’s say in Shenzhen, we provide a single app that allows every citizen in Shenzhen to access pretty much every government service with the same ease of use as you can access an online service. If you think of most government internet services, they’re usually internet 1.0 or typically internet minus 1.0.

We’ve developed that in conjunction with the Shenzhen government. But what we’re finding is that a lot of our analytics, AI and blockchain solutions can be used for government recordkeeping, property registers, traffic management and pollution management. There is a whole raft of services that build off of capabilities that Ping An has been able to build over the last five or six years using advanced technology. We’re integrating that and finding applications for that technology, and then providing it as an integrated cloud-based service. We’re finding that concept is very scalable horizontally into quite a wide range of areas.

I would position us as a financial institution that has embraced technology deeply, and is now pursuing a broad range of opportunities in five ecosystems, finance, health, auto, home and smart cities that leverage those capabilities and create new logics for customers around each of those business areas.

ED: When you look at an opportunity, what are you looking for? What thrills you and where do you find the connections?

JL: In the role I have with the fund, I’m constantly looking at new businesses. The first thing that I try to do is cut through the hype. There’s a lot of hype around. Everyone’s an AI company, everyone’s a blockchain company, everyone has a ridiculous valuation that you can’t reconcile with any cash flow for. So a very healthy skepticism is the first thing, number one. Number two, are there real capabilities, real technologies, is there a uniqueness to the business model?Number three, is the customer really getting something of value? Is there a problem being solved and is there a value proposition? And is it creatingloyalty?

ED: What have you seen that’s real recently? How do you cut through the growth?

JL: Very good question. We’re still at a relatively early stage in building our portfolio. One of our first investments was a company called 10x Future Technologies in the business to business (B2B) space for banks, set up by Antony Jenkins, the former CEO of Barclay’s in London. 10x’s mission is to essentially replace the legacystock of a bank with a cloud-based modular application programming interface (API) linked solution, such that any individual technology is never so large that it can’t be swapped out relatively easily with a new component when a new technology comes along. The data is all centralised. It is tiered based on the level of structure you need for that data, whether it’s ledger data or whether it is data that could be used for big data purposes.

And they’re doing really well. They started out with Virgin Money in the United Kingdom, which unfortunately got taken over by Clydesdale and Yorkshire banks so that contract stopped, although it was after Virgin Money had paid 10x to actually build the platform quite a large amount of money. Since that time, they’ve acquired Nationwide Building Society, a top three global bank, as core client. They’ve just got an Australian bank, that’s in the process of signing up with, and another top three level bank. They’re really on the road to scaling and to success.

For me, this is a good example where you’ve got a very unique proposition. We’ve scoured the landscape and there really isn’t anybody at the enterprise grade that does what they do. None of the legacy vendors want to do this. They’re all conflicted.

ED: The funny thing about the legacy vendors is that they’re conflicted, they’re protecting their legacy. At the same time, they are doing this. They are investing in apps, in the application layer. So they’ve gone out to invest in startups themselves.

JL: They have. Usually on top of their legacy platform as opposed to a substitute.Every bank faces this challenge, so I think this thing has a massive runway. There are probably 3,000 banks in the world that need this solution and every bank has a replica of the same problem.

ED: How much of that is Ping An Bank or Ping An itself? How much of Ping An the bank or Ping An the financial group legacy and how much of it is cloud?

JL: 100% of our business is cloud now. Over five years, between 2012 and 2017, Ping An basically built its own private cloud. All of our 500 million users sit on that cloud. Every application from every business is either being ported, rewritten or purchased to basically function on a commodity platform. Every single piece of technology we build is fungible across every operating unit within the company and the commodity processing platform that the company has created is fundamental to that.

That is unique in the world. There is no other financial institution anywhere close to our scale that has done that, and it is a huge enabler for Ping An. Where Ping An is, is extremely consistent with the vision that Antony has for 10x, as an example.

Since I just happened to be in Beijing, in the health space. There’s a company called Airdoc, and what they do is they take a scan of your retina and from that, apply an AI algorithm. They can determine 30 disease types in literally a second and give you a comprehensive report – arteriosclerosis, diabetic retinopathy or high blood pressure. All kinds of things that you would never expect to know about yourself that you can tell because the eye is the only place in your body where you can actually look through blood vessels and veins. This is a very sophisticated piece of technology. They’re doing very well and started to scale that business.


Focusing on opportunities, businesses and services

ED: What’s interesting here is that you’re going into areas in medicine, which you wouldn’t have if you didn’t take that platform view of Airdoc.

JL: Health is a huge opportunity for us. Finding ways of delivering health services, diagnostics and treatment on a decentralised basis as well as leveraging mobile devices are fundamental strategies for us and we think that’s going to be the future. We think that health can be as big as finance as a revenue pool and an opportunity over time.

ED: How did that opportunity come to you? Is it because of the Ping An Good Doctor focus that you have?

JL: It is because of our health ecosystem focus, which is Good Doctor. There’s a company called Health Connect that provides analytic and data services to the state health insurance system at a municipal level in China. We have a clinic enterprise platform. We’re the largest health insurance provider already. Interestingly, in partnership with Discovery Life from South Africa, who owns 25% of our health business, which is a very interesting choice of partners, very sophisticated, as you know, and a very analytically-driven company based in South Africa.

The fact that Ping An chose them as their partner as opposed to a more conventional choice seven, eight years ago, back in 2012 when that business was started is quite significant in itself. Health is a very big area of commitment for Ping An. We have long-term ambitions in that space. We think we can bring a lot of value to the health infrastructure of China. China has huge challenges in meeting the demands of its aging population, the onset of chronic diseases, the incidents of diseases like lung cancer where 54% of males still smoke in China and 9% of long-term smokers will get lung cancer. That’s what the data says.

There are enormous needs, and there is no question that the health system today is under capacitised and under specced to meet that challenge. That’s fully acknowledged by the government.

ED: Given that Good Doctor gives you so much data, and it’s linked to the insurance business that you have, how much linkages have you found so far?

JL: First of all, you got to be very careful about what you do with data. If someone gives us health data about themselves in the context of telemedicine treatment, we absolutely can’t use that data for underwriting, for example. Or, in a way, that could be adverse to customers. We have to be extremely disciplined and careful in segregating data when it is given in one context and cannot or may not be used in another. Many of the legal boundaries within our group, say, for example, the bank, data protection laws for bank customers are extremely strict in China. Actually, China itself is heading very much down to the path of general data protection regulation (GDPR) and organisation for economic cooperation and development (OECD) guidelines on privacy.

ED: Is the clock ticking on you, then? A lot of the freedom that you had so far, it’s going to be slowing down a lot.

JL: Even in Europe, once you have customers’ consent and as long as you make it clear to customers what you’re gonna do with data, you are not restricted from using data across boundaries. All of the big companies in China, like us, presumably the tech giants, are solving for a different set of standards and making ourselves future compatible. We didn’t see that as a huge limitation. We find that our proprietary data is always the most valuable, because that’s the data that no one else has, that’s the data that’s unique and tells us something very specific about a customer.

ED: In the old days when you worked in a bank, proprietary data means the GL, the general ledger, what the customer has with you historically. Proprietary data is what the customer does with you, which is current, but it’s still within, and then everyone talked about big data and tagging it and stuff like that. But here you’re talking about something else.

JL: We have an integrated call center for every business and what we do is we record every conversation. Of course, we tell people we’re recording their conversations. We turn all voice to text that then becomes machine analysable. We use that to train our voice robots, where we’re basically building our conversational AI engines that can deal with certain topics comprehensively with customers. All of that is coming from our conversation data from real customers. It’s all being abstracted. We’re building algorithms that effectively allow the computer to understand what you’re saying and respond in an appropriate way. That’s all proprietary data.

In our auto insurance business, we have the world’s largest telematics platform. What we do is use your mobile phone. You can join a service called Ping An Good Driver, and it turns out that the accelerometer, gyroscope and GPS in your phone allow us to know where you are at any point in time. We know if you’re accelerating, if you’re braking too hard. We know if you’re on hard roads, dirt roads. We know if you’re in busy areas, in accident prone areas. We know if you like to drive when it’s raining, when it’s icy. We can derive an enormous amount of information from that, and that allows us to think about risk in a completely different way. That’s all data that we can only get by having this program ourselves.

ED: Have you started monetising it? Like productisation examples of that.

JL: In China, the regulatory environment creates both opportunities and constraints. In many of the markets in many of the provinces, we’re locked into fixed pricing, but we can offer loyalty incentive benefits for customers who demonstrate superior risk characteristics, as an example.

Another example I would give is auto claims. If you have a dent in your car, you can scan the damage and we can instantly assess the damage. We have a database of every single external panel, every single external part. We have 23 damage scenarios as to what could be wrong with that. The computer can assess. Does this need to be repaired or replaced? What will it cost, parts and labor? That varies by where you are in the country. We can give you an instant quote, and if you agree, we can give you an instant settlement.

ED: There is the institution with its proprietary data sets and so on, and then there is the data feed that’s being given to you by the customer and so on. Then there are the things that you are going out to look for to add in to the whole story. Give me a better sense of the partnerships that you have for what the group already does, the APIs and existing ecosystem, outside of the acquisitions that you’re going out to look for.

JL: One of the really interesting things Ping An has done is build a platform to support our life insurance agents. We still believe that there’s a role left for the human element in selling life insurance. It’s a consultative process. It’s quite an emotional process. Most people are underinsured. Most people don’t recognise the need for risk protection and the human role is rightly important in our view.

What we’ve done is we’ve kept our agents. We actually have 1.4 million of them now, and what we’ve done is to build a digital infrastructure that supports pretty much everything they do all the way from recruitment to the way in which they manage their prospect database and their clients using WeChat and using these content engines.

Agents are able to build their own content.In this particular case, what we’re trying to do is automate everything in the agent’s life, so they can just spend their time connecting with customers and making connections that actually create value for the customer and, of course, for the company. Everything from recruitment, to customer relationship management and to client communication.

Even when you ask a question as a customer, the first answers you get are going to be automated answers, machine generated answers. It’s when you look like you’re really interested in something, that’s when the agent will interact with you. That’s quite powerful and of course, the whole entry system.

In terms of external linkages, there are many linkages. Payments would be the clearest example. You can’t exist in China without being linked to the online payment networks. We have our own, we have the number three payment wallet, but it’s a long way behind Alipay and Tenpay. Of course, we have to interact with those players.

Platforms like WeChat offer a lot of widgets that allow clients to access many Ping An services. We participate in that. We want to be embedded in e-commerce wherever it’s possible to be, but through our payment products and our financing products. There are many places where we’re linked into a much broader ecosystem of e-commerce and finance.


Providing a competitive capability

ED: Are there those who look at you and say “You should be part of their ecosystem”?

JL: We’ve got this business called OneConnect. The original purpose of OneConnect was to take small banks in China. Under the big five or six banks, there’s a raft of hundreds of medium-sized banks. There could be $10 billion to $150 billion in asset size. They’re not necessarily tiny at all. They’re quite substantial. These guys typically don’t have substantial in-house technology capabilities.

We started by saying, “Could we offer, let’s say, mobile services for consumers and SMEs for these banks?” The answer was yes. They know they can’t compete with Alipay and Tencent. Can Ping An provide them with a competitive capability? Can it be cloud-based? Can it be always updated and always current? Yes, we can do that.

We then found that our credit scores that we’ve built for our virtual consumer lending business, we’re the largest non-bank lender in China, and that business is completely virtual. We never take a piece of paper from a customer. Everything is online. The credit score we built for that turned out to be something that was highly desirable for all of these other banks. When we could layer their customers into that, it increased the pool of clients that we were analysing and allow us to actually improve the quality of the score.

We now have a database of about 800 million customers and it serves well over 200 banks, including HSBC and Standard Chartered Bank in China. That’s become a whole business all by itself, and it comes from one of our businesses. There’s a vast range of these services now: AI services, facial recognition, voice print recognition and conversational AI services.

What’s effectively happening is you can be a small bank in China, and now we’ve actually built an office in Singapore and we’re offering this in Southeast Asia and selectively elsewhere in the world. You can now access this full range of Ping An services as a financial institution even if you have very limited in-house technology capabilities. That would be one example of us in a very focused way providing access to our ecosystem of capabilities to institutions that don’t have those.

ED: Is there an alternative to that? Or is there a variation of that? I’m really thinking APIs where your ordinary customer, your ordinary partner, likes you so much that they want you to be a part of their ecosystem.

JL: The e-commerce example’s a really good one where what’s happened really is finance has been embedded into e-commerce. We have many online merchants where our services can easily be accessed. Are you asking is there some fundamental platform business that’s essentially an open architecture business, where people can build their own capabilities? Lufax is a good example of that, and it’s a completely open architecture wealth platform wherever possible.

If the wealth providers, the product providers are automated, we want to have API linkages to those people. We want to control what’s in that platform. We don’t want anything on that platform. On the customer side, we are trying to scale that as much as possible but we’re bound also by know your customer (KYC) and other regulations that require us to control who it is that we offer and what it is we offer to them through suitability requirements and so forth. It would be wrong to imply that we’ve completely departed from the financial institution ethos and to some extent set of constraints.

ED: I want to build what you’re looking at. You talked about 10x and Airdoc, so what other things are out there? What about content-related potential? You are a huge generator of content as a result, and payments is a huge generator of content in itself. What have you been learning from Ping An payments for example? It’s a little under the radar, but how’s that going and how are you going to be scaling that?

JL: It’s a good business. It obviously doesn’t have anything like the market position of the two leaders in the space, but we are able to generate a lot of payment volume from our own proprietary ecosystem, from our customers intragroup and with our partners. That’s essentially what the business does. It’s a contributor to the group. It’s profitable, but it’s nowhere near the scale of the leaders in the marketplace.

ED: How would you classify what your own ecosystem looks like? Then when you got to see 10x, for example, in the European space, and when you look out for any opportunities in the American space, how would you describe those ecosystems and how are they different from yours?

JL: What’s really interesting to me, and it probably comes back to your question about what’s fundamentally different about Ping An. Most western financial institutions are in a kind of optimisation mode.

Most are in cost containment mode. One of the interesting questions is how many new businesses have been created by developed market financial institutions in the last 15 years. Not many. I can think of just a couple. Marcus by Goldman Sachs would be one example. There are a few, but very few that mostly are very small scale. In some ways, the developed market financial sector has stopped creating new enterprises. It just makes Ping An all the more distinctive, where they can create repeatedly multibillion dollar businesses as a byproduct of their capabilities and of their market position.

ED: When you looked at 10x, were you looking at them as a supplier as much as a partner worth scaling?

JL: Now that their platform is mature, we’re certainly looking at opportunities where that could be useful for Ping An, for Ping An Bank and for our OneConnect customers. In particular, our OneConnect customers internationally.

ED: As a traditional retail banker, you think enterprise, you think institution, you think end to end, you think risk. Your risk is within the institution, within the layers of assets that you carry and all that. How do you think today? You’re thinking portfolio. You’re thinking investment today. But in terms of financial services, if you actually ran a financial institution, I wouldn’t call it a bank anymore. I would call it a financial institution that is totally embedded into the lifestyle of its customers.

JL: The form in which financial services can take is just fundamentally different, and a lot of the boundaries that define financial institutions traditionally are pretty artificial, are a product of either regulation or physical constraints in distribution or technology from the past. There’s the opportunity to reshape financial services into pretty much anything you want it to be.

One of the very important points is that the underlying nature of the financial service doesn’t change. The way in which you shape it and deliver it, the context that you put it into, does change. Therefore, many of the fundamental considerations about risk from liquidity and privacy, data protection, they’re all exactly the same issues. They just take on a different form.

ED: Will the products eventually change? Will what you sell actually change?

JL: I hope that where we get to is far fewer, far more simpler, and far more flexible product platforms as opposed to the products that we think of in financial services today. Can I give an example? I’ve always had this idea. For every customer, if I know you as a customer, I should be able to tell you at any point what the entire universe of credit I can offer you is, secured and unsecured. You should know that. You shouldn’t have to even ask me.

We’re getting to a point where some kind of value proposition like that becomes extremely possible, where I can already anticipate what your wealth management needs are, not just now, but pretty much for your whole life. I can lay that out for you in a powerful way and show what your options are, the most cost effective and the highest risk-adjusted return path that you should be following. These possibilities are very real now. There are quantum shifts in the kind of services that we can offer. We’ve yet to see those, or at least we’re only seeing parts of them today.

ED: What are you personally expecting from 5G? What are you looking forward to? How much of a game changer will it be and what sort of place do you think will come from it that is worth waiting for?

JL: It’s quite interesting. The examples that are in the public domain are pretty limited. Many people struggle to imagine what happens when you increase upload and download speeds by 100 times or even 1,000 times, which may be possible. Where we get to is this world where pretty much anything you can imagine in the physical world is either going to be virtualised or it’s going to have a digital twin. There are going to be sensors for pretty much everything.

The average car, when you buy it, already has 1,200 sensors embedded in it. Typically, for the auto, the original equipment manufacturers (OEMs) today suck out for the first two years when they pay for the SIM card in the car, because almost all cars get sold with an embedded SIM card and the subscription is paid for by the OEM for the first two years. They typically only take about 26 to 30 data elements.

There’s this massive pool of data that tells you not just about the car, but how that car is being used, how it’s being driven. It tells you all kinds of things about the lifestyle of the individuals that own those cars or drive those cars. That data has to be massively available. 5G allows us not to be constrained to 30 data elements. It allows us very easily to suck all of that data out, and it exponentially multiplies the amount of information that we have.


Creating a spectrum between things

ED: Who’s the leader now? Who do you think would be a game changer?

JL: In that space, all of the OEMs are interested in this. None of them has particularly strong capabilities today. There are a couple of companies that are leaders in helping them aggregate data and make use of it. One is a UK company called Wager. Another one is an Israeli company called Autonomer. They’re probably the two market leaders today.

That’s a good example of a demand where the sensor layout already exists and where it’s probably not that difficult to imagine use cases for predictive maintenance, usage-based insurance, driver risk assessment and even things that you might think of as peripheral. If you’re a mapping company and you want to know where is it raining right now, guess what? The wind screen sensor tells you whether it’s raining right now, tells you how much it’s raining. That data is all there.

Typically, companies like Waze will use background feeds from mobile in order to populate the roads with where cars are. Increasingly, telecom providers, application providers and handset providers are blocking those passive flows. Connected car data gives you very reliable data as to exactly where the cars are on the road. Again, from using even a sample of cars, you can extrapolate and get very accurate information. That’s one example of the use case. There are many others.

Think of a factory. Complex set of equipment from different vendors, some of those pieces of equipment, the newer ones, will already have very sophisticated sensor technology and optimisation technology, but there is nothing that integrates the whole line. If you can create a digital twin of everything, and you can apply a sensor layer, a digital representation layer and an optimisation layer, you can start managing the productivity of that asset in a very different way. You can structure the ownership of that asset in a very different way. Someone else can own the asset. You can just pay by widget that you produce. That someone else actually knows as much about your business, maybe more than you do.

ED: In your fund, how far outside your limit will you go, or you will be willing to go, to look for investments that may not have any immediate correlation to the core group?

JL: For example, in the case of connected cars, which is very interesting to us. We’re the biggest auto insurer in China, the biggest auto financier, and we’re in the biggest auto sales platform, so that’s a natural area for us to focus on. We’re interested in platforms that sell cars, we’re interested in connected car data and we’re interested in usage-based insurance. They’re all pretty core to us.

Manufacturing, internet of things, we’re very interested in this space. This is not a business that we are in directly right now. It’s highly relevant to our commercial insurance business. It’s highly relevant to our leasing business, highly relevant to our bank business. We think that there are certainly opportunities there. We haven’t found one that we have been able to get comfortable investing just yet, but there are a couple that we’re looking at that we’re quite interested in, and this is a space that we’re interested in.

We want a spectrum between things like Airdoc. It is already working with our businesses to provide screening for our customers. Their platform was ready to go and we could plug it in very fast. We also want things that are maybe five years out there, things that we will never activate, but present option value for the future, and we want a spectrum in between. I don’t think being too weighted towards the short term is going to be helpful for this type of fund, or being too weighted to blue sky opportunities is going to be helpful. We really want to have a balanced spectrum.

Our minimum ticket is about $10 million. We’re typically investing 15 to 30. So far, our largest investment is about $45 million, which is a company called Finley in Germany, which is the largest company builder in the fintech space in Europe. It’s a very interesting company. We are typically looking for 10% to 20% of the company. We absolutely do not want control. We’re looking for the ability to create equity and ownership as a way of creating alignment. We typically want to create some kind of corporation and that could range from a licensing agreement, a joint venture, through creating a new business together in China.

ED: You want to see alignment and corporation at the onset, so then you start the whole process. It’s a wonderful put-your-seatbelts-on journey.

JL: It’s a unique company. I don’t think there’s anything like it in China or in the world. For me, the ability to be in this kind of point of intersection between this unique and diverse Chinese companies, super innovative, in this entire world of external innovation, I don’t think there’s anything like it.

ED: The fact that you’re looking at partnership’s completely agnostic, whether they’re European, African, Asian and so on. But in fact, you’ve missed out Southeast Asia. So what are you doing in that?

JL: The general story is that most of the fundamental innovations are still coming from developed markets – US, continental Europe, UK, Israel and to some extent in Australasia. In emerging markets, I’m not generalising because there are always exceptions, for the most part, what you’re seeing is adaptations of models that have been proven elsewhere. The company is focused on the challenges of deploying that model in a totally different context.

If you take e-commerce and you try and put it into Indonesia or India, which has now been successfully done multiple times, obviously it’s a totally different challenge from building out Amazon in the first place. You can understand why those priorities are as they are. In general, that’s what we see. There are examples of businesses in – consumer-focused businesses in Southeast Asia that we certainly are interested in and we are talking to. What we are interested, in particular, is our ability to bring value to those businesses using Ping An technologies.

ED: Jonathan, this is a continued conversation and we hope to be able to talk to you again soon.

JL: Emmanuel, thank you very much.

Keywords: Technology, API, Cloud, Health Insurance, Asset Management, Data, Blockchain, Legacy Platforms, B2B, Good Doctor, Telemedicine, E-Commerce, KYC, Risk Management, 5g, GDPR, OECD, Corporate Venture Capital
Institutions: Ping An Group, Citibank, OneConnect, Lufax, Barclays, Virgin Money, Nationwide Building Society, Health Connect, HSBC, Standard Chartered, Goldman Sachs, Wager, Autonomer, Waze
Country: China
Region: Asia Pacific
People : Jonathan Larsen, Emmanuel Daniel, Peter Ma, Richard Jackson, Anthony Jenkins
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