Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Using ecosystems to reach higher: An interview with the co-CEO of Ping An
McKinsey & Company | Jason Li and Joydeep Sengupta | Nov 17, 2020
Expect digital to further blur industry lines, supercharge scalability, and loosen geographical restraints for professional services, says Jessica Tan.
Ping An is the archetypal example of how today’s Asian powerhouses succeed by creating, participating in, and exploiting digital ecosystems. Founded in 1988 as an insurance company in the then-rapidly developing city of Shenzhen, Ping An has since grown to become China’s largest non-State-owned conglomerate by revenue (1.169 trillion RMB [$174 billion] in 2019), with portfolio companies spanning automobile services, financial services, healthcare, and smart city solutions. Early investments in digital technologies such as artificial intelligence (AI), blockchain, and cloud infrastructure help Ping An serve more than 214 million retail customers and nearly 579 million internet users across China.
As chief information officer from 2013 to 2019, Jessica Tan was a key architect of Ping An’s digital-ecosystem-based business model. In an interview with McKinsey’s Jason Li and Joydeep Sengupta, Tan shared her thoughts on how the digital transformation will affect professional services, the synergies that big and small companies can share in digital ecosystems, and the ways in which she’s reimagining Ping An’s organizational structure and leadership selection criteria, starting from the company’s highest ranks.
See: The Intersection of Small Business, Tech and Our Financial Ecosystem is More Important Than Ever
The Quarterly: What impact are Chinese companies having on Asia and the rest of the world?
Jessica Tan: There are two areas where I see Chinese companies contributing. One is how to serve large volumes of consumers online. China has done incredibly well with the largest consumer market, from daily lifestyle services like ride-hailing to professional services like telemedicine and finance. Chinese companies have been at the forefront of pioneering successful business models and platforms. The second area relates to technology applications, particularly AI. AI needs three things to succeed: basic algorithms, computing power, and real data and scenarios. Large markets like China and the US are very ripe countries in which to develop AI applications and train AI technologies.
The Quarterly: Sounds like digital technology is a key theme. Has the COVID-19 pandemic reaffirmed Ping An’s approach to digitization?
Jessica Tan: We’ve always been very aggressive on the digitization front. Our founder [and chair], Peter Ma, has always been visionary. Ten years ago, when he said we should invest significantly in technology R&D above and beyond IT, it was not an easy decision to make. We now spend more than $1.7 billion, or 10 percent of our revenue, every year. Even though we never really know how technology will change, we think it’s important to have these capabilities.
See: Fintech Fridays EP44: The Vanguard of Digital Innovation and Ecosystems in Canada
If anything, COVID has taught us that we need to be even more aggressive. We have 1.5 million employees, and I had contingencies for around 20 percent of them to work remotely from home at any point in time. During Chinese New Year this year [when the pandemic was at its height in China and the government instituted lockdowns and restricted travels], I had five days to get all of them online.
One of our portfolio companies, OneConnect, is a fintech that serves financial institutions. Since COVID broke, it’s provided 60 banks with remote sales-management and customer-support tools, including an AI voice robot and a videoconferencing app. Before COVID, it could have taken a year to persuade them to sign up. But now, more people are aware that this is something we need to do.
At the same time, we’re part of the insurance industry, where face-to-face interaction is very important. We’ve always used digitization as support, and have our own video apps to do morning meetings and training remotely. But it’s not a sufficient sales-management tool. Our customers are not yet used to talking to us remotely, so our agents were actually back up and running very quickly. The leap to digital has to be done right.
See: What to expect from Biden-Harris on tech policy, platform regulation, and China
The Quarterly: What about the rest of Ping An’s diverse portfolio of companies?
Jessica Tan: In our portfolio of tech companies providing healthcare, education, and smart city services, digital has spurred even more growth. There are eight billion telemedicine consultations across China every year. Only about 3 percent of visits were online. During COVID, traffic on our Good Doctor platform increased more than eight times; people didn’t want to go to hospitals.
his has changed three things: one, the consumer mindset. They no longer feel the need to go to hospitals for minor illnesses. Two, regulators’ behavior toward telemedicine. They didn’t allow social health insurance to reimburse telemedicine expenses, but they’ve released that restriction now. So now you see 400 internet hospitals booming in China with official blessing. Three, the standardization of the quality of healthcare in China. Our health scientists found that about 34 percent of all medical consultations can be done online without sacrificing quality, and in many case are made even better because everything done online is taped and recorded. There’ll be less deviation between doctors in cities and doctors in rural areas.
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