If you think about China, the country was not wired with land line phones so when cell phones became available people bought them. People communicated more than ever, but adding technology soon meant apps were available and Alibaba was one of the most popular. The app has continued to be the most popular in China as the number one e-commerce sites. When you have a large market share, it is time to branch out to over products and services and Alibaba branched out. In fin-tech, Alibaba came out with Ant Group which has become the number fin-tech in China.

In an article by Julie Zhu and Brenda Goh of Reuters, Ant Group became a threat to some of the commercial banks which incidentally some governments and their agencies own. The banks complained to the regulators and more importantly to the Premier Li. He waited until Ant Group was going to go public before sending in the regulators.

Recently Ant Group has agreed to the restructuring plan with Chinese regulators under which the fin-tech giant will be turned into a financial services holding company. Bloomberg News reported this will potentially a major step toward easing founder Jack Ma’s regulatory woes.

This means the fin-tech will have similar capital requirements than banks have and should allow the banks to compete against Ant. The company Ant has been a leader in China for small loans of $100 or more. When the regulatory structure is in place, if and when Ant Group becomes a publicly traded company, the valuation between a fin-tech and another banking company will be lower.

Linking to dividend paying stocks, the regulators are important to every industry but sometimes management tends to skirt the laws until it needs them to beat the competition. Government has regulations and most companies have lobbyists to help ensure the competition is both fair and stable and when the rules change, companies run to the regulations and try to change them for a fair playing field. Regulations matter.

There are more questions than answers, till the next time – to raising questions.