The Story of Ant Group: Part II
Ant Group, although an industry leader who holds a full range of financial licenses and intensified advancements in the financial market through investment and shareholding in recent years, could not solely rely on its financial services due to the rise of o2o and mobile internet. The company’s capital expansion and rapid upgrade of its products are derived from its strength in information technology.
Instead of remaining an e-commerce platform, Ant Group’s focus on both finance and technology had been revealed with the release of products including Sesame Credit and Huabei. In 2017, Ant Group officially announced its new Techfin branding, emphasizing the company’s technology advantage.
In fact, according to the timeline, this move is not groundless: it coincides with the launch of strict supervision of internet finance in China in 2016, which included online loans, funds, internet asset management, small loans, etc.
In other words, in the so-called “definancialization” trend of Chinese internet giants (BATJ) in recent years, which initiated due to stricter regulations of financial supervision and external pressure from all parties, Ant Group realized the importance of technology on its survival. Therefore, shifting the focus to technology would pave the way for prolonged success. The company would no longer be involved in financial services only, but would provide services for small and medium financial institutions employing its outstanding technological capabilities. On July 20, 2020, Ant Group’s focus officially shifted from finance to technology. The industry was very optimistic. At present, with its cutting-edge technology, Ant Group has formed three strategies: attract middle-class users, diversify business structure, and globalize the multi-dimensional business empire. And there are six major business sectors: payment, wealth management, microloan, insurance, credit reporting, and technology output. It is obvious that Ant Group has emerged as a mature technology output company after decades of development.
The decision of shifting away from its finance core is supported by years of continuous innovation. In order to achieve digitalization, Ant Group has adopted a series of upgrades. In October 2017, the company launched its BASIC technology strategy (Blockchain, AI, Security, IoT, Cloud financial cloud) and distributed technology, the most representative of which is the sofa distributed architecture.
SOFA is a set of financial distributed middleware developed by Ant Group. There are two characteristics of the distributed system: one is that the components are distributed on network computers, and the other is that the components rely on messages to coordinate activities. The middleware, as the name suggests, is the bridge between the operating system software and the user’s application software: you cannot directly manipulate the database, but need some intermediate software, such as SOFA, to help complete the overall system architecture. Adding the concept of distributed to this perspective, SOFA is the complete package that serves as a bridge among applications with its shared resources among different technologies.
Alipay employed the layered system in its early stages, with a straight line process transferring from the wallet system to the database. But as the business expanded, the cost of collaboration within and among teams became higher and higher. Therefore, SOFA was developed in response to the demand.
SOFA’s code has undergone a lot of optimization and refactoring. In the original version, to solve the problem of internal collaboration, the developers introduced the concept of modularity: a way of separating the system into more manageable modules. Each module completes a specific sub-function, and assembling all modules using a certain method would form an entirety that completes the functions required by the overall system. The advantage of this system to avoid naming conflicts so that people don’t work on the same section simultaneously. The second advantage is that SOFA allows multiple people to collaborate without interfering with each other. For Ant Group, if they continued Alipay’s old hierarchical system, time and resources would be wasted.
As Ant Group’s business expanded, SOFA also underwent a service-oriented transformation in modularization. Before explaining the concept of service layer, let’s talk about what happens if a service layer is missing. Every business line in the company needs to access the database to obtain user data, but when there is no service layer, each business line has to write SQL codes to access libraries to retrieve data, which wastes a substantial amount of time in copying similar codes many times. Second, if there is no service layer, everyone accessing the database will impose access pressure on the library and cause complexity. Then, with the service layer, there is an extra “front desk”. Everyone would ask the front desk to process the basic tasks, so the basic operations will be handled by the service layer instead.
After solving the problem of horizontal expansion, there came the capacity problem of the library. It is impossible to store the information of all business lines in a single storage space. Then the developers came up with another method to put the data of different businesses into different databases.
This split has not come to an end. As the transaction volume grows, a transaction database may not be able to hold as much information, therefore the developers implemented another horizontal split, including splitting by user id.
Here, the role of SOFA distributed transaction system is to regulate the communication problems among thousands of databases and to increase operating efficiency. By selectively filtering trivial basic information upstream, the de-IOE centralization concept saves a lot of maintenance costs and improved performance load capacity. The most typical application scenario was the Double Eleven event, which observed a substantial amount of information flow flooding the platform. Alipay reached a world record of 120,000 payments per second in 2011, and in 2017, the number increased to 256,000 payments per second.
Now we introduce some of the BASIC technologies.
Blockchain has been trending in recent years. Generally speaking, blockchain shifts from the original way of requiring an intermediary to keep all accounts, to offering everyone a ledger, regardless of whether the transaction is related to you. This technology also fits the trend of decentralization and distribution. Blockchain is open to the public as a transparent, low-threshold, and inclusive service network. Ant Financial Group uses this technology for electronic invoices, insurance claims, supply chain finance, charity donations, and commodity traceability.
With the strategy of “real-time insight, real-time decision-making”, Ant Group has increased its strength in AI through its powerful AI platform, self-service support, content production, service distribution, intelligent investment advisory, and other services. In terms of understanding user needs, Ant Group uses a dual approach: one is implicit, which predicts user needs by learning the user histories; the other is explicit, that is, the need is learned through real user questions. However, it is not enough to only understand the intention. Through similarity analysis, event extraction, event attribution analysis and other means, Ant Group inputs fragmented information scattered in all corners of the Internet, conducting cluster analysis on the content after understanding user needs. Finally, valuable information is extracted and presented to users.
Financial cloud computing uses the principles of cloud computing to interconnect the databases of various financial institutions to form a shared cloud network. Ant Financial Cloud is an internet financial technology that Ant Group had developed for years. It is a platform that provides cloud computing services for small and medium financial institutions. The key basic technology products, including its own R&D platform, middleware, and distributed cloud database OceanBase, form the “financial cloud” architecture. With the ability to connect 5,000 machines collectively, and simultaneously with the shared and consistent characteristics of distributed technology, small and medium-sized financial institutions no longer need to build their own platforms, saving financial resources and concerns of inadequate technology, establishing the foundation of a billion-scale platform that has a much larger scale and lower costs.