GBA Brief

The herd instinct: how Ping An is unleashing its unicorns

Shenzhen’s Ping An is pressing ahead with tech investment, after its startling successes in seeding four multi-billion dollar start-ups.

About 50 new unicorns – privately held start-ups with valuations north of $1 billion – have emerged so far this year. Companies from China accounted for just four of the new breed, according to Crunchbase, following a long period when they had been catching up on the American herd in number. 

Twenty out of the 35 newcomers from the United States have headquarters in the San Francisco Bay Area, it was also reported, highlighting how the unicorns often gather in a similar location.

And although they aren’t quite as abundant in the GBA, they have been prolific in one place in particular – at Ping An, a company from a traditionally staid sector.

Insurer, turned unicorn-breeder

China’s largest insurer by market value has spent more than Rmb50 billion on technology investment over the past decade. And listening to what Song Chen, Ping An Technology’s general manager of smart cognition, said at a forum in Chengdu in May, you get a better understanding of why it wants to spend Rmb100 billion more on its technology arsenal in the ten years ahead.

As Song pointed out, tech investment was initially seen as a way of improving Ping An’s core businesses. That is still the number one mission, where data security and processing capability are fundamental to running its various financial units. Here we are talking about zillions of transactions from more than 180 million customers – the computing backbone simply has to be robust and cost effective in meeting its daily operational needs.

Technology is also reinventing the ways these traditional businesses are carried out. Song likes to use the word “rebuild” to describe this process. As an example, if a client’s car suffers a minor mishap, like a scratch, the customer can upload a couple of photos or short video footage of the damage to Ping An’s system, which then uses machine vision to determine the correct amount of compensation.

This is making so-called “flash claims” possible, Song says. In the past, the same process could take two weeks to complete. 

If there is a need for it, Ping An staff might also be sent to the scene for onsite investigation. They are getting there more quickly because the company is monitoring where to position its teams in real time, based on geospatial analysis and big data assessments of traffic conditions.

The Amazon effect

Other than in-house use, Ping An is realising that its know-how can power new business models for third parties, such as helping real estate developers to manage their property portfolios. 

Ping An is already a major player in the property sector through its own real estate investments, shareholdings in major developers like Country Garden, and its involvement in project financings, the mortgage business and property fund management.

Now, its property-related smart city technologies promise not only to benefit it directly, but also have the potential of growing into another significant income source. 

On the face of it, a comparison between Ping An and Amazon seems unlikely. But Amazon’s tech prowess emerged from the need to support its core e-commerce business. Likewise, Ping An is investing heavily in technology that is critical to its insurance, banking and asset management concerns. In the process of building an unrivalled e-tailing platform, Amazon spawned powerful new businesses, like its cloud unit AWS. And Ping An, too, has hit some unexpected jackpots. 

Ping An Good Doctor, an online medical platform, went public last year, and its fintech unit OneConnect is said to be planning an IPO in New York later this year. In May OneConnect was awarded a virtual bank licence by the Hong Kong Monetary Authority and it unveiled its Gamma O platform in the same month, positioning it as a “technology app store for financial institutions” in a bid to boost the fintech sector in general.

Bigger is better?

The insurer has two other unicorns on its books: Lufax, a peer-to-peer lender that has branched out into wealth management, and Ping An HealthKonnect, an online provider of health cover and other insurance.

Taken together the group was being valued at more than $80 billion before Ping An Good Doctor went public last year. Lufax alone was said to be worth close to $40 billion during its most recent funding round in March.

With its existing client base, Ping An enjoys the advantages of creating products to address specific needs and testing them in the real world to see if they work. “We are beginning to notice the differentiation that can be created by technology is getting smaller…what really counts is real application scenarios and access to real clients and actual businesses,” Song explained. “This is why we may not be the first, but we are able to accelerate at a faster clip.” 

While one of the major purposes of the GBA is to forge a closer relationship among the member cities, another goal is the creation of an ecosystem that nurtures tech breakthroughs and cross-sector collaboration. Much of the momentum for this may not always come from start-ups and smaller firms, as it often has in the US and Europe. In China’s case it’s often the largest companies that are setting the pace. And to make that ecosystem into a reality in the GBA, tech-driven champions like Ping An, Huawei and Tencent are going to play a key role in attracting more talent into the region.