China’s Ping An started out as a property and casualty insurance company but rapidly grew into becoming what we know today as one of the world’s biggest tech giants.
A new case study published by the International Institute of Management Development (IMD) in Switzerland looks at the evolution of Ping An and identifies key lessons from the firm’s successful journey into becoming a tech disruptor.
Ping An’s rise is something that’s apparent to most industry observers, KPMG once wrote a guest piece in Fintech News Singapore outlining 3 key lessons that insurers can learn from Ping An.
According to the study, very rarely do incumbents double as tech leaders, but Ping An managed to reach that position. The firm has incubated no less than 11 affiliates, two of which have achieved unicorn status, and today operates far beyond the boundaries of insurance and even finance itself. Taken as a whole, Ping An and its affiliates represent a new type of technology ecosystem.
Looking at Ping An’s journey over the years, the study notes that the firm has been investing heavily in tech early on. For nearly ten years now, Ping An has allocated 1% of its revenues and about 10% of its profit each year in research and development (R&D) in new technology.
The firm was quick to embrace cloud computing, beginning to move all of its proprietary IT systems to the cloud in 2013, the paper notes. This allowed Ping An to rapidly develop advanced data analytics across businesses, an essential step in the company’s effort to become a technology-driven company.
Another key strategy has been to leverage its technology infrastructure to build extensive ecosystems. To do this, Ping An branched out to new businesses and brought its ecosystems to scale. An example of that is its fintech spinoff OneConnect.
After recognizing the opportunity to export its technology and expertise to banks and other insurance companies in China, Ping An set up OneConnect Financial Technology in 2015. By June 2020, OneConnect had served all of China’s major banks, 99% of its city commercial banks and 53% of its insurance companies.
Another area of focus has been to create synergies between Ping An’s different ecosystems. Autohome, for example, is an online car-buying platform which Ping An purchased in 2016. After the acquisition, Ping An integrated banking, finance and insurance into Autohome, and pursued cross-selling opportunities. In 2019, a total of 74 million individual customers held contracts from more than one Ping An subsidiary.
The diversity of Ping An’s revenue streams have proven to be a significant advantage, notably during COVID-19. While Ping An’s life insurance business took a hit with the pandemic, Ping An Good Doctor, its online-to-offline healthcare servicing platform, recorded a surge in usage. Meanwhile, more than 30 banks turned to OneConnect for digital services.
Another key takeaway from Ping An’s tech transformation journey was the emphasis it put on changing mindsets, installing an innovation culture, and pushing people to look beyond typical short-term planning horizons and take risks.
The firm killed the “not-invented-here” syndrome, or the tendency for people and organizations to avoid things that they didn’t create themselves, the study notes, and encouraged companies to mobilize whatever resources they can from inside and outside their organization.
Today, Ping An has a very diversified management team, which currently comprises a substantial number of non-Chinese people with untraditional financial backgrounds. This diversity partially explains why Ping An was able to able new business models much more aggressively.
Ping An is the world’s largest insurance group by market capitalization. As of December 31, 2020, four of its tech companies including OneConnect and Lufax, an online finance marketplace, had gone public with a total market capitalization of US$68.4 billion.
