Ant Group will apply to set up a financial holding company, the fintech giant said on Monday in compliance with a joint rectification plan it made with Chinese regulators.

Chinese financial regulators have been working with Ant Group to make sure its financial activities meet regulatory standards since late last year.

Ant Group is the fintech arm spun out of Alibaba Group and the parent company of China's largest mobile payments business Alipay. Launched in 2004, the group has evolved from a PayPal-like online payment business into a fintech empire covering various online banking and financing businesses.

Chinese authorities have warned it of monopoly and unregulated business expansion.

The company was summoned to another joint regulatory talk held by the People's Bank of China (PBOC), the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange on Monday. 

The talk echoes China's anti-monopoly efforts and aims to promote the healthy and sustainable development of the platform economy, Pan Gongsheng, deputy head of the central bank, said in a Q&A statement released on Monday.

Since the joint regulatory talks with Ant Group in December last year, the company has established a work group to formulate rectification plans under the guidance of the financial management authorities. 

On Monday, the financial management authorities again jointly interviewed the relevant company personnel, requiring the company to face the serious problems in financial business activities, strictly carry out the rectification work, better serve the real economy and the people, actively respond to the national development strategy and increase financial technology innovation, Pan said.

Pan said they discussed rectifying unfair competition in the payment business, breaking the information monopoly, applying to become a financial holding company and accepting supervision, rectifying violation of regulation in financial activities, and controlling the liquidity risk of the important fund products.

Ant Group said on its official WeChat account that it will use the rectification as an opportunity to reinforce its commitment to serving consumers and small and medium-sized enterprises.

"Ant Group attaches great importance to the seriousness of the rectification. Under the regulators' guidance, and in accordance with regulatory requirements, Ant Group has completed the formulation of our rectification plan," it said in the statement.

The company said it will set up a personal credit reporting company and apply for a personal credit reporting license. Jiebei and Huabei, Alibaba's affiliated consumer lending units, will be operated by Ant Group's consumer finance company.

China has been making efforts to mitigate financial risk and maintain a healthy financial market in recent years. The country has repeatedly stressed stepping up anti-monopoly efforts and preventing the disorderly expansion of capital in high-profile economic meetings.

Regulating fintech

Ant Group's mega $37 billion dual listing in Shanghai and Hong Kong hit the pause button late last year amid China's tightened regulatory scrutiny of fintech. The stock offering was set to be the world's biggest ever, exceeding Saudi Aramco's debut in 2019.

China's fintech groups have previously been criticized for dodging regulations by leaning on the "tech" part of their operations. Pan reiterated on Monday that all financial activities are included in financial supervision, including fintech. He said all financial business has to be licensed to operate. 

Pan acknowledged fintech's role in improving efficiency and making the financial system more inclusive while pointing out that cross-sector and cross-regional traits of the industry have posed new challenges to financial risk mitigation.

Pan said Chinese regulators are willing to participate in building international fintech regulatory standards and strengthening regulatory coordination to prevent cross-border regulatory arbitrage and cross-border spill of financial risks. He also said China is willing to step up global cooperation in areas including anti-monopoly, data supervision and consumer protection.