Tech Giants are shaking up China’s Banking Sector
Jun. 10, 2015
This month, the Alibaba affiliate Ant Financial Services is launching an online-only bank called MyBank. The new bank is registered with a capital of 4 billion yuan ($650 million) and will not have any physical branch.
This month, the Alibaba affiliate Ant Financial Services is launching an online-only bank called MyBank. The new bank is registered with a capital of 4 billion yuan ($650 million) and will not have any physical branch. Despite Tencent's recent move launching China's first online-only bank, the hype around Alibaba's MyBank remains quite big.
These two banks are among the 5 private banks that were approved by China Banking Regulatory Commission last year. By partly opening up the banking sector, China’s goal is to help financing innovative startups and to make market-oriented reforms to help the slowing growth of the export based economy.
Experts say that the new banks opened by China’s internet giants have a few competitive advantages over other players in this sector. Both MyBank and WeBank can leverage big data capabilities to better understand clients’ needs and to analyze lending related risks. Using their massive infrastructure they can lend faster and at better rates than traditional banks . Using their social media platforms they will be able to attract new clients from younger generations.
WeBank is integrated to the QQ messaging platform and provides personal loans up to RMB200 000, free of guarantee. It takes only 15 minutes to process a loan request and daily interest rate is around 0.05%. At a later stage of development, the service will also be integrated to WeChat. Even though MyBank is not launched yet, Ant Financial Services -Alibaba’s financial arm- is already a successful provider of online micro-loans. The lending volume on their platform reached RMB400 billion since their launch.
Some might think the tech giants are barking up the wrong tree, but Li Keqiang and Jack Ma seem to agree that online-only banking is going to transform the financial landscape in China.