On­line and on­ward

In­ter­net-based banks are stum­bling but hold­ing fast to a vi­sion of bright fu­ture

China Daily (Canada) - - CHINA - By JIANG XUEQING jiangx­ue­qing@ chi­nadaily.com.cn

In Novem­ber, China’s In­ter­net search gi­ant Baidu Inc and China CITIC Bank Corp Ltd, a mid-sized lender, an­nounced they will launch as yet un­named direct bank that will have no net­work of branches but will of­fer its ser­vices on­line.

By for­ay­ing into In­ter­net­based bank­ing, Baidu em­u­lated an­other two Chi­nese In­ter­net gi­ants: Ten­cent Hold­ings Ltd and Alibaba GroupHold­ing Ltd.

Robin Li, chair­man and chief ex­ec­u­tive of­fi­cer of Baidu, noted the pro­posed direct bank will be the first of its kind, in the sense that it will bind an ex­ist­ing bank and an In­ter­net com­pany from the main­stream to­gether in cy­berspace.

“The Chi­nese bank­ing sec­tor has ar­rived at a his­tor­i­cal junc­ture and will be vi­tal­ized by the In­ter­net.”

China CITIC Bank said it could make a tran­si­tion by draw­ing on the op­er­a­tion model of Baidu and their co­op­er­a­tion will likely bring a large num­ber of clients and in­crease on­line traf­fic to the pro­posed bank.

For ex­am­ple, Baidu could crunch big data about its users to cre­ate pro­files of po­ten­tial direct bank cus­tomers.

Such a strat­egy would be in tune with Chi­nese Premier Li Ke­qiang’s “In­ter­net Plus” plan, which un­der­lines boost­ing eco­nomic de­vel­op­ment through In­ter­net tech­nolo­gies like cloud com­put­ing and big data an­a­lyt­ics.

It is a plan that is in­spir­ing a grow­ing num­ber of In­ter­net com­pa­nies to in­no­vate and launch on­line fi­nan­cial ser­vices.

For in­stance, WeBank, the coun­try’s first on­line pri­vate bank, was jointly founded by Ten­cent and two lo­cal in­vest­ment firms in De­cem­ber 2014.

By Oc­to­ber-end, WeBank’s out­stand­ing loans ex­ceeded 4 bil­lion yuan ($624 mil­lion), ben­e­fit­ing more than 10 mil­lion peo­ple. The bank sold third-party wealth man­age­ment prod­ucts worth 70 bil­lion yuan to nearly 500,000 clients.

At present, WeBank’s fi­nan­cial prod­ucts span a small range that in­cludes se­cu­ri­ties in­vest­ment funds, third-party as­set man­age­ment prod­ucts and small per­sonal loans to in­vited clients.

Sim­i­larly, on­line lender MYbank pro­vides loans of up to 1 mil­lion yuan with­out col­lat­eral to small off­line mer­chants based on their cred­it­wor­thi­ness. It also of­fers un­se­cured loans of no more than 500,000 yuan to farm­ers and small busi­ness own­ers in ru­ral ar­eas.

MYbank opened for busi­ness in June. It is led by the fi­nan­cial ser­vices af­fil­i­ate of Alibaba Group Hold­ing Ltd, China’s largest e-commerce com­pany.

Yu Shengfa, pres­i­dent of MYbank, told the me­dia in Oc­to­ber that the bank was still test­ing ap­pli­ca­tion soft­ware and in­vited 500,000 small and mi­cro en­trepreneurs to use its ap­pli­ca­tion.

Even tra­di­tional banks are seek­ing to re­vi­tal­ize them­selves by adopt­ing on­line tech­nolo­gies and in­no­va­tive busi­ness mod­els even though some newly es­tab­lished In­ter­net-based banks are fac­ing chal­lenges.

WeBank blames reg­u­la­tory hur­dles for its mod­est suc­cess so far.

Un­der the cur­rent reg­u­la­tions, peo­ple seek­ing to open new­bank ac­counts are re­quired to visit the bank with their iden­ti­fi­ca­tion card and sign re­lated forms. For ac­counts with on­line banks, they need to use a debit card is­sued by a tra­di­tional bank, due to safety con­cerns. On­line banks feel this rule en­sures the bank­ing space is not a level play­ing field.

Li Nan­qing, pres­i­dent of WeBank, said he hopes re­mote open­ing of on­line bank ac­counts would be al­lowed as soon as pos­si­ble.


A vis­i­tor tries face-iden­ti­fi­ca­tion tech­nol­ogy at the booth of Ant Fi­nan­cial, Alibaba's fi­nance af­fil­i­ate, dur­ing an in­dus­try expo in Hangzhou, cap­i­tal of Zhe­jiang prov­ince.

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