Online banking and retail competition heats up
(25 June 2015 – China) Alibaba Group Holding Ltd, China’s biggest online retailer is launching MYbank this week, an online lender that will tap into a record US$7.8 trillion (A$10.6 trillion) of deposits massive banking revenue.
MYbank is to begin operating on 26 June as part of Alibaba’s finance arm, Zhejiang Ant Small & Micro Financial Services Group Co.
It’s one of a wave of new private banks being licensed by the government to target small loans and aims to use facial-recognition software to let users set up accounts.
There are no physical branches planned whatsoever, and follows the launch of Tencent Holdings Ltd’s online WeBank in December.
In May, WeBank started its consumer lending, where borrowers without collateral are able to get as much as 200,000 yuan (A$41,600) at an annualised rate of 18 percent.
In order to counter retail giants moving into the banking industry, China’s big banks have been pushing into the online retail world.
Industrial & Commercial Bank of China Ltd., which as the world’s most profitable company dwarfs Alibaba’s net income by more than 10 times, set up a platform allowing retailers to sell the bank’s customers wine, shampoo, appliances and more.
ICBC’s site, called Easy to Buy, is forecasting sales of 300 billion yuan this year, after tallying 130 billion yuan so far since January.
ICBC’s mall lets customers also purchase wealth-management products, gold bars, luxury cars, travel packages and even apartments.
China Construction Bank Corp., Agricultural Bank of China Ltd. and others are also getting into the action.
Construction Bank’s online mall saw a 67 percent surge in transactions last year, while Agricultural Bank had a 57 percent gain, faster than the 47 percent growth at Alibaba’s Tmall and Taobao sites.
Bank of Communications Co.’s e-commerce platform sells merchandise and also allows customers to book air tickets and hotels.
China Merchants Bank Co.’s online shop offers a 30 percent discount on Prada bags and zero interest and free shipping on purchases made on installments through its credit cards.
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