Alibaba’s Digital Bank Comes Online To Serve ‘The Little Guys’ In China – TechCrunch
You may know Alibaba for its huge e-commerce business in China and the record-breaking U.S. IPO that it held last year. But there’s a lot more to the Hangzhou-based company than that, and as of this week, that includes an online bank.
Alibaba-backed MYbank opened Thursday with a promise to provide services “for the little guys.” The service is an all-digital bank, it has no physical branches but is open 24/7. It is aimed at those who tend to end up a little short changed by the existing banking system — SMEs who struggle to fit into a financial bracket for loans and services, and those in rural areas who have issues accessing branches and banks in person.
“Answering to the needs of those who have limited access to financial services in China is our mission,” said Eric Jing, president of Ant Financial — the Alibaba affiliate backing the bank.
“MYbank is here to give affordable loans for small and micro enterprises, and we are here to provide banking services, not for the rich, but for the little guys,” Jing, who is also executive chairman of MYbank, added.
Initially, it is aiming to pay out loans of up to 5 million RMB ($800,000) to SMEs, enterprises, entrepreneurs and consumers — although it still requires final green lights from authorities before it can break the seal on its purse of 4 billion RMB ($640 million) in registered capital.
The bank believes it can pass on savings to customers by cutting out the expensive processes and systems that traditional banks deal with. For example, MYBank uses cloud computing rather than internal IT systems, while it has kept its staff to 300 employees thanks to being digital.
MYbank has the potential to be disruptive, particularly piggybacking the Alibaba name and brand in China, but Jing said he intends to work with the bank’s traditional peers too.
“Small and micro enterprises may not be our clients in the future when their businesses grow beyond our capabilities. And we will recommend our clients to seek financial solutions at traditional banks,” he added.
Alibaba isn’t the only Chinese internet firm moving into banking. Tencent, the creator of smash-hit chat app WeChat, began piloting WeBank, which was China’s first digital bank, in January of this year.
Ant Financial’s other services include Alipay, the payment service that processes three times more payments than PayPal, a loan program, and online investment platform Yu’e Bao. Ant Financial, which was formerly known as Alipay, was spun out of Alibaba prior to the firm’s blockbuster U.S. listing and it is tipped to go public in China within the next two years.
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