Ant Financial, an affiliate of the e-commerce giant Alibaba, is in the final stages of establishing its private online bank, and could launch its deposit and loan services within a matter of weeks.
The opening of Ant’s Zhejiang Internet Commerce Bank will create a new front in the war between Alibaba and its biggest rival Tencent, which made waves by inviting China’s premier Li Keqiang to its online banking launch (paywall) earlier this year.
“At present, the launch date for Zhejiang Internet Commerce Bank is undecided,” Ant Financial vice-president Yu Shengfa told a Beijing newspaper (link in Chinese). “But in light of our original plan, we are striving to launch in May or June this year.”
The government hopes that the competition between private, relatively small banks—especially those operated by Tencent and Alibaba—can help save the Chinese economy.
China’s government has long been trying to shift the economy away from its reliance on state-owned firms and export-driven manufacturing, and to give domestic consumption and the service sector a much greater role. But there have been several challenges in getting Chinese people to start their own businesses and spend more money—including the reluctance of China’s giant state-owned banks to lend to small- and medium-sized enterprises.
So the arrival of private online banks like Zhejiang, which touts its desire to ”serve the financial needs of small and micro enterprises and individuals,” couldn’t come at a better time.
The bank will encourage deposits of less than 200,000 yuan ($32,300) and offer loans of up to 5 million yuan ($800,000). Tencent’s WeBank—named after its massively popular WeChat messaging service—focuses more on individuals, and will offer loans of up to 1 million yuan.
In total, the government has given licenses to six private online banks and plans to license 10 more soon. If the competition between Alibaba and Tencent is anywhere near as fierce in the banking sector as has been in their other areas of competition, China’s consumers may finally have access to lenders that are actually eager to have their business.