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Is China leading the global banking revolution ?
The spread of digital banking has been vast and rapid in China but also largely ignored outside the country, as the biggest players focus first on the domestic market.
This year we have seen two big tech giants - Alibaba and Tencent - launch into the banking space. First was WeBank, an offshoot of Tencent’s payments service QQ and its messaging app WeChat; this was followed by MYBank, formed out of Allibaba’s AliPay and ANT Financial.
With a lack of equivalent maneuvers by Western tech giants - who are just getting into payments - it begs the question: is China leading the way on financial innovation? This the question asked by Chris Skinner in his Financial Services Club Blog.
Rivals Alibaba and Tencent have already been in the finance space for at least two years. Both launched payments services bundled in with their chat rooms and messaging apps.
Tencent in particular enjoyed a massive uptick in the adoption of its payments service last year when it allowed users to send money to family and friends on Chinese new years in the form of virtual red envelopes - $64 million was transacted. Alibaba then upped to ante by giving away $96 million in lucky money gifts.
This latest foray by both into the banking sector comes by dint of China’s regulators offering private companies the opportunity to apply for banking licences last year. The two banks differ from incumbents by focusing on micro-lending, due to restriction from regulators.
This way China has opened up the banking sector to the private markets without threatening the state-owned banking sector. There will no doubt be issues down the road, particularly if they look to eventually target overseas users. But for now, it shows China’s tech giants are already some way down the road, while their Western counterparts are still putting their boots on.
Photo: Tauno Tohk