China’s first experiment in online banking has finally opened its virtual doors — but for now, only for a select few, The Wall Street Journal reported.
WeBank, the online bank created by Chinese Internet giant Tencent, started trial operation on Sunday (Jan. 18). The bank said employees of its stakeholders — which include Tencent, Shenzhen Baiyeyuan Investment and Shenzhen Liye Group — can now open accounts, deposit money and, in some cases, take out loans.
The trial period is likely to take about four months, which puts the official launch for all customers sometime around May, an unnamed source told the Journal.
The bank doesn’t have any brick-and-mortar branches, and is the first of an expected five Chinese new online banks that will start operations this year — including one backed by Tencent archrival Alibaba, which got approval from regulators in September to open its own online bank. Tencent won regulatory permission in July, giving it a two-month head start.
Tencent, which is WeBank’s biggest shareholder with a 30-percent stake, dominates China’s online game market. It also operates WeChat, a massively popular smartphone messaging application that has 468 million active users and includes a mobile payments service. How tightly the mobile payments offering will be integrated with WeBank’s loans and other banking services isn’t clear.
WeBank’s management team consists of Chinese banking and financial industry veterans. Chief Executive David Ku is a former executive of Ping An Insurance Group, while Cao Tong, a general manager, has previously worked at Exim Bank and CITIC Bank, according to the person familiar with WeBank.
While regulators are likely to keep the new privately held banks under close watch, the Chinese government approved banking licenses for the Internet companies in part because their expertise in online services could help make the country’s financial sector more competitive and responsive to private customers. Banking in China has long been dominated by state-owned banks.