Chinese online retail giant Alibaba’s financial services arm Ant Financial launched its online bank MYBank on Thursday. It will offer loans to small and medium-sized businesses as well as consumers. MYBank has a registered capital of $644 million, and can lend up to 5 million yuan to SMEs and consumers.
Now Alibaba to take on Tencent in online banking
However, it won’t be able to open accounts due to regulatory concerns over Alibaba’s facial recognition technology. MYBank wants to use the facial recognition technology to verify account holders’ identities. SMEs and consumers have long complained that state-run banks only focus on large state-run companies. It has created a huge potential room for online banks targeting customers underserved by large banks.
Online banking will take Alibaba’s rivalry with Tencent to a whole new level. Tencent has already launched its WeBank. MYBank said it would be able to meet the demand of SMEs and consumers without brick-and-mortar branches. Alibaba’s Internet bank said operating online would dramatically reduce overhead expenses, and allow it to offer more competitive interest rates.
Jack Ma is the biggest shareholder of Ant Financial
MYBank has only 300 employees. It will use Alibaba’s huge customer data to determine the borrowers’ creditworthiness and potential lending risks. Ant Financial was among six private companies that were granted new banking licenses by the Chinese government to diversify the country’s financial system. Alibaba founder Jack Ma is the biggest shareholder of Ant Financial.
MYBank’s services will be limited due to concerns over the facial recognition technology. The company said it would continue to talk with regulators, and assure them of the technology’s high degree of accuracy. Ant Financial holds 30% stake in MYBank, while Shanghai Fosun High Technology Co owns 25%. The remaining 45% is owned by private investors.