China's virtual banking market


In 2015, China came up with ‘Guiding Opinions on Promoting the Healthy Development of Internet Finance (Guiding Opinions)’ to support the unprecedented growth of online banking in the country. According to the Guiding Opinions, regulators support the creation of internet platforms for innovative banking solutions. As per Reuters in January 2020, China is formalizing the rules to cover virtual banking operations. Consequently, minimize the risk in the financial sector and attract new, global players in the market. The rule formation is to guide the transformational use of data and disruptive technologies (e.g., AI, blockchain, and Cloud). These technologies are reshaping the banking landscape in China.

“The widespread application of advanced technologies in the SME financing space has dramatically improved risk management and lowered costs.” – Eric Jing, former chairman of Mybank

Based on the guidelines, China granted three virtual banking licenses to WeBank, MYbank, and AiBank.

Current scenario

A consortium formed by Tencent, Baiyeyuan, and Liye Group became China’s first virtual bank. In 2015, its first product was launched, Weilidai on QQ, an easy-to-use mobile app. WeBank App and Weichedai became its first B2B2C product. WeBank profitably serves more than 100 million previously under-served customers and processes more than 300 million transactions per day. The bank’s deposit valuation is US$ 21.5 billion with a 2800% Y-o-Y growth, becoming the fastest-growing virtual bank, globally.

A consortium by Alibaba affiliate Ant Financial Services Group and Chinese conglomerate Fosun International Ltd, officially launched on June 25th, 2015. MYbank’s initial strategy was to concentrate on issuing small affordable loans of less than RMB 5 million (about $800,000) to small- and micro-sized enterprises, entrepreneurs, and consumers. Over the past few years, Mybank loaned 2 trillion yuan to 16 million SMEs in China using real-time data and credit-risk management models covering over 3,000 variables.

A consortium by search engine operator Baidu and China Citic Bank Corp Ltd, where the bank owns a majority stake of 70%; It leverages modern technologies such as AI and Big Data with 60% of its workforce comprises of technology roles. AI is the core element of the bank’s branding and it offers a spate of innovative services through Baidu’s AI technology.

Sichuan Xinwang (XW) Bank is consortium led by New Hope Group, Xiaomi, and Hongqi Chain, with a 30% stake owned by Xiaomi. The bank focuses on SME financial inclusion by evaluating their creditworthiness through machine learning algorithms. Since its inception in December 2016, the bank supports 24 million SME customers with US$ 33.4 billion issued in loans. As stated on its website, the bank regards financial technology and big data risk control as its core capabilities to build and innovate.

An upcoming virtual bank

ING and Bank of Beijing: ING and Bank of Beijing are launching a joint venture virtual bank in China. The deal is notable both for being the first commercial bank on the mainland to have a majority foreign owner and the new brand is purely digital.


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