Ant Financial, the spinoff from Alibaba, has now launched Mybank, which is a bank that is for the internet only. There will be no brick and mortar branches going up in and around China, but will cater to those who want to do their banking online, whether this be individuals or small businesses. Overall, the bank will be just like any other bank out there, it will allow members to make deposits, make withdrawals and will even loan money. The bank will be set to loan up to 5 million yuan per year. However, the way in which they will make these loans is completely unique.
A New Way to Make Loans
Mybank will not have collateral from debtors. But, it will look at the financial data of the customers or small businesses who are looking to take the loan out. They are specifically looking at the financial data associated with Alibaba on Alipay. Thus, initially a person could get a loan from Mybank thanks to their online shopping habits.
A spokeswoman for Ant, stated:
“…we [Mybank] can reach out to rural areas as long as you have a phone.”
Meaning that Mybank has the potentially to become a much larger factor in the market, given their ability to reach many customers.
The Companies behind Mybank
There are several companies who are making Mybank possible for the Chinese market. Ant Financial holds a huge stake in the company at thirty percent. In addition, shareholders include Wanxiang Sannong, Ningbo Jinrun and Fosun Industrial who have invested a total of 4 billion yuan into this venture. And of course, Alibaba is behind the bank, as they are associated with Ant Financial.
Though this particular banking venture seems unique, it is not one of a kind. Earlier this year, Tencent started their own online bank after receiving approval from the China Banking Regulatory Commission.