Through an affiliate, Chinese e-commerce giant Alibaba has announced the launch of a new digital bank called MYbank that will provide lending to China’s growing base of small- and medium-sized businesses. The launch comes after Chinese authorities issued a new banking license to the company as part of its plan to boost competition in the financial services market.
While the new bank still has to get regulatory approval to take deposits and requires customers to visit partner Alibaba locations to open accounts, executives at the bank hope that regulations will be relaxed so that facial recognition software can be used to carry out KYC and make the new bank fully digital.
Commenting on the launch of the new bank, executive chairman Eric Jing told Reuters,
“MYbank is here to give affordable loans for small and micro enterprises, and we are here to provide banking services, not for the rich, but for the little guys,”
With Alibaba’s main rival Tencent already announcing their own bank it looks like the latest chapter in arguably China’s greatest corporate rivalry will play out in financial services. While Alibaba can direct significant resources to this latest venture, it does reinforce that the company is only truly dominant in China and is struggling to make inroads internationally as seen by the recent decision to sell its U.S. focused e-commerce brand.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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