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Chinese e-commerce giant, Alibaba has announced that it has built an in-house cloud-based banking platform for its new banking affiliate, MyBank. The move by Alibaba comes after the Chinese government put pressure on the company to look internally rather than use an American solution from providers like IBM, Oracle and EMC over concerns of spying by the NSA.
MyBank CIO Tang Jiaci told an audience that the move will not only meet the Chinese government’s unofficial policy to wean local companies off US technology solutions but will help MyBank reduce its technology costs and allow it to lend to consumers at a lower rate.
The Alibaba Group in the wake of their successful IPO has increasingly targeted financial solutions in China and in neighboring markets. The decision to launch a cloud platform for smaller and mid-size banks and has allowed the company to create new revenue while providing the infrastructure to launch its own bank. With significant success in payment products like Alipay and other lending products through subsidiaries like Ant Financial there is no reason that Alibaba’s MyBank can’t carve out a significant niche in the market.
The only possible obstacle to success is running against the regulators, but by publically rejecting US solutions, Alibaba is clearly trying to generate good will between the company and the powerful regulatory bodies.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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