Chinese e-commerce giant Tencent (second only to Alibaba) is reportedly seeking about $1 billion for its digital bank, WeBank. While Webank has yet to confirm or deny the reports, the Wall Street Journal has said that the company is speaking to private equity investors. The news comes after Chinese search engine Baidu and China Citic announced plans to launch a joint venture based digital bank called Baixin Bank.
While Tencent hopes the $1 billion will hope WeBank compete more effectively against other new entrants as well as traditional financial service providers, it has already announced a new partnership with money transfer service, Western Union that will allow users to send money cross-border to 200 countries and territories, through WeBank’s mobile application. Commenting on the new partnership, Hikmet Ersek, CEO, Western Union said,
“Given the proliferation of social media around the world, we are expanding our activities in this exciting area. It only makes sense to include the WeChat platform as part of the company’s innovative digital money transfer capabilities.”
Though the partnership with Western Union is notable, the more significant news is that Tencent is seeking a vast new source of funding for its digital bank. With Tencent, Alibaba and others looking to expand their payment and banking portfolios it highlights that the Chinese market is rapidly changing and these non-traditional financial service providers could capture a sizable part of the market. Something non-traditional financial service providers are struggling to accomplish in more mature banking markets.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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