Increasing online banking activities push financial reform
網上銀行活動刺激金融業改革

In China, development in the banking sector is no longer limited to brick-and-mortar institutions. With the country's first Internet bank up and running, consumer behavior and industry regulations are all also changing.

The name WeBank and its penguin are now familiar to most Chinese. Although few people have conducted actual business with the Internet bank, word has gone out that China's first Internet bank is opening its doors very soon.

"Our target clients are people who need smaller amounts of loans, from several hundred yuan to one million yuan. As we operate on the Internet, we hope the technology will help increase efficiency, cut costs, and in turn give customers better rates," said Cao Tong, the President of WeBank.

WeBank doesn't have plans to attract established clients who borrow big. But rather, it uses big data to find those with more personal needs.

"For new graduates, they need to borrow small amounts to pay rent, cover daily expenses and maybe allow them to pay in installments. WeBank will be helpful to them," Cao said.

"I'm a small business owner. I tried to borrow from banks, but I've never had a mortgage. It will be really helpful if there are other ways to get loans."

Unlike traditional banks, WeBank will issue loans based on credit rating scores from Tencent's social data. Permission came from China's central bank, which recently loosened its control by allowing eight private firms, including Tencent and Alibaba, to set up their own credit rating agencies. This gives commercial banks alternatives to the central bank when checking an applicant's credit worthiness.

"The central government has given a lot of support to China's growing internet finance industry in recent years. Now that the personal credit reporting industry is opening up, we’re setting up our own rating system. We’ve already been approached by potential partners across the financial industry," said Wu Dan, Senior Director of TenPay Credit Products & Services, Tencent.

Internet players such as Tencent and Alibaba are confident that their huge customer base and decades of their online footprints from buying to gaming will help them calculate better than traditional methods. But big data application in China is still relatively new.

"The accuracy cannot be achieved as a hundred percent...for big data currently the accuracy is much lower than that..it requires lots of computing power to analyze ..because it involves not only numbers but also pictures, sounds, voice, things like that..currently this field is still immature, very young," said Lin Yachen, the CCO of China Guangfa Bank.

Internet financing could be a game-changer for China's banking industry and consumers. And it's a positive sign that regulations are adapting, albeit slowly, to help nurture the growth of pilot programs, as the country undergoes continuing reform.