China's Internet holding company Tencent has launched China's first private bank -- and it happens to be an entirely online operation.
Dubbed WeBank, the Internet-based bank officially opened its digital doors on Monday in a ceremony attended by Premier Li Keqiang. WeBank is notable for being the first bank not entirely controlled by the Chinese government. Yet, perhaps more importantly, it has no brick-and-mortar presence, which means customers do all their banking online, from depositing and transferring funds to securing loans.
According to the Chinese government, Premier Li was the first to approve a loan via WeBank, giving 35,000 yuan (about $5,600) to a truck driver.
Tencent is a major player in China, providing a wide range of services, including its own social network, an instant-messaging platform known as QQ and the mobile app WeChat. The company also owns an e-commerce company and is a major force in online gaming.
Given its diverse portfolio of companies, it's perhaps no surprise that it added banking to the mix. By jumping into banking, Tencent puts itself in direct competition with government-sponsored banks across China. However, the charter for private banks allows WeBank to focus on individuals and small businesses, rather than large corporations. Private, online banks can issue small loans, collect deposits and perform other standard banking tasks.
What's not clear, however, is how the government will respond to this new crop of banks as time goes on. Major banks in China, which are all state run, have controlled the marketplace. That said, Premier Li's participation in the WeBank opening seems like an encouraging sign.
Tencent did not immediately respond to a request for comment.
(Via Wall Street Journal)