“It’s one small step for WeBank, one giant step for financial reform” said Chinese Premier Li Keqiang after the launch of the country’s first online-only bank, a joint venture headed by Tencent Holdings Limited, best-known outside China for its popular instant messaging and social networking app, WeChat. WeBank is the first private bank to pilot online operations after becoming one of six institutions that were granted licences to do so last year.
A bank affiliated with the e-commerce giant Alibaba – Tencent’s biggest rival – was among the six to receive licenses from financial regulators last year, but Tencent has been quickest off the mark in commencing operations. The licenses were granted as part of a series of reforms which, it is hoped, will make it easier for small companies to obtain loans. Small and medium-sized businesses have become an important driver of economic growth in China, but are routinely discriminated against by state-run banks, who favour larger companies and, unsurprisingly, other state-run companies.
Tencent has already taken strides in vitalising the way money is spent in China. Last year, it introduced Tenpay, one of the first mobile payment services in the country, which went beyond allowing users to make payments and transfers using funds stored in their Tenpay accounts. It also launched a “highly successful experiment that socialized, digitized and gamified the tradition of giving red envelopes in celebration of Chinese New Year”, wrote Forbes.
Li Keqiang said during WeBank’s launch ceremony in Shenzhen today, “we will lower costs for and deliver practical benefits to small clients, while forcing traditional financial institutions to accelerate reforms.” The Financial Times reported that WeBank’s first transaction was a RMB 35,000 ($5,600) loan to a truck driver.