Shortly after Alibaba announced its MYbank project, Tecent’s (00700.HK) WeBank signed a strategic cooperation agreement last week with Hong Kong-based Bank of East Asia (BEA) (00023.HK).
The areas of cooperation include customer referrals, credit cards, micro and personal loans, wealth management, interbank lending, and internet finance, according to an announcement from BEA.
Executive director Brian Li Man-bun said BEA will ride on WeBank’s big data capabilities to reach target customers more effectively.
Earlier this month, WeBank’s chief strategic officer Chen Qiao revealed that his firm will roll out a series of products, which include wealth management and payment offerings, in May.
BEA is the first traditional bank that WeBank has hooked up with. The mainland entity said it is interested in joining hands with other traditional lenders as well.
Before the WeBank-BEA deal, there were reports that Bank of Communications (03328.HK) also intends to team up with WeBank.
Private banks that use internet as the main platform are believed to be game changers in the financial world. Although it is not clear how the internet finance game will exactly play out, traditional banks cannot afford to miss out the trend.
It is therefore a very sensible thing for conventional lenders to ally with such new-generation internet banks.
Precisely how the cooperation between WeBank and BEA will work is yet to be finalized. Compliance with regulation requirements is probably a major hurdle.
Last year, Tencent, Alibaba and China CITIC Bank (00998.HK) planned to issue virtual credit cards for online shopping. But the People’s Bank of China (PBoC) blocked such initiatives, citing the need for customer protection.
Tencent’s MYbank is scheduled to commence operation in June.
Under Ant Financial, the Alibaba unit that runs the country’s most popular online payment service Alipay, MYbank will be a tough rival for Tencent and BEA, as Alipay owns the most comprehensive data about mainland internet shoppers and small businesses.
MYbank plans to offer services like banking, loans and credit, insurance, payment systems and investments.
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