Voilà, Alibaba’s Online Bank Service “Mybank”

Alibaba-backed Mybank opened on June 25th. The service is an all-digital bank, which has no physical branches and is open 24/7. It is aimed at those who tend to end up a little short changed by the existing banking system-SMEs who struggle to fit into a financial bracket for loans and services, and those in rural areas who have issues accessing branches and banks in person.

(Chinese Version)

Editor’s Note:

After nine-month preparation, Alibaba finally rolled out its online bank service, Mybank (Click to read a related article) on June 25th. TMTpost has always held the point that traditional banks are sure to be replaced by online banks sooner or later. Mybank, with no physical branches and offline service centers in major cities, is a typical online bank. The following article will explain how online banks will transform the bank industry.

Ant Financial, whose services include Alipay and Yu’e Bao, added another service, Mybank, to its platform.

After being granted the permission to operate Mybank on May 27th, Alibaba’s online bank, Mybank opened almost a month later, on June 25th. As the first “cloud-based bank, Mybank doesn’t have any physical branches or service centers in major cities, provides no cash transaction service, and has no offline service team. According to Alibaba’s official statement, Mybank is “dedicated to providing inclusive and innovative financial solutions for individuals in both urban and rural areas, and for small and middle-sized enterprises”.

“With the help of Internet and big data technology, Mybank will be able to reduce the operational and promotional costs significantly,” Tang Jiacai, CIO of Mybank, explained.

By now, Mabank has already had a team of 300, among which 2/3 are technology talents. Besides, Alibaba equipped Mybank with several experienced high-level managers, including governor Yu Shengfa, former governor of Hangzhou Bank, vice-governor Zhao Weixing, who used to work for China Minsheng Bank and Huaxia Bank and has great experience in bank industry, as well as CIO Tang Jiacai, former director of software development center of Agricultural Bank of China.

It seems that Mabank is born with a silver spoon, since it is equipped with the best managers and professionals. So how exactly Mybank works?

A tech company with a banking license

For sure, putting banking services online is no longer a cutting-edge technology. However, Maybank is the first online bank that completely gets rid of the so-called “IOE system”, in other words, the first bank that doesn’t use IBM minicomputers, Oracle Database and EMC storage. Instead, Alibaba developed its online bank by itself. If we compare developing Mybank to building a house, then Ali-cloud is similar to the foundation of the house, while all kinds of models, including customer model, accounting model, product model, etc., serve as the outline of this significant “house”. At the same time, the sophistication, preciseness and adequate safe-control measures provided by these models make Mybank an all-around online bank

“By putting our services online, we get to cut out the expensive processes and systems that traditional banks used to deal with. MYBank uses cloud computing rather than internal IT systems, which could have cost traditional banks hundreds of millions of RMB in the past,” said Tang Jiacai.

Take the example of account maintenance, while traditional banks have to spend annually 30 to 100 RMB for each account, and 6 to 7 cents per bank transaction, online banks only need to spend 0.5 RMB in maintaining an account for a year and 2 cents on each transaction.

While traditional banks evaluate a loan applicant’s credit based on his or her debt record, revenue status and cash flow chart (so-called “three-charts evaluation”), which could be inaccurate sometimes, online banks evaluate an applicant’s credit based on big data.

As far as I know, the data flow an online bank has to deal with can hit over an Exabyte(EB) per day. Most online banks’ employees are technology professionals, who spend most of their time in carrying out models to deal with the big data. Their ultimate goal is to make online banks “smarter” in dealing with customers’ needs.

“Our data comes not only from Ant Financial, but also some credit evaluation companies, such as Zhima Credit,” Zhao Weixing, vice-governor of Mybank explained to TMTpost. According to Mr. Zhao, such evaluation is more comprehensive and credible, since besides the “three charts”, an applicant’s family consumption status, as well as a company’s supply chain condition is also taken into consideration before issuing a loan. Mybank lowers risk significantly by doing so.

Zhao added that: “Online banks’ financial services are strongly based on consumption behaviors, especially on online retailing platforms. Mybank is born with a silver spoon since users of Alibaba’s Taobao and Tmall are naturally the potential users of Mybank.” In his opinion, the key of any financial services lies in catering to specific transaction scenarios.

In fact, Ant Financial has already tested its capacity in providing micro-loan services through its Ant Micro-lending service. By the end of April, 2015, Ant Financial had already lent over 400 billion RMB to more than 1.6 million small-sized companies and entrepreneurs, while keeping the bad loan rate lower than 1.5%. For sure, Ant Micro-lending will be gradually integrated to Maybank’s platform in the near future.

Providing financial services for small and middle-sized enterprises

If we take the input and output potential of a customer into consideration we may understand why traditional banks prefer key clients. Although they only take up 20% of all customers, the benefit they bring to banks is significant (taking up over 80%).

Mybank, however, targets only the rest 80%. Yu Shengfa, governor of Mybank promised to the press that Mybank would only offer loans up to RMB 5 million (around US$800,000).

How so?

Financial services for small and middle-sized companies in China have always been insufficient. In the past, these companies had no choice but turn to private lenders. Although private lenders were also well aware of the potential of these customers, they failed to manage risks well. In this case, Mybank, which based on big data and Internet, fill in the gap.

For example, Mybank will evaluate a company’s credit based on its past revenue status, instead of its operation scale and asset condition at present, which could hardly meet the basic requirement for traditional banks to issue a loan.

Backed by Ant Financial, Ant Micro-lending platform has been issuing loans for several years, which help Mybank gain enough experience in carrying out micro-lending services.

“We are the only one that has been providing instant micro-loan services with the help of big data and Internet technology for over six years in China,” Feng Liang, product manager of Mybank, concluded.

Besides, Mabank has no physical branches in major cities since all its services are carried out online. Rumor has it that Mybank would introduce face-recognition technology to its platform, but up till now, this function hasn’t been approved by the authority yet.

Anyway, Mybank can provide financial services anytime, anywhere. “This is a great news for small and middle-sized companies, since owners of these companies tend to meet customers in the daytime and need financial services late in the evening,” Feng Liang explained.

Moreover, the company structure of Mybank is flatter, so that customers can get their problems solved more quickly.

Tang Jiacai concluded that Mybank’s dedicated to providing inclusive and innovative financial solutions for individuals in both urban and rural areas and small and middle-sized enterprises.

Since Ant Micro-lending platform has been issuing micro-loans for several years, then why Mybank has to get another banking license?

“Well, it’s pretty simple, Mybank is not going to provide only lending service, but rather a variety of services, such as cash management, investing, online and offline financial services, cash flow management, supply chain financial services, etc.,” Mr. Tang explained.

And for over 800 million villagers

Mybank will also provide financial services for the large number of villagers in China. “We hope to bridge the gap between banks and villagers and provide financial services for villagers directly via the Internet,” said Tang Jiacai.

In fact, the benefit of such services could be significant. In early June, a bunch of high-level managers of Mybank did a field research in some villages and found that financial services are indeed meager in these villages. For example, farmers might have to walk for several miles in order to withdraw or put away some money in rural credit cooperatives. At the same time, however, the number of netizens in rural areas is increasing year by year. By the end of 2013, as the statistics show, 84.6% of villages have cell phones, while only 79.6% of city residents have cell phones. “We see a huge market of online banks in villages,” said Zhao Weixing.

Moreover, online banks will make it easier and quicker to apply for loans, since all the evaluation and application procedures are finished online. Besides, Mybank is looking forward to playing a role in paying for agricultural machines and tools… These are all possible areas for online banks to take part in.

By the way, it is reported that Alibaba Group is planning to set up 100,000 Village Taobao outlets across China, where villages can surf the Internet and buy things online. For sure, Village Taobao will be able to attract a large number of villagers. It follows that Mybank will be able to play a part in all possible online payment scenarios. As it is expected by Zhao Weixing, “Mybank will follow up and explore every possible opportunity to make a difference.”

Much to Mybank’s developers, villagers embrace the mobile Internet. During the last Spring Festival, more than half of Alipay Red Envelope’s users are villagers. With an increasing number of college graduates going back to their hometowns, we have every confidence that online banks will play a great role in the near future.

PS: Feng Liang, product manager of Mybank, summarized the advantages of Mybank into four aspects:

  • First of all, while villagers and owners of small and middle-sized enterprises need to borrow and pay back money instantly, Mybank caters to their needs and provides instant-lending and borrowing services.
  • Secondly, Mybank gets to manage risks pretty well with the help of big data, and lowers the risk of bad debts significantly.
  • Thirdly, all Mybank’s service are conducted online, so that the operation cost of Mybank is pretty low compared to traditional banks.
  • Fourthly, Mybank lowers the financing cost significantly by providing a platform for private investors and borrowers, so that private lending becomes more standardized, making private financing easier and quicker.

[The article is published and edited with authorization from the author @Guo Juan, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.

转载请注明出处、作者和本文链接
声明:文章内容仅供参考、交流、学习、不构成投资建议。
想和千万钛媒体用户分享你的新奇观点和发现,点击这里投稿 。创业或融资寻求报道,点击这里

敬原创,有钛度,得赞赏

赞赏支持
发表评论
0 / 300

根据《网络安全法》实名制要求,请绑定手机号后发表评论

登录后输入评论内容
  • Why no coment on those good articles

    回复 2015.07.23 · via android
1

扫描下载App