Following the footsteps of its rival Tencent which launched China’s first private internet bank ‘WeBank’ in December 2014, now Alibaba Group Holding Ltd’s affiliate Ant Financial has launched MYbank for Chinese SMEs.
Ant Financial will hold a 30% stake in MYbank which has $644 million of registered capital, and it will offer loans up to $805,503. “MYbank is here to give affordable loans for small and micro enterprises, and we are here to provide banking services, not for the rich, but for the little guys,” said Eric Jing, Executive Chairman of MYbank.
The internet bank said that its lower overheads from operating online allowed it to offer more competitive interest rates, compared to the bigger banks. Ant Financial has also added that it will use its Sesame Credit arm, which analyzes data from its payment processing arm Alipay and Alibaba’s eCommerce sites to assess risk and price loans for MYbank customers. But according to some analysts, the bank would still face risks.
“The biggest risk for them is more than likely going to be credit costs, and will they be able to properly assess the risks?” said Matthew Smith, a banks analyst at Macquarie. “It’s not clear, if they grow too aggressively, potentially the answer would be no.”