Reports from Chinese media are sourcing that Baidu and Citic Bank are cooperating to launch an online bank. The arrival of Baidu into the financial services sector would add to the Chinese search giant’s list of businesses it operates. Beyond its search and advertising portal, the firm operates an array of web-based businesses including the sale of anti-virus software and operating an app marketplace.
Working with state controlled Citic Bank, by launching an online bank, Baidu will become the latest Chinese internet company to become involved with financial services. With their massive community of users, companies such as Tencent which operates WeChat as well as Alibaba have created payment and banking products. By entering the financial industry as well as other industries, these firms are aiming to leverage their user base with the goal of bundling suites of products to increase the stickiness of their customers to remain on their platforms.
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The interest in financial services also comes as China represents the largest country of smartphone growth in terms of unit growth. As such, online banks which handle deposit, payments and loans have the potential of becoming in public demand as they migrate more of their life habits to their phones.
However, despite the growth in mobile, online banks in the country may counter friction from the public to move their banking online as according to statistics from the World Bank, as of 2014, 79% of the Chinese population above 14 years of age have accounts at a financial institution. Therefore, the vast majority of the banking public will need to be convinced about the benefits of moving online. So far, early results from Alibaba and Tencent have yet to show meaningful uptake for their online banking services.