Tencent, one of China’s top internet groups, launched the country’s first online-only private bank in a ceremony in Shenzhen today. The new service is called WeBank and branded similarly to Tencent’s popular messaging app WeChat.
WeChat is the the largest messaging app in the world by the number of active users. According to Tencent’s latest figures, as of August 2014 the app had 438 million active users, with 70 million of them outside of China. The WeChat app also offers a payment service between users, available since 2014.
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Small and private companies are considered to be disadvantaged in obtaining loans from state-owned banks in China, which prefer lending to larger, state-owned groups.
As part of a pilot program to make credit more available to small businesses, Tencent and rival Alibaba were among the few private investors approved by the Chinese government last year to launch new private lending banks. The tech giants plan to leverage their big data advantage, having hundreds of millions of users, to assess the credit risk of small borrowers.
“We will lower costs for and deliver practical benefits to small clients, while forcing traditional financial institutions to accelerate reforms,” Premier Li said at the opening ceremony, according to Xinhua, the official news agency. “It’s one small step for WeBank, one giant step for financial reform.” With the press of a button he then launched the new service and sent the first loan, RMB35,000 to a truck driver.