In the U.S., major banks can’t decide how to feel about major technology companies encroaching into what has been their domain traditionally, like Amazon’s foray into small business loans or Apple’s into peer-to-peer cash transfers with Apple Pay Cash. But in China, banks are leaning into partnerships with major technology firms.
On Saturday, China Citic Bank and Baidu—China’s answer to Google—launched AiBank. The direct banking joint venture is just one of several major recent partnerships between a bank and tech firm to crop up in the country, according to Reuters. Through their own financial arms, Alibaba and Tencent both already offer consumer financial products, including payment, wealth management, and micro loans.
As a direct bank, AiBank will skip physical branches and offer all services digitally. The approach mirrors a strategy thus far successful for Hong Kong fintech WeLab. By automating the process of user identity verification and credit checks, WeLab helps banks save on the costs of hiring staff and maintaining physical branches to vet potential borrowers. For example, the artificial intelligence behind WeLab’s chatbot ‘WeBot’ now handles 70 percent of its customer service enquiries.
For AiBank’s part, its staff is expected to be 60 percent technology personnel, whose focus will be building new risk control models using big data and artificial intelligence.
China Citic Bank owns 70 percent of the new direct bank, while Baidu owns the remaining 30 percent.
Cadence is a fintech reporter and writer at Fintech Unltd, where she covers the changing landscape of financial technologies. Previously, Cadence interned at Psychology Today, Business Insider and the Wisconsin State Journal. Cadence is interested in how science and technology intersect with power and culture and is curious about the world we are creating for tomorrow, consciously or not. She graduated from the University of Wisconsin–Madison in 2017 with degrees in Journalism and Chinese. Send tips and story ideas to Cadence at [email protected] You can also follow her on Twitter @cadencebambenek.