China’s regulators should draw up clear rules allowing banks to set up online finance subsidiaries to fend off rising competition from technology giants that have expanded into banks’ traditional territory, a senior central bank researcher was quoted saying by a state-run newspaper.
Policymakers should encourage financial institutions to be more proactive in areas such as peer-to-peer lending, third-party payment, crowdfunding and e-commerce by allowing them to acquire or set up an online finance unit, Yao Yudong, head of the central bank’s financial research institution, was quoted as saying by the Economic Information Daily.
While China’s tech giants Alibaba Group Holding Ltd and Tencent Holdings Ltd are using the Internet finance boom to accelerate a drive to become full-fledged financial networks providing services ranging from online payment, wealth management to e-commerce, Chinese lenders are constrained by tighter regulation and falling behind.
In March, Industrial and Commercial Bank of China Ltd , the country’s biggest lender by assets, launched its “e-ICBC”, the first Internet finance brand by a Chinese bank.
The lender’s e-commerce platform has accumulated 160 billion yuan ($25.8 billion) in sales volume since it was launched more than a year ago, ICBC said earlier this week. The figure is overshadowed by Alibaba’s $370 billion gross merchandise volume in 2014 alone.