China gets its first online private bank, courtesy of Tencent

Chinese internet and social giant Tencent has launched the country’s first private online bank. The bank, which is called WeBank in a clear allusion to its massively popular instant messaging service WeChat, is also China’s first internet-based financial institution.

The launch of WeBank sees Tencent steal a march on Alibaba and eight other private investors who were last year given permission to launch five private banks. As Technode pointed out at the time, the pilot programme is designed to help make funding more accessible to startups and small businesses. Despite being vital to the country’s future growth, these companies often struggle to get funding from China’s large central banks.

Speaking at WeBank’s launch ceremony in Shenzhen, Chinese premier Li Keqiang said “we will lower costs for and deliver practical benefits to small clients, while forcing traditional financial instituions to accelerate reforms.”

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According to the Financial Times, the first payment made from the bank was a 35 000 RMB (US$5 600) loan to a truck driver.

While Tencent and Alibaba compete in a number of business areas, finance is relatively new to both. That said, the latter probably has a slight edge, having launched Alifinance on top of Alipay, the online payment solution developed for Taobao marketplace. Alifinance has been making small online loans since 2010.

Tencent’s stock rose in the wake of the announcement, before normalising shortly thereafter.