Tencent co-launches financial platform on QQ

Chinese Internet company Tencent Holdings Ltd has entered a new realm of Internet finance by co-developing a wealth management platform based on its popular QQ instant messaging service, targeting securities firms and stock investors, Shanghai Securities News (SSN) reported on Thursday.

Tencent will work with Shenzhen Kingdom Sci-tech Co, a listed IT company, to offer a securities wealth management platform, a PR staff of Tencent told the Global Times Thursday, confirming that an agreement had been signed with Shenzhen Kingdom without providing details.

The IT company will develop a customized QQ platform targeting financial institutions including securities brokerage firms, trust companies, banks and fund management firms, charge fees for usage and share the revenues with Tencent based on their agreement, Shenzhen Kingdom said in a statement on Thursday.

However, it did not disclose the percentage of royalty-sharing with Tencent which has over 800 million monthly active QQ users.

"Internet finance is a future trend, and Shenzhen Kingdom's move shows its ambition to take a lead in securing a massive Internet customer base by providing access to Internet finance," a Wuhan-based securities analyst told the Global Times Thursday.

"It is very costly for securities brokerage firms to attract new customers off-line as it requires hiring agents and setting up outlets, while an online operation is cost-efficient and is preferred by many smaller securities firms," he said on condition of anonymity as he is not authorized to speak to media.

The new platform features stock account opening, trading, marketing, customer services and social networking, and a mobile version will be available by the end of the year, according to media reports.

The online wealth management platform may attract some young customers and have an impact on the traditional securities brokers, a Jiangsu-based securities agent surnamed Liu told the Global Times Thursday.

But a virtual wealth management platform cannot replace securities firms which provide face-to-face after-sales service to customers, Liu said.

He said he hoped that securities firms anchoring with Tencent will not "disturb" the market.

Five securities brokerage firms including Shenzhen-based Chinalion Securities, Zhongshan Securities, and Guangzhou Securities, are the first batch of financial institutions to offer services via QQ's wealth management platform, said the SSN.

It takes less than 3 minutes for an investor to open a stock account through the QQ wealth management platform, according to Zhongshan Securities.

Shenzhen-based Chinalion Securities told the Global Times they have "not officially started operations with the QQ securities wealth management platform" in an e-mail on Thursday, declining to comment.

Tencent had made an earlier splash in the Internet finance market in February when it launched, together with Chengdu-based Sinolink Securities, an Internet securities product named Yongjinbao which charges a low commission fee and allows investors to make returns by investing idle money in their stock accounts into a monetary fund.

Yongjinbao surprised the market by offering a promised brokerage commission as low as 0.02 percent, compared with the 0.1 to 0.3 percent commission fees charged by most securities firms.

In March, Yongjinbao reportedly was accused by its peers of disrupting market order by waging a price war due to its low commission rate. Currently Yongjinbao charges a commission of 0.025 percent according to Sinolink's website.

It is not necessary for securities firms to rely on Internet giants and many have started to offer account opening services online themselves, Liu said.

In early April, five brokers including CITIC Securities and Guotai Junan Securities were given permission to start pilot online securities business.

"I would not choose to open a stock account online," Zhang Chengbao, a Beijing-based investor, told the Global Times Thursday, citing concerns over data security and rampant online financial fraud in Internet finance.

Apart from offering online securities products, Tencent is also known for having rolled out a wealth management product on its mobile messaging app WeChat in January by partnering with fund companies to compete against similar offerings from rivals Alibaba and Baidu.

In less than four months, Licaitong, Tencent's wealth management product on WeChat, raised over 80 billion yuan ($13 billion), or about 700 million yuan each day. Similar successes with Alibaba and Baidu have diverted many customers from traditional financial institutions and forced the institutions to offer online access to financial products.