Technology could transform banking

Alibaba Group Holding has filed an application with China's banking regulators to set up a privately owned bank. With the assessment process still underway, insiders say that regulators are inclined toward prudence when it comes to such reviews.

Alibaba has made several successful steps into the financial services arena. The company already runs an online lending service, where the creditworthiness of borrowers is assessed using data culled from their Alibaba accounts. This service has not only delivered funding support to many small-scale trading companies, the sort of big data engine responsible for its success could be used in risk control operations at its planned bank.

Rapid advancements in Internet and computing technology have opened new ways to accurately evaluate credit risk. Regulators should take this into consideration and accelerate licensing of online banks like the one Alibaba has in the works. China has never suffered from a dearth of State-owned or traditional banks. If the credit market continues to lack anything, it's creativity and innovation.