Venture part of parent's broad global strategy
Ant Financial Services Group, the operator of China's largest online payment tool Alipay, said on Monday it would establish an Internet bank in South Korea with local partners.
The affiliate of Alibaba Group Holding said the move would expand its presence in the global Internet financial sector.
The bank, called K Bank, will be jointly set up by Ant Financial and South Korean companies such as leading mobile carrier KT Corp, targeting niche markets that have gotten little attention from traditional lenders in South Korea, it said.
Web users can deposit funds and get mid-rate loans, as well as enjoy other financial services such as asset management and payment via the Internet-only bank, according to a press release Ant Financial sent to the Global Times on Monday.
The establishment of K Bank follows the company-backed Paytm, an Indian online payment company, which was licensed in August to offer similar online banking services in India.
These moves are in line with Alibaba's global strategy, said analysts.
Financial services can be a good venue for Alibaba to venture into overseas e-commerce market, Guo Dazhi, an analyst at Zhongguancun Internet Finance Institute, told the Global Times on Monday.
However, it is hard to tell whether K Bank can prosper in the face of competition, he said.
South Korea's Financial Services Commission (FSC) also granted a similar Internet banking license to another consortium led by South Korea-based information technology service giant Kakao Corp, according to a statement posted on the website of the FSC on Sunday.
Kakao's messaging services has 39 million users in South Korea out of a total population of 51 million, the AFP reported on Monday.
Banking services offered by Kakao, which operates South Korea's most popular mobile chat app KakaoTalk and the nation's second-largest portal site Daum, have already gained the interest of young consumers like Mun Hyeon-jung, a 22-year-old student in Seoul.
"Kakao's Internet bank is based on its chat app, which, I heard, will allow me to transfer money to my friends while chatting. This is very convenient in comparison with K Bank, which mainly serves people who have credit cards,"Mun told the Global Times on Monday.
According to Ant Financial's press release, this is the first time in 23 years that the South Korean banking authorities have awarded licenses to run commercial banks.
South Korea's banking system is slumping, and the local authorities have tried hard over the past few years to introduce Internet banking as part of their effort to deregulate the financial sector, South Korea's Yonhap News Agency reported on Sunday.
Given the strictly regulated banking industry in South Korea, analysts said Ant Financial will be more like an investor in K Bank.
A PR representative with the company declined to say how large a stake Ant Financial will own in the new joint bank.
"Even if it's a small shareholder, Ant Financial will likely play a key role in the development of K Bank with the advantage of the experience it has gained in its home market," Li Chao, an industry analyst with Beijing-based market consultancy iResearch, told the Global Times on Monday.
Ant Financial said on Monday that its Internet bank MYbank, which opened in late June, has served 430,000 micro-sized and small enterprises, providing 5.2 billion yuan ($813 million) loans in total by the end of November.
Li noted that Ant Financial's online lending business, with the help of the large merchant user bases amassed via Alibaba's online marketplaces, operates more efficiently than those offered by other domestic Internet mammoths like Baidu Inc and Tencent Holdings.
However, Guo said that none of these companies' online banking services have developed smoothly, because China's opening-up of the banking system is going slowly and prudently, due to security concerns.
