Alibaba launches online bank aimed at SMBs, rural customers

China's first online-only banking service provider is using big data technology to grant loans to SMBs and rural customers.

After almost nine months of preparation, e-commerce giant Alibaba has revealed the latest addition to its online financial services network by officially launching the Zhejiang Wangshang Bank.

As China's first online-only bank, it has no physical branches, but provides easily accessible loans to as many as 800 million rural residents, according to a report by industry website on June 25.

Unlike its conventional competitors, the online bank neither deals with cash nor with big clients, but instead focuses on the bottom 80 percent, such as small, mid-, and micro-sized businesses. The company also targets groups such as the people living in remote areas of China, who have become heavy internet users over recent years, and who are in need of loans to buy new materials and machinery to grow crops.

According to the report, the 300-person team -- two thirds of whom are technical experts -- is led by a group of not only former directors, but also software developers, from traditional banks.

"Backed by our new platform, and thanks to the big data technology, the online bank will significantly lower the amount of operating costs and the expenses to attract clients," said Tang Jiacai, the chief information officer, who also served as director of the software development center at the Agricultural Bank of China. "When the system is uploaded to the cloud, the cost will drop dramatically, and as our business grows, the finance cloud's advantage will only get more obvious."

When granting loans to small businesses and rural residents, instead of checking customers' assets, income details, and cash flows, the online bank will "draw" a digital picture of the loanee based on his or her family consumption levels, enterprise supply chain situations, and other business transactions.

As reported on Thursday, the storage unit of Alibaba's online bank processes 10EB (1EB is equal to 1,024PB, with 1PB equal to 1,025TB) of data on a daily basis.

"A lot of the data comes from Antgroup," concluded Zhao Weixing, deputy director of the bank.

Antgroup is a financing company primarily owned by Alibaba, which operates the popular online service platform Alipay, the Chinese equivalent of PayPal.

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