Tencent’s WeBank (微众银行) became China’s first digital bank in December 2014 upon receiving its banking license. Regulations cap Tencent’s ownership at 30%. Other shareholders in WeBank include two financial firms from China’s biggest social-network and mobile-games company’s hometown, Shenzhen Baiyeyuan Investment and Shenzhen Li Ye Group, with 20% stakes each. WeBank was followed by Alibaba-affiliated MyBank (网商银行), as well as Baidu and China CITIC Bank’s aiBank (百信银行). The latter only started operations in November 2017.
In the recently published “China Internet Report”, WeBank is listed as the 14th among “Top Chinese Internet Players” with a valuation of USD 21bn. Goldman Sachs goes even further and attributes a valuation of USD 29bn following Tencent’s latest earnings report. Compare that to leading European neobanks like Monzo or N26, with a valuation of USD 2.5bn and 2.7bn in their most recent funding rounds, respectively. Or fallen-from-grace Deutsche Bank, still boosting a USD 16bn market capitalization.
WeBank’s most popular service is Weilidai (“a tiny bit of loan”), providing unsecured personal loans in a range between approximatley USD 70 and USD 44,000 (RMB 300,000). Weilidai is available through Tencent’s popular WeChat messaging app with more than 650 million users. Its standard interest rate is 18% annually with a borrowing period from one single day to 20 months. It gives borrowers the flexibility to borrow and return at any time. From its launch in May 2015 to August 2017, Weilidai had amassed an outstanding loan balance of RMB 100bn, on par with the loan book of leading Chinese city commercial banks.
In order to allow a 7x24 digital banking experience, 56% of Tencent’s employees are IT staff. It stresses product design, data analysis and technology, while it may rely on traditional industry players as partners for capital, risk management and products. WeBank cooperates with more than 40 banks in China, with up to 80% of the capital coming from these partners that are reimbursed through a profit-sharing agreement. Given all the user data that Tencent has accumulated through its QQ and WeChat messaging services, Weilidai loans are approved in mere seconds.
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