It was nearly a year ago that the China Banking Regulatory Commission gave the first approval for setting up five private banks, in a move that corresponded with the government's determination to deepen reform in the finance sector. The one receiving the most attention has been WeBank, jointly founded by Internet giant Tencent Holdings, Shenzhen Baiyeyuan Investment Co. and Shenzhen Liye Group. Partly because its first business transaction was witnessed by Premier Li Keqiang, but perhaps more so due to its unique business model.

China's first Internet bank, WeBank, is now busy testing its operating systems, before officially opening its doors to customers months from now. In reality though, there will be no physical door for customers to walk through. Just a portal, that customers will access; whether it's to take out loans or saving deposits, WeBank will conduct its business solely on the Internet.

"Our target clients are people who need smaller amounts of loans from several hundred dollars to mo‍‍re than 160 thousand USD such as young people, micro enterprisers and blue collar workers. China's banking sector as a whole has been improving customer experience for such groups and WeBank hopes to do the same. As we operate on the Internet, we hope the technology will help increase efficiency, cut costs and in turn give customers better rates," says Cao Tong, president of WeBank.

This is how authentication works if you're a customer borrowing from webank. The company's face scanning technology verifies your identity so you no longer need to go to a physical location. Once the loan is processed, it's just a few clicks away to see the transaction into your account.

While it's more profitable for commercial banks to serve large enterprises and give out investment loans, in recent years, in order to encourage consumer spending and facilitate the overall economic transition, many traditional banks have increased efforts to create new products to engage individual consumers and SME owners. And so, the borrowers' credit record has become essential for banks to analyse risks.

The internet bank takes pride in its big data resources, as it enjoys a potential customer base of 300 million paying Tencent customers, and a further one-third of the entire Chinese population, who're using Tencent tools to chat, game and for recreation online. WeBank is confident the rich data from such activities will help it calculate risks.

"During the current trial period we're testing three things. The information system, product preparations, and the risk control models. So far all three areas are going well according to plan. It's overall looking quite optimistic," Cao says.

WeBank has the blessing of China's banking watchdog, which has overlooked its running since it obtained its licence in December last year. At the same time, the commission is encouraging all banks to innovate to better serve the market.

"Webank has been thoroughly developing its business models since opening last year. For now, the most important thing is to ensure asset safety for customers. Internet finance and traditional banking should be complimentary. Traditional banks have been exploring ways to do businesses on the Internet too. This is a steady market trend, and relevant policies are also coming out to facilitate the process," says Hu Yanchao, deputy director-general of China Banking Regulatory Commission.

WeBank along with other upcoming private banks won't be overtaking the traditional banking sector anytime soon here in China, but as the reform ripples into the financial sector, there is hope that more private banks will emerge and in turn provide more benefits to ordinary people like us.

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