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Top six Internet-based financial services providers in China

Word has it that Alibaba’s Ant Financial may be listed on China’s Mainboard from next year. Analysts say that it will likely inspire more Internet-based financial service providers to go public.

According to Securities Times, by the end of Q1 2015, the market size for China’s Internet-based financial services had reached RMB 10 trillion (USD 1.57 trillion). It’s also estimated customers for China’s Internet-based financial services may reach 489 million with a penetration rate of 71.91% by the end of 2015.

Which company provides the superior service, who among them will lead the pack?

AllChinaTech has researched the different Internet-based financial services on offer in China and has curated a list of the most notable businesses based on functionality, business scale, and popularity.

Alibaba spun off its financial business and established new company, Ali Micro-Finance in 2011, which it later renamed to Ant Financial in 2014.

Ant Financial closed an A-series funding in July with a valuation of USD 45 billion. Its major businesses include Alipay, Sesame Credit, Ant Fortune, MYbank and Yu’e Bao. It’s reported that Ant Financial has already acquired almost all the financial licenses its needs including licenses for its banking, insurance, funding and personal credit services.

By the end of June 2015, Alipay alone had over 400 million users. Yu’e Bao, Ant Financial’s Alipay-embedded money fund, now has over RMB 57.42 billion in investments, which makes it the biggest money fund in China.

The financial business of Tencent includes two sectors: its newly restructured financial business unit comprised of the payment system Tenpay and the separate WeChat Wallet payment system.

Tencent combined its previously dispersed financial functions into an integrated unit based on the original Tenpay team last week. The new team focuses on utilization of big data for business purposes.

WeChat Wallet and WeBank are independent from the new unit and concentrate more on personal banking and the O2O business. There are more than 150,000 offline stores accepting WeChat payments now, Sohu reports.

Most new applications for WeBank are still only being offered through invitation-only. 15 million invitations will be sent by the end of 2015, the company claimed.

Baidu Finance was established in 2013. Its payment system Baifubao, now named Baidu Wallet, received a license from the People’s Bank of China (China’s central bank) in July 2013, almost ten years following the establishment of Alibaba’s now dominant Alipay payment system.

Baidu Finance now offers personal finance products, a crowdfunding platform, personal loans and a Quora-like interactive financial forum. Though Baidu doesn’t have any impressive Internet-based financial service, its 70% share of the search engine market will enable it to drive significant traffic to a new service once it has a mature product.
As the second largest e-commerce platform in China, holds massive personal data on user purchase habits. Leveraging this advantage, launched the consumer finance product JD Baitiao (or JD Check) to allow customers to make payments through installments. It’s reported that JD will securitize its JD Baitiao assets for more cash flow.

Other services provided by include supply chain finance, crowdfunding, asset management, payment, insurance, and security trading.

Also noteworthy, launched a financial product targeting farmers this year. According to Sohu, the market potential for personal finance in the countryside is estimated to be over RMB 200 billion (USD 31.38 billion).

Xiaomi just launched its financial service, Xiaomi Finance, earlier this month. Xiaomi Finance is based around Xiaomi’s unique fan community and is currently for Xiaomi smartphone users only.

The financial services Xiaomi now offers include payment through installments — or consumer finance — and small loans and personal finance, based on money funds and index funds offered by eFunds, a Guangdong based investment manager.

Xiaomi’s smartphone shipments reached 17.9 million in Q2 2015, according to IDC. With a relatively closed community, Xiaomi Finance may find success if its smartphone business continues to boom.

Lufax – a subsidiary of Ping An Insurance Group – was founded in September 2011 with registered capital of RMB 837 million (USD 131 million) in Shanghai. Lufax had 13.96 million registered users as of September 25th.

Services Lufax provides include personal loans, crowdfunding, insurance and personal finance. Supported by the Shanghai government and Ping An Group, Lufax has strong risk control ability and credibility among investors.


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