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ANT FINANCIAL

In 2015, MYbank launched the Flourishing Farmer Loan Program, which is an effort to extend financial services to rural China. Because the banks program targeted customers who had no experience with banking. MYbank looked to determine credit-worthiness by using big data from Internet transactions to create a nationwide credit-rating system for individuals and small enterprises. Credit-scoring was new to China, and the banks pioneering efforts could pave the way for economic development in the rural areas.

MYbank was an offshoot of the Alibaba Internet empire founded by Jack Ma. Ma had built Alibabas online platforms to bring buyers and sellers together in China. Having found success in facilitating online transactions, Alibaba began offering financial services. In time, these financial services units were spun out from the Alibaba group, which was first organized under Alipay and rebranded under the name Ant Financial Services Group. By 2013, Ant Financial consisted of Alipay and Alipay Wallet, two services that facilitated online transactions (similar to PayPal); YueBao, a money market fund with 570 billion yuan ($93 billion) under management; Zhao Caibao, a third-party financial services platform; and Ant Micro, a micro-loan provider. Each of Ant Financials units had cooperative arrangements with Alibabas online platforms, providing data for business transactions and facilitating the transfer of funds.

In March 2014, Ant Financial received regulatory approval to create an online bank-MYbank. MYbank was among the first privately owned banks to be granted approval by the China Banking Regulatory Commission. MYbank was initially authorized to make loans but not accept deposits. Besides looking at models of private ownership, the regulators were evaluating the implications of online banking services.

While cautions, the China Banking Regulatory Commission welcomed new banking models that could increase available capital for private entrepreneurs and encourage economic growth in a way that the state-owned banks were not set up to provide. Regulators were also eager to see if private banks could support economic growth in the rural regions that are far from the main cities.

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