银行对互联网金融的回击

With the advent of online investment opportunities in China in recent months, capital flows are increasingly starting to move away from traditional brick-and-mortar banks. Users of Alibaba, China's dominant e-commerce website can now deposit funds, make investments, take out loans and even give out gifts of virtual cash. While the amounts remain small compared with China's towering mainstream lenders, the growth rates have been rapid.

However, experts warn that these online financial products bring with them many uncertainties. Yang Dong is a deputy director of the Research Institute of Finance Law at Renmin University of China.

"The online platform itself has several risk issues, like technical security, information safety of consumers, possibility of poor management of the platform, etc. All these uncertainties require users to be more sensible about these online financial products."

Alibaba has long handled payments through Alipay, its version of PayPal. Last year, it launched a new service called Yu'erbao. The funds offer a return of about 6 percent, double what savers typically get from one-year bank deposits.

However, Luo Mingxiong, vice president of Beijing Software and Information Service Exchange, says that high returns offered from online financial products are not sustainable.

"As to when a certain point is achieved, it's hard to say now. The larger the fund is, the more difficult it is to maintain such high returns. The point may stand at 500 billion, 1 trillion or even higher. But certainly the critical point is there."

Meanwhile, traditional banks in China are reacting actively to gain back customers. Charles Feng, a fund accountant in the custody service department of the Agricultural Bank of China, talks about recent moves taken by traditional brick-and-mortar banks.

"To cope with this threat, some banks have already started similar projects. In January, the Bank of Communications launched their real time fund redemption service with fund management companies. After that, Industrial and Commercial Bank of China, Bank of China, Ping An Bank also took similar moves with products similar to Yu Er Bao. In the meantime, banks are busy lobbying regulators on the presence of online financial products."

Feng adds that the Agricultural Bank of China is likely to launch similar products within a month.

Financial regulators are reportedly drafting rules on Internet financing, including lending, sales of monetary funds, and virtual currencies. According to the China Business News, the China Banking Regulatory Commission has already submitted plans to the State Council that may standardize online and offline financial practices.

For CRI, I'm Yu Yang.