WeBank Experiences Problems Several Months into Operations
China’s first Internet based private bank, WeBank looks likes it hit the buffers in nine months once it was approved for operations since existing regulations hamper their growth. Based on the current regulations, customers opening accounts in online banks needs to do with a debit card that is issued by a traditional bank for safety concerns.
But a lot of customers are unable to open accounts in WeBank, using debit cards that re issued by traditional banks and investigations have shown that China Merchants Bank a mid size commercial lender closed identity verification interface between both banks stating that they found it necessary to close down the identification verification process with certain platform to prevent potential risks. But analysts are seeing the move as a fight against WeBank and its efforts to stop the flow of deposits to wealth management products that are offered by online banks.
The platforms transfer large amounts of money from a clients debit cards in investing in wealth management products instead of making regular small payments for electricity, water and insurance bills since it will be compromising the client’s money and account information. According to a former investment banker working for a internet based financial company, commercial banks are willing to see Tencent attract a big portion of its deposits using shirt term baits, not to mention the strength of China Merchants Banks is into retail banking with a threat to close down identity verification interfaces with WeBank if it grows too quickly.
As regulators approved the launch of WeBank last December, it was expected to push forward the financial reform, but its development fell short of expectations as China hasn’t realize internet based remote account opening.