China is finalizing its first rules for online-only banks, striving to reduce financial jeopardy and lure pivotal participants, Reuters reported on Monday (Jan. 13), citing three sources.
The new rules would also cover foreign financial institutions already doing business in China — Citigroup, HSBC and Standard Chartered — and empower them to establish independent online banks, two sources told Reuters.
The drafting of rules comes at a time when data privacy is being discussed and artificial intelligence (AI) and online banking technologies have revamped China’s financial services terrain “from processing payments to selling investment products.”
Global financial institutions are not profitable in China, and many have yet to break even.
About 12 associations, including foreigners, are working on the new laws with Chinese officials, and some are eager to introduce online banks, a source said. “The rules would allow them to partner with tech firms for independent digital banking platforms,” the source said.
It is anticipated that financial institutions will have majority stakes in digital-only banking enterprises, the source said, adding that the Chinese government is moving forward with plans to make it easier for foreigners to tap China’s vast financial markets.
The rules’ foundation includes the prevailing digital banking divisions of Alibaba, Tencent and others and marks China’s first move towards oversight standardization of the fast-growing digital banking sector.
Hong Kong and Singapore are among the additional Asian economies introducing online-only banks.
Since 2014, China has licensed four digital-only banks — WeBank, which is backed by Tencent; MYbank, an Alibaba offshoot; AiBank, backed by Baidu; and China Citic Bank.
A Citi spokesperson said the bank would evaluate the new rules as soon as possible and noted that its Chinese consumer banking business was already digitized.
The central bank said in August that it was formulating a three-year FinTech plan, but no timetable was given.
The People’s Bank of China (PBoC) is counting on technology to oversee China’s FinTech, blockchain and electronic financial services.
Featured News
BHP Unveils £31bn Mining Megamerger Proposal with Anglo American
Apr 25, 2024 by
nhoch@pymnts.com
ByteDance Prefers Shutdown Over Sale of TikTok Amid US Ban Threats
Apr 25, 2024 by
CPI
FCC Votes to Restore Net Neutrality Rules
Apr 25, 2024 by
nhoch@pymnts.com
Apple Rejects Spotify’s Updated App Over In-App Pricing Disclosure
Apr 25, 2024 by
CPI
FCC Set to Reinstate Net Neutrality Rules Today
Apr 25, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI