How long have you not been to a bank? A Weibo survey shows that more than 60% of people have not been to a bank for more than a year. These days, as more and more financial services become available on the smartphone, fewer and fewer people go to the physical bank. In the wave of digital transformation, a company called WeBank is at the forefront.
In 2014, WeBank was born in the Qianhai development zone in Shenzhen, as China’s first private bank, and the first digital bank. From depositing to taking out a loan to wealth management, any financial services are at your fingertips.
Challenging ginormous state-owned banks, how did the online-only bank find its way out of China’s fiercely competitive banking industry? The answer lies in two keywords: technology and sinking market.
Speaking of technology, WeBank has an innate advantage. It was founded by Tencent, with internet technology in its DNA. As of the end of 2022, Tencent remained WeBank’s single largest shareholder with a stake of over 30%. With the backing of Tencent, WeBank developed China’s first self-controlled distributed banking system, in place of the traditional centralized system that most banks adopted.
Simply put, centralized banking is like a “General” commanding thousands of troops, processing all business operations with few super large hosts. On the other hand, a distributed system is decentralized, breaking down business operation into several smaller tasks and distributing them to many hosts. Distributed banking is reliable, higher in performance yet lower in cost.
For example, each day there’s an influx of customers using WeBank to take out small loans. Instead of hiring staff to review a huge amount of loan applications, the bank uses the distributed system to help it make decisions in minutes.
In addition to technological strength, WeBank, taking advantage of Tencent’s massive number of users, makes its products accessible on the ubiquitous WeChat, thus being able to connect with the so-called “long-tail” customers who have long been obscured to traditional banking services - small and micro enterprises and the general public. It used to be hard for these people to obtain loans due to high risk and low collateral assets so they had to turn to private lending.
But WeBank, as its name suggests, was set out to empower these people, providing inclusive financial services to individuals and small businesses by launching a selection of unsecured loan products.
As of the end of 2022, WeBank’s individual customers exceeded 360 million, twice the amount of many large banks, and it also counted over 3.4 million small and micro enterprises as its customers.
In 2022, WeBank achieved a net profit of 8.94 billion yuan, even more than the combined amount of all the other 18 private banks in China.
By the end of last year, WeBank’s total assets neared 500 billion yuan, ranking first among China’s private banks.
WeBank’s path to success tells a story of a trailblazer, a challenger, who did what traditional banks had never dared to do. With the audacity to innovate in its genes, WeBank is just like Qianhai where it comes from, continues to break the limit, and walks in the forefront of China’s transformation to digital finance.
