A few weeks ago it was interesting to see China’s e-commerce titan Alibaba move in to disrupt China’s personal finance industry with a new, online-only finance product aimed at the regular Zhou. Giving China’s prudent savers a higher interest rate than most banks’ time deposit offerings (Alibaba’s is currently giving 6.299 percent), the new service has been explosively popular. With no marketing, Alibaba’s Yuebao has today grown to 2.5 million users who have collectively deposited RMB 6.601 billion ($1.07 billion).
In the 18 days since it launched, it has become China’s most popular single personal finance fund.
Basically, Yuebao is a money-market fund that’s pegged to corporate debt and government bonds. When it first quietly rolled out, Alibaba founder and chairman Jack Ma told Chinese media:
China’s financial industry, especially the banking industry, only serves 20 percent of clients, and I see there are 80 percent of the clients are not covered. Financial services should be about serving the layman, rather than playing inside your own circles and make money yourself.
While Alibaba’s Yuebao hasn’t been fully approved by the China Securities Regulatory Commission, Alibaba is in the process, via its Alipay platform for e-payments, of getting the online fund its regulatory approval. If that’s not done, the fund might be penalized by the CSRC.
In a sign that Alibaba and Alipay is hedging closer to being an online bank, the company’s Alipay Wallet app was updated yesterday to support managing your Yuebao fund.