China opens first direct bank�
From K J M Varma
Beijing, Sept 19 (PTI) The Bank of Beijing today launched China''s first direct bank, a novel mode predicted to preponderate in the era of online banking.
Cooperating with the Netherlands-based ING Group, the Bank of Beijing has initially launched direct bank services in cities of Beijing, Xi''an and Jinan, said Shi Zhan, a senior manager at the Bank of Beijing.
A new mode that has proven popular in the European and US markets, direct banking does not rely on entity outlets, instead offering financial products and services mainly via the Internet, telephones and ATMs, state-run Xinhua news agency reported.
The direct banking services operated by the Bank of Beijing will mainly serve retail clients and small and micro enterprises, according to Shi.
Industry observers say direct banking has been a much anticipated phenomenon in China, which has observed a surging popularity of online and telephone banking in recent years.
Experts say the strength of direct banking lies in its lower operation costs, greater efficiency and its focus on serving small and micro-sized companies, which have long had difficulties in securing loans from conventional financial channels.
"A direct bank operates no branch network, so it runs on lower costs. In return, it can offer higher rates of return for customers and enjoy greater competitiveness," Tang Jianwei, a financial analyst with the Bank of Communications, told Xinhua in an interview.
Some industry observers also praise the opening of direct banks as vital for boosting banks'' presence in the online financial markets against the inroads made by competing e-commerce companies.
On Monday, Chinese e-commerce giant Alibaba Group announced it would develop its direct banking services by teaming up with China Minsheng Bank.
Expected to start operating in October, the service will capitalise on Alibaba''s success in the e-commerce sector, including its popular online shopping platform Taobao.
Its bank accounts will be linked to Alipay, China''s largest e-payment provider, said Lin Yunshan, assistant president of China Minsheng Bank.
"New financial platforms built by e-commerce companies are like uninvited guests into the territory claimed by the banking sector, and banks need to reflect on their survival modes in the Internet era, including by establishing direct banks," Yang Zaiping, vice head of the China Banking Association said.
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