Ant Group removes small banks’ online deposit products from its platform as it toes the line with China’s new fintech rules
- Small and medium-sized banks across China have used digital platforms as a way of attracting deposits
- PBOC official worries such online-deposit products have high returns and low thresholds for accepting customers
The company, based in the Zhejiang provincial capital of Hangzhou, removed interest-bearing time deposit products that mature in either three or five years offered by several small regional banks from its financial market place.
The three-year deposit products on the platform pay a top rate of 4.125 per cent while the highest interest for five years is 4.875 per cent per annum, near the upper limit of the central bank’s guidelines and more generous than returns by China’s state-owned banks.
By soliciting deposits on a nationwide platform used by up to 1 billion customers, those regional banks had been offering products with higher returns at lower entry thresholds than their larger rivals to customers, effectively skipping the geographical boundaries in China’s tightly regulated banking industry.
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These online-deposit products often have high returns and low thresholds for accepting customers, with half of them requiring merely 50 yuan to start, Sun said. As many as 50 banks, mostly small and medium-sized lenders, have offered their deposit-taking products on 11 platforms, with the average balance at 500,000 yuan, he said.
Jing noted the close relationship between sustainable financial development and regulation and said that as a first mover, it had often had to feel its way. He also noted regulators’ fears about fintech’s potential to spread chaos throughout the financial system and said the firm will pay close attention to regulators’ guidance.
“Recently, we at Ant Group have spared no effort in studying the 14th Five-Year Plan, and the government’s policy insights into financial security and financial stability,” Jing said in his speech, delivered in Mandarin Chinese.
More broadly, the number of online wealth management and insurance products available to Ant Group’s customers has fallen in the past couple of months as some product providers temporarily withdrew from the market to adjust to a swathe of new guidelines this year, according to market sources.
The clean-up by Ant Group may herald similar removals across the fintech industry. Officials at Du Xiaoman and JD Digits could not be reached to comment.
“Ant is committed to complying with regulatory requirements, and will leverage technology to better support financial institutions and serve the real economy,” said an Ant Group spokesperson on Friday.
A fundraising plan by JD Digits is still awaiting approval by Shanghai’s financial authorities.
Ant Group said on Friday it had voluntarily removed the online deposit products offered by banks on its platform following recent regulatory requirements for online deposits services.
Users who have already deposited money with banks via Alipay will still be able to see their account balance.