China’s Big Three Internet and e-commerce companies—Baidu, Alibaba and Tencent—are so big they are referred to collectively as BAT, and all three have received banking licenses and scaled up their e-commerce and finance platforms.
When Patrick Saw, senior vice president and head of regional sales, DBS Bank, described competition from nonbank providers in the transaction banking space in Asia as the next battleground at Global Finance’s inaugural Digital Bank Conference in October, he was not being melodramatic.
In January 2015, Tencent launched WeBank, offering small loans of less than Rmb1 million ($160,700) to small and medium-size businesses. Alibaba, which had already expanded into e-finance with its Alipay payments system and Yu’E Bao money market fund, launched MYbank as an online provider of small loans.
A recent report by Innotribe, the innovation arm of financial messaging network SWIFT, cites BAT as the biggest global threat to traditional banks.
“Rather than being built for the purposes of supporting a bank, BAT’s technology was built to handle millions of e-commerce transactions, mobile and online communication and Internet searches,” the report notes. “That is a critical advantage, as it gives BAT a technological agility that a traditional bank could only dream of. China’s big tech companies are powered by big data, informed by automated feedback loops from customer activity, driven by business experimentation rather than IT, function at an unprecedented scale and operate at a new degree of service integration.”
Singapore-based DBS has heeded the warning and ramped up its digital innovation efforts to include the release of mobile apps, while partnering with IBM Watson to offer more personalized products and services to its high-net-worth clients. DBS’s CEO, Piyush Gupta, says that in the future, people won’t need a bank; they’ll need banking. And the battle lines have been drawn where technology is key to a banking future.