JD.com, the second biggest e-commerce player in China, confirmed that it is carrying out work related to a banking license. This move will set the company to join the roster of a few tech counterparts that offer banking services.
The confirmation followed after the media recently reported that the Internet giant is willing to cooperate with a domestic traditional bank in order to open a direct bank as a separate legal entity.
A direct bank is a bank that offers its services remotely via online banking, mail and mobile without any branch network. Direct banks also offer telephone banking and may also provide access via Automated Teller Machines, often through inter-bank network alliances.
JD hasn't denied the reports, but would now disclose specific details.
A spokesperson from the company said that it is carrying out work related to a bank license to align with its strategic planning as well as to meet its business development needs.
This is not the first time that Chinese Internet companies have engaged in direct online banking in the country. Baidu Inc, China's top Internet search provider, and China CITIC bank announced that they have received approval from the China Banking Regulatory Commission last January in establishing Baixin Bank, an online direct bank.
Baidu will hold a 30 percent stake in Baixin and CITIC will have a 70 percent share.
Ant Financial Services Group, the financial arm of Alibaba Group Holdings Ltd., launched an online private bank called MYBank last 2015. The bank focuses on providing financial services to small and micro businesses and young entrepreneurs.
Tencent Holdings Ltd. also launched an online bank called WeBank.
"Most of the domestic direct banks exist as an internal department of a bank, some even as a secondary unit affiliated to the e-banking department or personal finance department," said Dong Ximiao, the executive president of the Hengfeng Bank Institute.
Dong, however, clarified that a direct bank should be a separate legal entity as per international practice.