(ECNS) -- China's banking regulator has sent a positive signal to banks wanting to enter the rapidly developing online financial market, the Economic Information Daily reports.
Yao Yudong, director of the Research Institute of Finance and Banking under People's Bank of China, said authorities should support banks in establishing subsidiaries regarding Internet financing or by having a stake in existing online financial businesses.
Banks can also offer their own peer-to-peer (P2P) lending, third-party payment services, crowd funding, and e-commerce, it was added.
P2P is regarded a threat to the traditional banking model since the platform can quickly pool funds as well as connect lenders and borrowers.
Experts said Yao's statement means more banks would enter the already competitive online financial market, which is currently dominated by Internet companies.
He said the traditional banking sector is now facing daunting challenges in the Big Data digital era and that China's regulation of the online financial industry is "dynamic, gradual, and open-minded."
Yao suggested that subsidiaries could also adopt mixed ownership structures to further fit the development of Internet companies.
Fu Lichun, chief greater China economist with the Golden Fortune International Group, said it appears that regulator attitude is transforming from prudent to more proactive.
Several banks have already started providing online financial services such as E-ICBC by Industrial and Commercial Bank of China in March. ICBC also launched an online financial marketing center, the first of its kind among Chinese commercial banks. China Merchants Bank expanded its online service to also include P2P financing.
Zhou Zhihan, deputy general manager of China's leading P2P platform Kaixindai Financing Service, said the banks' expected move would change the current landscape of the Internet financing market by employing advantages in risk management.
But for Zhang Jun, CEO of P2P service provider ppdai.com, banks still lag behind in terms of service, Internet-based thinking, and cost control for small-loan services.
