The WeBank information chief is living his life's dream as the first web-based lender in China takes micro-credit to the next level. Chai Hua reports in Shenzhen.

The main targets of traditional banks are government departments and large enterprises, which makes it difficult for micro- and small-sized private companies, not to speak of average individuals, to raise funds in China, says Henry Ma Zhitao, chief information officer at WeBank.

But as China's first Internet-based lender, WeBank may be poised to change that scenario.

Located in the southern powerhouse city of Shenzhen, WeBank was approved by the China Banking Regulatory Commission on Dec 12, 2014 - a milestone event for China's Internet finance sector.

In early 2015, Premier Li Keqiang attended the opening ceremony of WeBank and applauded its innovative move, saying: "It is one small step for WeBank, one giant step for financial reform."

Market position

Ma said WeBank focuses on providing capital lending to small and medium-sized companies, individual customers, agricultural businesses and farmers deeply caught up in the cash-loan dilemma.

Internet giant Tencent Holdings Ltd is WeBank's largest shareholder with a 30 percent stake, while other shareholders include investment firms Baiyeyuan Investment and Liye Group.

Small or private companies account for about 60 percent of the mainland's gross domestic product and about 75 percent of new jobs, but they have struggled to obtain loans from State-owned banks, because of weakness in terms of collateral and credit rating systems.

WeBank in May last year launched its first loan product, Weilidai, providing microcredit to users without the need for guarantee or collateral, but based on Tencent's big data. Users are offered as much as 200,000 yuan ($30,400) in credit at a daily interest rate of 0.05 percent.

Because the loan amount of target users is not large, the bank has to enlarge its user base in order to turn a profit, Ma said.

So WeBank started to promote the product through Tencent's popular online instant messaging tool QQ and WeChat, which have billions of active accounts.

The service is available round the clock via Tencent's QQ wallet, a mobile payment service on its QQ instant messaging tool, with transactions processed within 15 minutes if need be, according to the company.

Weilidai has extended more than 9 billion yuan in microcredit to about 10 million consumers so far, according to Ma.

Taking stock

Besides the loan product, however, it seems the bank has achieved little in the year since it opened. Even Ma admitted that the speed of development of the online lender seems to be slower than that of some private banks.

Some industry analysts and insiders have expressed disappointment and doubts, especially after two high-level managers left the company. What was the mysterious Internet bank doing and could it even survive the stiff competition with traditional banks?

Responding to these questions, Ma explained that they have established a very fundamental and important platform for such services - a new IT (information technology) system for banking.

"Private banks can be established quickly because they usually just copy the traditional banking system, but we needed to establish our own," Ma said.

In fact, WeBank has built China's first banking IT structure without involving "IOE", the collective moniker in China for the Western tech giants IBM, Oracle and EMC.

The three companies, providing minicomputers, data bases and high-end storage, formed the backstage structure of many large enterprises not only in China but around the world, including those in financial sectors.

Ma said the IOE structure could pose several risks for banks, such as high cost, limited scalability and lack of support for innovation.

Ma claimed that the cost of the WeBank IT structure is only about a tenth of a traditional one.

"We can cut the cost substantially because we use low-end X86 computers and open-source software optimized by Tencent," Ma said.

But despite using low-end machines, Ma is not unduly concerned about the system's stability, and used the analogy of water to explain his point.

"If we regard users as a body of water, the old system is like a big bottle and our new system is a (collection of) small ones."

As Internet finance develops, the account base will enlarge remarkably, Ma added, with demand becoming too huge for the traditional banking structure to handle.

"Once the big bottle is full, they have to replace it with a bigger one, pouring all the water into the new big one. But for small bottles, we just need to add more new bottles for new users," he explained.

He believes the structure of the model is such that it can split the pressure, supporting the stability of the entire system.

Ma and his team set up the system in just one year, which he is very proud of, especially as there were few precedents to learn from.

The majority of Hong Kong and foreign banks use the IOE system, Ma said. In fact, we are leading in the (banking IT) technology.

"We started from scratch a year ago, but I feel I have been preparing for the work at WeBank my whole life," he said.

Between two cites

Ma grew up in Hong Kong and went to the US for higher studies, graduating from Stanford University.

After graduation, he began working in Silicon Valley, when he found that some companies in traditional industries had started to adopt open-source technologies but at the time the new technique was not mature enough to justify abandoning the established one.

In 1996, Ma launched his own firm. Though he later sold the startup, he said it taught him to look at a company from different perspectives.

He discovered he lacked adequate experience in general management and human resources to run a business efficiently.

He decided to join a large enterprise and learn business administration to prepare for his second startup venture.

In his 30s, Ma returned to China and joined Shenzhen-based Ping An Bank as director of its technology department.

Speaking of the choice, he said the finance industry involves the most challenging IT work and he loves taking risks and having an adventure. That move saw Ma embark on a life of shuttling between two cities - working in Shenzhen and living in Hong Kong. Ma said he had been trying to change the IOE system when working for Ping An Bank and helped it successfully evolve from the enclosed IBM system to open-source Unix system within three years.

That was a revolutionary move back then, Ma recalled, but it was too hard to make a fundamental change because of "the burden of history."

After Ping An Bank, Ma moved onto a different track, joining Shenzhen-based delivery services firm SF Express and remaining in that sector for two years.

Then in 2014, he returned to the finance sector, leading the establishment of WeBank's technology system.

"WeBank is a piece of white paper," said Ma who regards his career in WeBank as his second chance to establish a startup, one that he had been preparing for his whole life. With more than 800 employees now, WeBank is taking solid steps toward progress, and Ma believes the company will grow from the current millions of users to billions in the near future.

"We are on the right track for the development of the finance industry," Ma declared with confidence.

"Integrating with the Internet, banks will upgrade their services from segmented process to automatic and intelligent management."

Looking ahead, Ma believes finance services will be further merged with Internet scenarios and users of the future "won't even feel the existence of banks" when making a transaction or taking out a loan.

Contact the writer at grace@chinadailyhk.com

(HK Edition 02/01/2016 page8)