Online service to gain more ground in financial market (2)

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Online lending

Online financial services began to draw attention since Alibaba started to promote its Yu'ebao service and encouraged fund companies to open Taobao outlets.

Tan Ruyong, a professor with Shanghai University of Finance and Economics, told the Global Times Monday that such services allow banks as well as e-commerce companies to offer financial services such as online banking and peer-to-peer (P2P) borrowings.

Internet financial services can take several major forms.

The most common form is the payment service, which allows customers to pay for a product, for example, on the Taobao marketplace, using money they saved in their Alipay accounts or online bank accounts, said Zhao Xijun, deputy director of the Finance and Securities Research Institute at Renmin University of China.

In other forms, Internet financial services allow Web users to borrow and invest their money. For example, Yu'ebao allows its users to use the ­balance in their Alipay accounts to invest in funds and other financial products. Also, some third-party websites, such as edai.com and rong360.com, offer platforms that connect borrowers with investors, he said.

"Online financial services became popular because commercial banks' customers, usually brick-and-mortar stores, are moving online, and the banks have to offer Internet-based services to stay in the game," Zhao said. "At the same time, e-commerce companies, such as Alibaba, have gained enough experience in online payment services, and are expanding into the borrowing and lending field."

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