It is satisfying to finally see these firms establish their private banks. The discussion around private banks really started at the end of 2013 and the progress has been somewhat slow by China standards. Certainly all three of the BAT will be keen to quickly leverage their new financial platforms along with their existing e-commerce, search and communications platforms to start really having an impact in the market.
How regulators let them go forward is also a bit unclear. Although Webank was setup with high-hopes earlier this year, the actual performance of the bank has been a bit underwhelming. One of the reasons for this is that the banks are still very much limited in their scope of operations - they can only provide certain products and services in certain geographical locations. The idea was that remote-account opening would be further streamlined in China, which would have allowed these firms to expand much more rapidly than they are currently able to do.
The structure of the partnership is also unique. The Baidu and Tencent banks all have multiple partners from varying backgrounds, whilst Baixin will (at least initially) only have Citic and Baixin. This may make it easier for the organizations to more effectively drive the bank forward as both have relative equal ownership, yet some analysts believe there might be a clash in management and corporate styles between the two.
For Citic, it is also an indication that they feel they partnering makes sense to be successful. Many of the traditional Chinese banks have pushed into digital banking on their own, but either establishing a division to focus on direct banking under their existing organization. Only China Minsheng has worked to setup a separate organization. In many ways, its an excellent match. Baidu is one of the most forward thinking and advanced technology companies in China and Citic is one of the largest and most successful financial institutions in China.
It is still early days for the private banks in China and it will be interesting to see how they progress and who is successful. Baidu has already shown its prowess in big data in the financial industry through its Baifa 100 financial product - will it be able to do the same in banking as a whole?