The world has entered into anera of “mass economy.” Basedon their unmatched capacityto draw massive numbers ofusers through social networking, searchengines, and cloud computing, internetcompanies have now set foot into realms previously dominated by traditional financialinstitutions such as banks, funds,and securities firms. These newcomershave conceived ambitious plans to seizeas much of the market as they can, butare they “innovators” or “spoilers” for thefinancial industry?
Explosion of Internet Finance
“I transferred all my money to anAlipay Yu’ebao account,” smiles Li Jing, ayoung office worker with a Beijing company.“With my cell phone, I can monitor thebalance in my Yu’ebao account as it growswith each passing day.”
Yu’ebao, or Leftover Treasure, is anonline financial product co-launched byAlipay, China’s largest third-party paymentplatform and a subsidiary of the e-commercegiant Alibaba Group, along withTianhong Fund. Yu’ebao allows Alipayusers to transfer any funds into TianhongFund, which can be cashed out anytime.So far, its annual return rate has remainedsteady at nearly 5 percent, about 14 timesmore than Chinese banks’ current depositinterest rate. Especially popular amongyoung web-savvy users with meager savings,Yu’ebao netted 1 million registeredusers in only five days after its launch onJune 13, 2013.......