Baidu will partner with China Citic Bank, one China’s largest and most internationally oriented banks, to launch an online bank according to local media reports.
Baidu has said it will make a formal announcement on Wednesday, while Citic Bank suspended trading on Monday pending an investment announcement.
Both Alibaba and Tencent have expanded considerably into the online banking space since they were granted their respective banking licenses in March 2014.
Tencent launched China’s first online bank in January, capitalizing on the under-serviced small and micro-loans markets, they followed up with a WeBank app this August.
Alibaba’s financial arm followed up with their own bank in June, also targeting small lenders. Both companies have developed consumer credit rating services preceding the launch of their online banks.
Baidu has been seeking to enter the space for well over a year. In March 2014 CEO Robin Li said that “Baidu is now applying for multiple banking licenses, including payment, but because we’re still in the process of applying it’s not convenient to reveal too much.”
In March of the same year Mr. Li called for greater regulation in China’s expanding online finance industry. In April the company omitted 800 P2P lending sites from results on Baidu’s search engine, citing poor regulation in the industry,
While Baidu has considerable experience in marketing finance products, they are behind the curve when it comes to internet banking services. Alibaba launched money-market fund Yu’er Bao in June 2013, which offers interest rates much higher than traditional banks. Despite a rocky year with high-end management changes, Tencent’s WeBank has leveraged their highly-popular social networking platforms WeChat and QQ to expand their banking service.
Competing with Alibaba’s early traction in finance and Tencent’s social integration will be a challenging task for Baidu’s new bank. It’s not immediately clear when the new bank will launch, though it’s worth noting that it took between 10 and 15 months for Tencent and Alibaba to launch their respective online banks following their initial license approval. Baidu’s stock was down 1.89% at $196.83 USD by the end of trading on Tuesday.