Following its initial roll-out of a trial program 2 months ago, mid-sized commercial lender China Merchants Bank (HKEx: 3968; Shanghai: 600036) is boosting its tie-up with Tencent’s (HKEx: 700) popular WeChat mobile instant messaging service. The growing tie-up is leading media to dub the new WeChat-based service as China Merchants Bank’s newest “branch office”, and looks like an interesting model to watch as online products and services migrate from the desktop to the mobile Internet.
I first wrote about this developing tie-up in May, when Merchants Bank formally launched its service on WeChat, Tencent’s popular mobile instant messaging service that boasts more than 300 million registered users. (previous post) The initial service was quite basic, with Merchants Bank using WeChat’s instant messaging functions to notify customers about things like their account balances and credit card purchases.
This next step in the tie-up will see China Merchants start to offer actual banking services over its WeChat platform. (Chinese article) According to the latest media reports, customers of Merchants Bank will be able to perform a limited range of financial functions over their WeChat-based accounts, including transferring money and making credit card payments.
As someone who does about half of my banking on the Internet, I can say that this development looks quite interesting. All of my Internet banking activity is now limited to my desktop computer, mostly because the web browsers on my smartphone are too small and awkward to use for banking functions that are often relatively complex.
The advantage of using a platform like WeChat is that it has many functions designed for use on smaller mobile phone screens. Those functions could then be used to create interfaces that make it easier to run programs like online banking on smartphones, providing an attractive alternative to the larger desktop computing interfaces that most people now typically use.
The roll-out of this platform is part of a broader movement that has Tencent, Sina (Nasdaq: SINA) and operators of other popular social networking platforms look for ways to earn some profits from those platforms. Sina so far has relied mostly on advertising to monetize its popular Twitter-like Weibo service. Earlier this year it also formed a ground-breaking tie-up with Alibaba in a bid to bring e-commerce services to its more than 500 million registered users. (previous post)
I personally liked the Sina-Alibaba partnership, and also think this latest WeChat tie-up with Merchants Bank looks smart. Corporate clients like banks are far more willing than average consumers to spend big money to develop a presence on platforms like WeChat, which can help them to meet their business objectives. If this banking tie-up shows good results, I could easily see banks, online travel agents and other service providers following with similar tie-ups.
All of this should bode well for Tencent, Sina and the other operators of social networking and mobile platforms looking to make some money from the Internet. Tencent and Sina are by no means alone in trying to use their platforms to develop mobile services. Alibaba itself has recently rolled out smartphones using its own self-developed operating system (OS), and search leader Baidu (Nasdaq: BIDU) has made similar moves.
With so many mobile platforms entering the market, it will be interesting to see who ultimately wins the most business in the space. If I were betting, I would say Tencent stands one of the best chances of emerging as a future industry leader on the mobile Internet, banking on the popularity of WeChat to create interesting new products and services like this emerging tie-up with China Merchants Bank.
Bottom line: Tencent’s growing tie-up with China Merchants Bank could emerge as a template for other service partnerships in the drive to monetize WeChat.
This article was first published in the online edition of the South China Morning Post at www.scmp.com.