Yu’E Bao, an investment service offered by Alipay, China’s leading online payments provider, and Tian Hong Asset Management now has the largest money market fund in China.
According to statistics released by Tian Hong, Yu’E Bao as of Sept. 30 had RMB 55.7 billion ($9.2 billion) in assets under management and more than 13 million customers. Yu’E Bao’s total assets grew tenfold between June 30 and Sept. 30. In the third quarter of this year, the fund has paid a total of RMB 362 million in interest income to subscribers.
Alipay, the e-payment affiliate of Alibaba Group, launched Yu’E Bao with Tian Hong to make it easy for Alipay users to invest the idle cash in their Alipay accounts and get a higher interest rate than typical bank savings deposits.
Alipay allows users to make purchases on the Internet or pay bills by allowing them to top up their Alipay accounts using cash or through their bank accounts.
The success of Yu’E Bao, which means “leftover treasure,” has encouraged several other Internet companies to launch similar financial offerings. Fund companies are also looking to launch more products on Alipay, Chinese media has reported.
In September, Alibaba decided to push deeper into the financial services industry by teaming up with China’s Minsheng bank to offer wealth management products, electronic banking and credit card operations on its Taobao platform, the Wall Street Journal reported. Earlier this month, Alipay bought a 51 percent stake in Tian Hong for $193 million.
Alibaba officials have said their goal is to spur innovation in China’s staid, highly regulated financial services industry by bringing out online financial products and services that are beneficial to ordinary consumers. In response to media inquires about Alibaba’s push into finance, Alibaba Group Executive Chairman Jack Ma was quoted as saying “if the banks do not change, then we will change the banks.”