Yu’e Bao, the online investment platform built around China’s largest money market fund, is evolving into an Internet-based financial management tool for consumers following the addition of several electronic fund-transfer features.
Yu’e Bao officials on Sept. 25 announced that investors can now arrange to transfer money between their bank accounts and their Yu’e Bao accounts automatically. In addition to facilitating regular investment in the platform’s money market fund, this feature allows accounts to be set up to receive monthly salary deposits automatically, and to automatically pay monthly bills such as mortgages and car loans—services similar to direct-deposit and autopay functions offered by traditional financial services providers.
The Yu’e Bao platform was launched in 2013 by Tianhong Asset Management and Alipay, which provides electronic payment services for transactions on China’s largest online shopping websites, Taobao Marketplace and Tmall.com. Yu’e Bao created an immediate stir in the financial community with its Zeng Libao money market fund, which offered significantly higher returns than those available through ordinary bank savings accounts without restrictions such as minimum account balances.
Positioning the fund as a convenient and lucrative place for consumers to park spare cash for online shopping, Alipay and Tianhong Asset Management were quickly deluged with depositors. The fund had more than 100 million users and RMB 574.1 billion ($92 billion) in assets under management (AUM) at the end of June, enough to make it China’s largest and the world’s fourth-largest money market fund.
In recent months, the fund’s growth has been slowing as yields have declined from more than 6 percent early in the year to around 4 percent currently. Instead of focusing on returns, Yu’e Bao officials have been beefing up the platform to make it an all-purpose cash-management tool.
In addition to the new automatic transfer functions announced this week, Yu’e bao accounts can be used to shop, pay utility bills, buy lottery and train tickets, book holidays, and pay off credit cards, among other services. Account holders can handle all transactions online through personal computers and via Alipay Wallet-enabled smartphones.