WeBank: Driving Financial Inclusion through Digital Technology

Case Code: ITSY143 Case Length: 15 Pages Period: Pub Date: 2024 Teaching Note: Available

Price: Rs.400 Organization: WeBank Co., Ltd Industry: Financial Services Countries: China Themes: FinTech, Banks and Banking, Digital Strategy

Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

Serving the Underbanked and Unbanked

WeBank was founded with the mission of “Better Banking for All.” Its aim was to meet the diverse financial needs of the general public, self-employed individuals, and MSMEs in China (see Exhibit II). WeBank’s business segments included consumer finance and MSME finance. It provided underbanked individuals and MSMEs with comprehensive financial services, including savings accounts, personal loans, small business loans, credit cards, wealth management products, and insurance services. During WeBank’s launch ceremony in Shenzhen, then-Premier Li Keqiang said, “We will lower costs for and deliver practical benefits to small clients while forcing traditional financial institutions to accelerate reforms. It’s one small step for WeBank, one giant step for financial reform.” WeBank’s primary source of income was interest accrued from its lending products. It focused on smaller loans with high volumes of customers, driven by an extensive user base..

Leveraging ABCD Technology

Shortly after its establishment, WeBank built a fully distributed core banking system using secure and controllable technologies. The system was created 100% in-house, designed with self-owned intellectual property capable of handling high-volume and high-frequency transactions. Reportedly, WeBank was the first Chinese bank to create a fully distributed core banking system that could process a massive volume of online transactions with the same efficiency as the conventional large banks in China. Since the core banking system was launched, the digital bank had been operating 24/7 without interruption, supporting hundreds of millions of users..

Secret to Success

Within five years of launching, WeBank had experienced rapid growth and emerged as the largest online-only digital bank in the world. It attracted a substantial number of customers, including individuals and small businesses. According to some analysts, WeBank’s tech-focused approach and varied services allowed it to scale up without having a single physical branch. Through continuous innovation and investments in leading-edge technology, WeBank leveraged its core capabilities and provided technological support for various aspects of its digital banking business, such as marketing, operations, risk control, and consumer rights protection. This approach helped it reduce operating and management costs and reach scale while creating a more efficient and convenient experience for customers..

Challenges Ahead

Going forward, some of the biggest challenges for David Ku and his team were to sustain the growth of WeBank, beat the competition, attract deposits, widen its product offerings, and ensure continuous innovation to fulfill the needs and expectations of customers and enhance its customer base. Discussing the challenges WeBank could face in the longer term, including how it served consumers and small businesses in the marketplace, Henry Ma said, “I think for the financial industry, banking included..

Exhibits

Exhibit I: Global Top 10 Digital-Only Banks
Exhibit II: WeBank’s Inclusive Finance Concept
Exhibit III: WeBank—Product Portfolio
Exhibit IV: WeBank—Key Technologies
Exhibit V: WeBank—Income Statement
Exhibit VI: WeBank—Selected Honors and Awards (2022)
Exhibit VII: Selection of World’s Most Unbanked Countries (2021)

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