By Shu Zhang and Ryan Woo
HANGZHOU, China (Reuters) - It has no physical branches or expensive foreign software, and uses cloud technology to cut back on the hardware it needs to serve borrowers.
MYbank, a Chinese online lender that is an offshoot of Alibaba Group Holding Ltd, has built its business on doing things cheaply.
The bank says it can deliver loans to borrowers across China at lightning speeds for up to 1,000 times less than it would cost brick-and-mortar banks to do so.
MYbank expects double-digit increases in all growth measures in 2017 due to lower costs enabled by technology, the bank's president, Huang Hao, said in an interview at his office in Hangzhou, in the eastern province of Zhejiang.
He called the results "very satisfying", but declined to elaborate.
Established in 2015, the privately held MYbank employs about 300 people, half of whom are technicians. It promises to approve loans in under three minutes without any human involvement, thanks to the bank's in-house technology.
As a result, the cost of approving a small business loan can be as little as 2 yuan, compared to at least 2,000 yuan ($317.97) at a traditional bank, according to data provided by the bank. MYbank has built its technological infrastructure with Chinese-made technology, avoiding more expensive products from companies like IBM Corp, Oracle Corp and Dell EMC, which form the network backbone for much of China's finance sector, Huang said.
"My costs would have been unbearably high," Huang said, referring to using systems from the U.S. companies. "In the future we will have a tremendous amount of users and high volume of demand. So I need scalable, inexpensive systems." Dell said China was its second largest market outside the United States. "We have many successful customer cases in China's banking sector," the company said in a statement.
Oracle declined to comment. IBM did not immediately comment.
MYbank is 30 percent owned by Ant Financial Services Group, an Alibaba affiliate. Alibaba and Ant Financial have provided MYbank with cloud-computing expertise and helped MYbank with developing big data, artificial intelligence and facial recognition to facilitate lending, Huang said.
BETTING ON FARMERS
MYbank is one of a handful of Chinese lenders - along with Tencent Holdings Ltd's WeBank - that are founded completely with private investment. Since mid-2015, MYbank has served more than 7 million small business owners, Huang said. The bank is seeking to expand its network to include China's 70 million to 100 million small businesses under-served by traditional financial institutions.