MIT Sloan Management Review Article on Learning From China's Digital Disrupters

Alibaba, a relative newcomer to financial services, has seen its small and medium-size enterprise (SME) lending business grow rapidly in the last four years, making it one of the leading lenders in China. Western banks should take note. Such explosive growth is a harbinger for an unfamiliar kind of competition — legacy business incumbents pitted against new digital giants.

In 2017, Alibaba issued SME loans worth 446 billion China Yuan Renminbi (RMB) (about $63.4 billion U.S.), amounting to 30% of the loans issued by the Industrial and Commercial Bank of China, the top SME lender in the country. Alipay, Alibaba’s payment wallet app, and Mybank, its internet bank, attracted deposits of 1.6 trillion RMB, matching 89% of the total value of deposits attracted by Bank of China.