Jack Ma, the founder of the Alibaba Group, is leading another potential revolution with his recent investment in the financial sector. MYbank is a virtual bank which has given out loans worth an astounding $290 billion so far. The innovative financial solution is trying to tackle a financial bottleneck in the credit market that has hampered the growth potential of the world’s second-largest economy for so long.  MYbank is nothing short of a revolutionary step forward in the financial solutions domain.

It provides financial services and lends to the small and medium scale business owners who find it difficult to obtain finances from other channels.  The bank is quite an example of technology incorporation as it makes use of real-time payments data as it analyses 3000 different variables using a risk management system.

This 4 year-old investment has so far lent over $290 billion to almost 16 million small and medium scale businesses.

The process is fairly simple; the loan applicants have to make a few taps on their smartphone screens, and if they are approved, they receive cash almost instantly. There are no human bankers involved in any of these transactions, and the entire process only takes about three minutes.

The default rate is surprisingly low at 1%. The FinTech solution has allowed a huge chunk of the population to avail financial services and acquire finances for their businesses.  The small and medium businesses are the backbone for economic progress and uplifting of the economy, and they will no longer be turned away. This can potentially revive the economic growth of the huge Chinese economy.  Nonstate firms, which are mostly small and medium scale businesses, are responsible for 60% of the economic growth and employ 80% of the labor force.

MYbank crunches scores of data from sources such as social media, various payment systems, and other sources and allows the bank to ascertain the financial capacity of the small borrowers.  As a result, they will not be considered too risky or too difficult, as is the case with traditional banking. This can have seismic positive implications for the Chinese economy.

The loan approval rate is 4 times higher than that of traditional banks. Traditional banks used to spurn 80 percent of the requests made by the small and medium scale businesses and would prefer larger, state-owned firms.

MYbank made 670 million Yuan in profits last year, which testifies that the business model seems to be working. This has encouraged other players to enter into this market that had largely been ignored. A financial revolution may be on the horizon.