Entertainment mogul: Starting his business with the internet

Chapter 459 Bank Siege
The aroma of tea wafts through the air in the top-floor office of the Tengda Technology Building.

Liu Xiaochen took a sip of the green tea in her cup, the mellow fragrance spreading across her tongue. A hint of approval flashed in her eyes, and she couldn't help but nod and say, "Good tea!"

Song Ci smiled slightly upon hearing this, her tone amiable: "Uncle, if you like, take some back with you later. I don't like tea, so it's just sitting there unused."

After taking a few more sips, Liu Xiaochen put down her teacup and changed the subject: "I saw the WeChat update yesterday, which was released on New Year's Day."

It seems that faced with the immense pressure from Alipay's launch of Yu'ebao, Tenda finally couldn't sit still any longer.

Song Ci smiled slightly as WeChat version 4.0 was officially launched yesterday.

Just over 20 days after the launch of WeChat Red Packets, this update adds a WeChat transfer function with a single transaction limit of up to 20 yuan, which is sufficient to meet users' needs for large-amount fund transfers.

With this, WeChat has completed the final piece of the puzzle in the mobile payment field, forming a "three-in-one" structure with WeChat Pay and WeChat Red Packets, and officially upgrading into a complete internet finance platform.

He did not elaborate on his uncle's attribution of this action to pressure from Alipay.

As the top-level application in the payment system, WeChat transfer is a key link connecting social relationships and large-scale financial activities. It is an indispensable part of Tenda's construction of the WeChat Pay ecosystem, and the intricacies of this are not for outsiders to know.

Liu Xiaochen's expression hardened, and her tone became serious: "You should have been paying attention to the recent news, right? It's New Year's Day."

Alibaba Group's Yu'ebao has made Alipay the public enemy of the entire banking industry. If Tenda Group also plans to launch a similar product, it should think twice before acting.

Song Ci nodded in agreement, already having considered Alipay's situation in his heart.

He even knew that he had indirectly contributed to the rapid nationwide popularity of Yu'ebao. These past two days, the drama of the four major banks "encircling" Alipay has intensified.

Within just 18 days of its launch, Yu'ebao's fund size surged to 600 billion yuan. This practice, which effectively increased banks' liabilities, thoroughly enraged the four major state-owned banks.

On January 10, the Industrial and Commercial Bank of China (ICBC) took the lead in launching an attack, citing the China Banking Regulatory Commission's document No. 86 of 2011, directly accusing Alipay's quick payment service of being "illegal".

The reason given is that the document requires the bank to directly verify the customer's identity for the first payment, while Alipay has simplified this process.

Alipay immediately retaliated, stating that ICBC itself had also launched a quick payment service, and that more than 170 banks nationwide were using the same model. If it were truly illegal, it would be a collective "violation of the law" by the banks.

Seeing that it was gaining no advantage in the propaganda war, ICBC stopped pursuing the matter and directly launched countermeasures:

Alipay has comprehensively lowered its quick payment limits, reducing the single transaction limit from 5 yuan to 5000 yuan and the monthly cumulative limit from 20 yuan to 5 yuan.

China Construction Bank followed suit that same day, simultaneously and significantly reducing credit limits.

Just one day later, Huaguo Bank and Agricultural Bank of China quickly followed suit, reducing the single transaction limit for Alipay to 1 yuan.

The four major banks have all given the same explanation, emphasizing that the move is to "protect users' funds," while avoiding any mention of their intentions regarding Yu'ebao.

However, users' actions such as topping up, repaying, and making purchases through Alipay via quick payment are clearly hampered.

Liu Xiaochen sighed softly: "Speaking of which, ICBC used to be the custodian bank for Alipay's reserve funds. The relationship was so good back then. Now that things have turned out like this... it's better not to mention it."

Just as Song Ci was about to speak, her phone suddenly vibrated. She glanced down and saw that it was Liu Yan calling, so she immediately answered.

"Chairman Song, Jack Ma has responded. He just publicly denounced the Big Four banks on Weibo. Do you think we should limit the reach of this post?"

On the other end of the phone, Liu Yan's voice carried a hint of caution, as if seeking instructions.

Song Ci laughed instead and joked, "President Liu, I'm about to criticize you."

It's rare for Teacher Ma to post something on Weibo, so it's one thing to not welcome it, but why restrict its reach? Just treat it normally.

"Understood," Liu Yan replied, and hung up the phone.

Song Ci immediately opened Weibo and searched for Ma Jieke's homepage.

This Alibaba Group leader registered his Weibo account when it was first launched, but he hasn't updated it since WeChat Pay was launched and became a competitor to Alipay.

He knew perfectly well that Ma Jieke's decision to speak out on Weibo at this moment was clearly a calculated move, as WeChat Pay and Alipay shared common interests and were natural allies in the field of internet finance.

A blog post titled "Alipay, please hold on!" was prominently featured.

I glanced at Song Ci's words and saw that they directly accused the four major banks of "monopolistic blocking," condemned their infringement on users' right to control their funds, questioned the legality of the measures, and stated that these methods against Alipay were "unprecedented and inconceivable."

The article repeatedly emphasizes that market competition should be "determined by the users" and calls for the establishment of a fair competitive environment.

Liu Xiaochen also came over to look at the Weibo post, and shook her head helplessly: "Ma Jieke is so high-profile in going against the Big Four banks, I really don't know how it will end."

Song Ci's words resonated deeply: "Uncle, when technology can more efficiently connect funds and demand, no administrative barriers can stop the market's choice."

The era of internet finance has arrived. The four major banks' efforts to "encircle" Alipay may have a short-term impact, but user habits are irreversible, and in the long run, such efforts are destined to be futile.

Upon hearing this, Liu Xiaochen was greatly shocked, never expecting that her nephew would be so pessimistic about the Big Four banks.

"Uncle, the main reason I invited you here today is to discuss a few things."

"Go ahead," Liu Xiaochen said, her expression composed.

"The idle funds in WeChat accounts have exceeded 4000 billion yuan." Song Ci spoke slowly and deliberately, yet with an undeniable determination.

"Now that Yu'ebao has already been launched, there's no need for me and the bank to keep it a secret. After the Spring Festival, Tengda will launch a similar money market fund product called Lingqiantong."

As early as November last year, Tengda Group had already obtained a public fund license through approval from the People's Bank of China, the China Securities Regulatory Commission and other departments.

The company already possesses all the qualifications to establish an online fund management company and conduct money market fund business, so launching Lingqiantong (a money market fund payment platform) now is simply a natural progression.

"4000 billion?!" Liu Xiaochen's eyes widened in shock when she heard the number, and she exclaimed in surprise, her breathing becoming rapid.

But he quickly calmed down and gave a wry smile, "On New Year's Day, the negotiated deposits of money market funds will greatly increase the bank's costs."

"If we let Yu'ebao and Lingqiantong absorb funds like this, it won't be long before they drain 30% of the market's demand deposits. The four major banks will never agree to that." "No, they will agree." Song Ci's expression was calm, but her eyes revealed complete confidence.

"If the four major banks are unwilling to take on this funding, I think banks like Bank of Communications and CITIC Bank would be very happy to."

He paused, then looked at Liu Xiaochen, "Uncle, actually, Lingqiantong could have been launched a long time ago. Do you know why I delayed it until now?"

Liu Xiaochen belatedly pieced together the sequence of events, her face filled with disbelief.

"Did you deliberately use WeChat red envelopes to provoke Alibaba Group, forcing them to launch Yu'ebao first and withstand the first wave of sanctions from the four major banks?"

"Indeed!" Song Ci nodded slightly, confirming his uncle's guess. "With Yu'ebao leading the way, the four major banks should react more calmly when Lingqiantong is launched, since they are already mentally prepared."

Liu Xiaochen still had concerns: "That being said, the scale of 4000 billion yuan far exceeds that of Yu'ebao. Even if we only calculate based on a 3% interest rate, the bank will have to pay an extra 120 billion yuan in costs every year."

Song Ci, however, seemed confident: "In previous years, banks might have been able to exert more influence, but this year is different."

Uncle, as the branch manager of the Industrial and Commercial Bank of China in Beiping, you must have noticed the pressure on social liquidity, right?

Liu Xiaochen's expression changed drastically. As a senior bank executive, he was well-versed in the industry's inner workings. By the end of 2012, the balance of bank wealth management products nationwide had reached 7.1 trillion yuan, a surge of 55% compared to 2011.

Major banks are aggressively expanding through off-balance-sheet channels such as wealth management and interbank lending in order to circumvent credit regulations.

As a result, funds were transferred from interbank certificates of deposit to trust beneficiary rights, and ultimately flowed to local government financing platforms or the real estate sector for idle circulation, forming a large number of non-standard debts and locking up huge amounts of working capital.

Knowing her nephew's keen insight, Liu Xiaochen pressed on, "Around New Year's Day, did you hear anything?"

Song Ci's tone became serious: "Nowadays, bank lending has long been out of control, with funds flowing into industries with overcapacity and local financing platforms, which has squeezed the survival space of small and medium-sized enterprises. This is by no means a good thing for the real economy."

How could the central bank stand idly by? This year, they will definitely take action to address two major problems plaguing the financial system: fund mismatch and regulatory arbitrage. This will force banks to shrink high-risk businesses and repair their balance sheets.

Liu Xiaochen frowned, quickly calculating the weight of his nephew's words. If what he said was true, the financial industry would inevitably undergo tremendous changes this year, and even the slightest trigger could lead to a "cash crunch."

The more he thought about it, the more likely it seemed. He tentatively asked, "Did you predict a 'cash crunch' in banks this year, which is why you're so confident?"

Song Ci frankly admitted: "A 'cash crunch' is a foregone conclusion. By then, no bank will be able to resist the hundreds of billions of yuan in WeChat accounts. The situation is on our side, and banks will not have much room for choice."

"If a real cash crunch occurs, banks really won't have the leverage to negotiate." Liu Xiaochen sighed, deeply impressed by her nephew's profound planning and meticulous scheming.

"Uncle, ICBC is a shareholder of Tengda after all. I hope you can communicate with the head office so that we can cooperate for mutual benefit and face the launch of Lingqiantong with equanimity."

Liu Xiaochen sighed softly, "I understand, I will report to head office."

Song Ci added, "Uncle, the digital transformation of banks is an inevitable trend. As the largest state-owned bank, ICBC should take the lead."

Tenda has accumulated considerable experience in the fintech field, including multi-factor authentication, delayed payment processing, intelligent risk control models, and biometric technology, all of which can be collaborated with ICBC.

Liu Xiaochen quickly replied, "I will communicate with the head office about these matters and try to pilot them at the Beiping branch first. If we can achieve results, it will also be a valuable experience for me."

Song Ci leaned back on the sofa, looking directly at Liu Xiaochen: "Uncle, with Tengda as your backing, it won't be difficult for you to get promoted again."

But to advance further in their careers, they ultimately need to achieve tangible results in the financial field.

"But I'm not good at business," Liu Xiaochen said with a wry smile, shaking her head.

He was self-aware that he had been doing well at ICBC thanks to his family's influence, but he had always been in charge of risk control and compliance. Front-end business was not his forte, and compared to his colleagues in business positions with outstanding achievements, he really had no advantage.

Song Ci said solemnly, “Uncle, times have changed. The future belongs to internet finance, and this rapidly changing landscape presents a great opportunity to make a difference.”

Liu Xiaochen was taken aback, then smiled: "Good nephew, quickly tell your old uncle what's wrong and give him some pointers."

After a moment's thought, Song Ci slowly began to speak: "In the era of internet finance, anti-money laundering, telecom fraud, and P2P risks are all challenges that banks cannot avoid."

If you can build a systematic defense system from a strategic perspective to protect the property of the people and the nation, setting a benchmark for the entire banking industry and demonstrating your capabilities to the higher-ups, then it's not impossible for you to eventually lead a large state-owned bank.

Liu Xiaochen felt a surge of warmth in his heart upon hearing this, as risk control and compliance were precisely his strengths!

Unable to contain his eagerness, he quickly pressed, "New Year's Day, tell me in detail."

Song Ci nodded and began to explain clearly: "First, let's talk about anti-money laundering. We can promote biometrics combined with blockchain real-name authentication, and connect with industrial and commercial and tax data to verify the actual controllers of enterprises..."

In the area of ​​telecommunications fraud, there are ways to implement circuit breakers during transactions. Banks have developed an emergency transfer braking system that forcibly triggers a confirmation mechanism for children when an elderly person transfers a large sum of money to a stranger's account.

A database of fraudulent transactions can also be built, automatically freezing accounts for 72 hours in cases such as concentrated nighttime transfers and high-frequency trial transactions. Regarding P2P risk prevention, a financial firewall must be established.

Song Ci eloquently recounted his inner thoughts, and Liu Xiaochen listened with frequent nods, gradually becoming engrossed.

"There's still a lot we can do, like holding anti-fraud classes at community banks and setting a default cooling-off period for transfers for customers over 65..."

"Great! I've learned a lot!" After listening, Liu Xiaochen couldn't help but slap her thigh, feeling enlightened and gaining a completely new understanding of bank risk control.

"Uncle, think about it. If you could take the lead and build a three-dimensional strategy of 'technology-driven + nationwide joint defense + institutional innovation' to build a solid property security line for 8 million individual customers and 4000 million enterprises, it would eventually become the industry standard."

By then, the central bank's commendation notice and a special report in the *Daily Express* will probably be just around the corner.

Liu Xiaochen was moved to tears and felt a surge of pride: "As a senior executive of a state-owned bank, it is my responsibility to safeguard the people's and the nation's property in the era of internet finance."

These reforms are my responsibility!

"True financial security means leaving no room for fraudsters and making the public completely unaware that danger was ever close at hand. This silent protection is what truly demonstrates the responsibility of a major state-owned bank."

Seeing her nephew's serious expression, Liu Xiaochen couldn't help but tease him: "You little rascal, you're getting more and more like an official. It's a waste of your talent that you're not taking the civil service exam!"

(End of this chapter)