Digital disruption is taking place in so many areas, it is almost easier to find the places that disruption isn’t happening. China is no exception. Bloomberg reports that Chinese are flocking to a digital disrupter – Alipay a subsidiary of Alibaba Group.
Rather than receiving very small amount of interest by depositing with Chinese Government Owned Banks, depositors could instead earn 17 times the level of interest by placing a deposit with Alipay. This is an extraordinary price differential for banking products. What is left unclear from the article is whether the account at Alipay is a bank account and attracts the same level of protection as other banking products. Non the less the price differential is quite significant. Apparently Chinese depositors have been flocking to the account – some 43 million of them. This is a classic example of digital disruption.
Irrespective of the price what is significant is the level of ease with which depositors can transfer their money to Alipay. A simple click of an smart phone and the money is quite literally transferred from a low interest bank account to a high interest account. So easy. Digital disruption making the transfer of funds so simple will make increasingly make the incumbents job even harder to manage “back books” of money. However depositors will also realise they can easily make more money, very simply by transferring the cash with a simple click of the smart phone. No hassles and no problems.
Digital tools make this task so much easier and will only “disrupt” the incumbents further.
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