On December 21^th, Postal Savings Bank of China (hereinafter referred to as PSBC) announced that it had received the approval of China Banking and Insurance Regulatory Commission (hereinafter referred to as CBIRC) on establishing a direct bank subsidiary, PSBC Online. The subsidiary is expected to be domiciled in Shanghai with the registered capital of 5 billion yuan (about 7.65 million US dollars). With 100% of its stakes owned by PSBC, it will operate as a wholly-owned subsidiary. After all the preparation work, PSBC will apply to CBIRC for opening business in accordance with relevant regulations and procedures.

This is the third direct bank with independent legal entity approved to be established after aiBank and another direct bank owned by China Merchants Bank and JD Digits, and also the first direct bank wholly owned by a bank. Direct bank is a new bank operating mode based mainly on the internet and mobile internet, which means that such banks do not rely on brick and mortar bank outlets, and that the target customers of their products and services are mainly those who cannot come to the bank counters in person.

The announcement of PSBC shows that the direct bank is designed to explore an innovative business mode of online and offline synergic development based on technological means, inclusive philosophy and market-oriented operation. It aims to carry out the national strategy of rural vitalization, fulfill the development mission of serving agriculture, rural areas and farmers, boosting small and micro businesses and providing inclusive financial services for the broad masses of the people, and build an innovation platform that brings together financial services for rural vitalization and technological empowerment for people’s better life. The bank will strictly follow the provisions of The Company Law of the People’s Republic of China, Guidelines on Corporate Governance of Commercial Banks and other relevant regulations to construct a sound corporate governance structure, and establish stringent risk management system and risk remoteness mechanism in accordance with supervision requirements and business features.

This investment of PSBC is an important measure to deepen the reform of system and mechanism, and actively explore fintech innovation. The establishment of the direct bank is in compliance with the regulatory policies, the market trend of the digital transformation of commercial banks as well as PSBC’s own needs for business development. It will contribute to improving the service level and efficiency of PSBC, thus better serving the national strategy of rural vitalization, offering digital inclusive financial services and supporting the development of real economy.