BEIJING, Jan. 7 (Xinhua) -- A rush by China's big Internet companies, such as Alibaba and Baidu, into online finance in the second half of 2013 is altering the landscape of China's financial sector in a dramatic and unprecedented way, industry insiders have said.
Last year was widely seen as "ground zero for Chinese Internet finance," partly because of the phenomenon involving "Yu'E Bao (Leftover Treasure)", a personal online finance product introduced in June by Internet giant Alibaba. It allows users to place their driblet savings -- no less than one yuan -- into a money market fund.
As of the end of 2013, Yu'E Bao had 43.03 million users with aggregate deposits of 185.3 billion yuan (30.4 billion U.S. dollars), the biggest single public fund in China. Internet finance has for the first time become part of life for many Chinese people.
Its users come from all over China -- more than 2,000 counties and cities in 31 provincial-level administrative regions with an average deposit of 4,307 yuan per user.
There is a substantial difference between depositing money into a savings account with a commercial bank and placing money with Yu'E Bao, since the latter offers users wealth management services and a much higher return rate, said Zu Guoming, one of the founders of Yu'E Bao.
Zu told a dialogue program produced by Xinhua's TV network CNC and Xinhua-run news portal xinhuanet.com that Yu'E Bao is popular partly because of its return, which comes from the money fund, with rates varying every day.
Return rates could be as high as 7 percent for Yu'E Bao users. That is remarkably higher than the roughly 0.35-percent interest rates offered by commercial banks, and also much better than the one-year deposit rate of 3.25 percent.
By the end of 2013, Yu'E Bao had brought 1.79 billion yuan in profits to users since its launch, according to the operator.
"The launch of Yu'E Bao is like the tipping point for Internet finance in China," Zu said.
Tang Bin, CEO of e-payment service provider YeePay, said that Yu'E Bao is revolutionary since it integrates the two functions of wealth management and payment and is user-centered with an extremely low threshold.
"Most traditional banks are high and mighty with hefty thresholds. Some banks' wealth management products reject customers with less than 50,000 yuan. Yu'E Bao is fine with just one yuan, which illustrates the spirit of the Internet -- being open with a bottom-up approach," Tang said.