Fintech File photo: VCG

As the financial arms of Chinese technology giants including Ant Group, JD Digits and Didi Financial Services reportedly stopped offering deposit products, even for existing clients, domestic private banks have started to transfer these products to their own platforms.

Ant Group's Alipay, JD Digits and Didi Financial Services have closed the channels through which existing users could increase deposits with banks, including fixed-term deposits, a news site associated with the Securities Times reported on Wednesday.

Alipay confirmed to the Global Times on the same day that existing users were no longer allowed to buy deposit products, with balances to be returned to users as they matured. The other two platforms didn't reply by press time.

That means permanent and stricter rectification in the wake of a notice issued by the China Banking and Insurance Regulatory Commission on January 15 to strengthen regulation of internet-based personal deposits offered by commercial banks, banning commercial banks from selling deposit or time-demand optional deposit products via third-party online platforms, analysts said.

This week, several private banks including Xin'an Bank, Blue Ocean Bank and Wuxi Xishang Bank announced that deposit businesses formerly carried out on third-party internet platforms have been transferred to these banks' own platforms, but individuals' personal deposits on internet platforms are not affected.

Experts said the move will help maintain market order, contain systemic financial risks, and protect the legitimate rights and interests of consumers.

"When commercial banks, especially regional banks, register, they are required to conduct businesses within certain areas. In this regard, attracting deposits via third-party internet platforms may risk violating or evading regulations," Dong Dengxin, director of the Financial Securities Institute at Wuhan University of Science and Technology, told the Global Times on Wednesday.

He said that it also increases commercial banks' costs by giving commission fees to third-party internet platforms, which increases the cost of lending for enterprises and individuals, and may disrupt the interest rate pricing mechanism.

"We need to improve the effectiveness and efficiency of supervision to seek a better and more transparent model of cooperation between internet platforms and commercial banks," he said, noting that fintech enjoys the advantage of closely linking with the younger generation while being convenient for small-scale, grass-roots money management.

Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies of Renmin University of China, said that small commercial banks should focus on deepening services for local enterprises and consumers, rather than expanding nationwide, to avoid financial risks.