Online financing platforms have flourished in China in recent years, posing challenges to conventional banking. The most notable model is run by E-commerce giant Alibaba.

The group runs a financing platform that lends to its traders with satisfactory credit records. Our reporter Xie Sisi speaks to industry players at the 12th China Internet Conference to find out more about this exciting development.

"P to P lending" is growing more popular in China.

Basically it's the practice of lending money to unrelated individuals via the internet. It saves you the effort of going through a traditional lender like a bank. The lending takes place online on peer-to-peer lending websites, which use various lending platforms and credit checking tools.

Peter Jiang from bFuture Information Technology, runs a cloud computing company closely related to real-life retail.

"This is not a new concept, but the Internet is a new channel. Online financial businesses are using the new channel to run mature businesses. Due to the high efficiency of the internet, this new form of business will lure in more customers. It has great potential to expand." Peter Jiang said.

Moreover, Yu'ebao, China's first fund investment platform for online shoppers, came online under Alibaba on June 13. Its investment value hit 6 billion yuan within half a month.

But Peter warns that there are high risks behind Internet financing.

"The country hasn't set any legal regulations towards the online financial business. Each internet company has their own way to operate and as a consumer you never know who's on the other side of running the deal, so when you give your money to this anonymous company - doubts will arise." Peter Jiang said.

Chinese consumers seem to be interested in taking "new" risks...since online investments will not only save time, but also enable them to perform small-asset investments between 10 and 20 thousand yuan?, that could never be realised in traditional banks.

"I'd love to try to use online tools to buy funds as I think it's so much more convenient. The online financial business is relatively new to me. However I've been a loyal customer by using Alipay, which is like Paypal, to make online transactions in China. It has worked fine for me so far." Consumer said.

"Managing your money in a Cyber Bank is the latest option for Chinese consumers. Analysts say online financial businesses could help these Internet companies to diversify their daily services for consumers and would impose challenges to the traditional financial sectors. Although it's more risky than deposits, considering the rate of return and the liquidity, many think the risk is acceptable."

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