China Bankers Smash `Golden Bowls' to Join Online Startups

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  • Pay gains can be as much as 30 percent, plus stock options
  • Internet lenders seen hiring 400,000 more people by 2019

After enduring a two-year pay freeze at Bank of Communications Co. and seeing his eight-year career as a credit-card risk manager in Shanghai stall, Zhu Jun headed for the exit. Like thousands of young Chinese, he quit his banking job to join a hot, new industry: Internet finance.

"I enjoy the fast pace here,” said Zhu, 31, who has done so much better at Omni Prime, a web startup that offers consumer credit to low-income workers, that his previously disapproving wife was able to quit her banking job and become a stay-at-home mom. "It was a very risky move, but I’m glad I made it."

Career advancement, prestige, the excitement of a startup -- and the opportunity to earn 20 percent to 30 percent more pay, plus stock options -- are luring Chinese professionals bored with banking and its limited opportunities. The exodus, an echo of moves in developed markets, comes as government-backed, brick-and-mortar lenders are struggling with zero profit growth and surging bad loans.

"People used to think that banking jobs are a ‘golden bowl’ -- it’s unbreakable, cushy and pays nicely," said Bai Rui, a Beijing-based partner at PXC Consulting, a human resources adviser. "Not anymore, because the pressure is rising and pay is diminishing." 

Surging Pay

Average pay at the online platforms that connect lenders and borrowers surged 16 percent in the first half from a year earlier, outstripping a 7.3 percent gain at banks, according to PXC. Internet finance firms’ median pay for their heads of risk management, marketing and operations is at least 1 million yuan ($157,000) annually, about double that of division heads at regional branches of major banks. That doesn’t include generous stock options.

When, an online lender in Beijing, advertised last month for a human resources director, it offered 10 million yuan of stock options, 16 months’ salary for the first year of employment -- and a 500,000-yuan cash reward for the person making the referral.

By comparison, the most-senior managers at the five largest banks, including chairmen, presidents and vice presidents, had their total compensation for this year cut to no more than about 600,000 yuan, people with knowledge of the matter said in March, from a maximum of almost 2 million yuan in 2014. That may send a chilling effect down the line.

Venture-capital firms including SoftBank Corp. and Tiger Global Management LLC have invested hundreds of millions of dollars in China’s Internet lenders over the past two years, drawn by the promise of financial deregulation aimed at giving individuals and businesses a wider array of borrowing options.

500,000 Workers

The peer-to-peer industry may need 500,000 employees by 2019, five times last year’s 100,000 people, Zhongguancun Internet Finance Institute estimated. Shanghai-based, started in 2012 by Soul Htite, who was a co-founder of LendingClub Corp. in the U.S., plans to more than double its workforce to 4,200 within 18 months.

Among high-profile Chinese bankers leaving for online rivals is Wang Yongli, a former executive vice president of Bank of China Ltd. Wang joined Le Holdings (Beijing) Co., which controls LeTV businesses spanning smartphones and a sports website, to head its Internet finance business, Caixin magazine reported last month. The firm’s high-profile hires also include former Bank of America Corp. dealmaker Winston Cheng. Earlier, Bank of Hangzhou Co.’s former President Yu Shengfa joined Alibaba Group Holding Ltd.’s banking affiliate MYbank.

"There’s a completely different vibe at Internet finance startups," said PXC’s Bai, citing dynamism and meritocracy over seniority and nepotism.

Because of the promise of stock options, Chen Jinyong, a former product manager at New China Life Insurance Co., took a 30 percent pay cut to join Hangzhou-based, a firm that offered leverage financing for small stock investors.

The firm has had to revamp its business model after the nation’s stock turmoil led to a clampdown on peer-to-peer lending for share purchases and the government issued rules regulating online finance.

Still, such turbulence hasn’t damped the 27-year-old’s enthusiasm.

"When I was at New China Life, I clocked in at 9:00 and left sharp at 5:00, and did what I was told to," said Chen. "But here there are many people like me who are voluntarily working extra-long hours because work becomes fun and meaningful."