Global research consultancy firm TNS said Alibaba, through its Yu'ebao fund, now dominates China's Internet finance market, closely followed by Chinese Internet giant Tencent.

The TNS survey, which polled 1,000 respondents, said 840 people who answered the survey claimed to have bought Internet financial products from either Yu'ebao or Licaitong, Tencent's online fund.

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However, Alibaba's online money market fund took up a lion's share of the market as 34 percent of the respondents said they bought only from Yu'ebao. Another 47 percent said that while they bought both funds, they invested more in Yu'ebao.

Internet finance has become very popular in China because it offers much higher returns compared to what traditional banks offer. For instance, banks offer 3.3 percent maximum interest for one-year deposits while Yu'ebao offers a seven-day annualized interest of around 6 percent.

Experts also claimed that Internet finance products are getting very popular among Chinese people because these products are easy to buy and sell.

Another survey conducted by the China Youth Daily showed that 85 percent of the 10,233 respondents said they have invested in Internet wealth management products.

Around 65 percent of the respondents also said they will be investing a part of their cash savings to Internet finance products, although the survey did not ask the respondents on what online fund products they were keen on investing.

A puzzling fact, however, emerged in the survey as 55 percent of the respondents said they don't have enough knowledge and information about the way Internet finance investment works.

Another 38 percent of the respondents said they did not know that Internet finance products also have risks.

The survey also showed the respondents want fund handlers to ensure security of their investments while a portion of the respondents expressed hope that the popularity of Internet finance will trigger reforms in traditional banks.