Beijing claims it will soon establish a mechanism for Internet banking that ensures fair competition against established banks, especially against the Big Four state-owned banks that have been campaigning against Internet banking.

The move towards Internet banking will be led by the China Banking Regulatory Commission (CBRC), the banking sector regulator, and the People's Bank of China (PBOC), the central bank.

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CBRC vice chairman Yan Qingmin said the mechanism to be established with the assistance of PBOC must be supervised with proper flexibility, related coordination and constant renovation. He noted that the end goal of the mechanism will be to design a platform to allow Internet banking to compete fairly against regular banking businesses.

Chen Zhiwu, a professor from Yale University's business school, however, said that the importance of Internet banking has been over exaggerated in China but did admit to some benefits from this new form of banking.

"It is a good thing that we have more different businesses in this industry. It is also a good thing to lift more bans against banking," Chen said.

Xie Ping, vice chairman for China Investment Corporation, China's sovereign wealth fund, said Internet banking will help decrease the costs for banks while increasing the transparency of each transaction.

This point of view, however, hasn't gone over well with China's Big Four banks: the Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China and China Construction Bank.

Alipay, the PayPal-like transaction unit of China's Alibaba Group, the world's largest online bazaar, is widely perceived as a threat to the Big Four and China's powerful banking sector. Alipay is now the world's largest mobile payments platform, processing US$150 billion in mobile transactions in 2013.

Last month, ICBC restricted trade with Alipay to one branch, which means ICBC (the world's largest bank) will no longer compete to offer high yields on Alipay's deposits. This move came weeks after PBOC blocked plans from Alibaba and competitor Tencent Holdings Ltd to offer virtual credit cards.