Chinese investment company Tencent opened WeBank  for business on Monday, creating China's first private, and online bank.

A ceremony for the launch of Internet-based WeBank was attended by China's Premier Li Keqiang. It is the first bank in China that is not 100% controlled by the government.

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Li was the first to approve a loan via WeBank, loaning a truck driver 35,000 yuan ($5,624).

"We will lower costs for and deliver practical benefits to small clients, while forcing traditional financial institutions to accelerate reforms," Li said at an opening ceremony in Shenzhen, according to China state news agency Xinhua.

"It's one small step for WeBank, one giant step for financial reform," he added, paraphrasing U.S. astronaut Neil Armstrong's famous quote.

Webank is also the first bank in China without a physical location, as customers conduct all of their banking online, including making deposits, transferring funds and securing loans.

The Financial Times reports that Tencent, and China-based ecommerce giant Alibaba, plan to use troves of user information to evaluate credit risk of small borrowers. Analysts expect most loans will be less than 1 million yuan ($161,000).

The FT added that WeBank will face a significant challenge attracting deposits. As an online-only business, WeBank will have no physical branches, which is the main way in which traditional banks take in funds.

On the other hand, both Alibaba and Tencent have shown in the past that they can draw in funds via money market type funds, which are sold online and through mobile apps. Both companies already have in place mobile payment services that allows users to store funds in their accounts.

According to the FT, China's banking regulator recently eased enforcement on the maximum 75 percent loan-to-deposit ratio, which allowed placements by non-bank financial institutions to count as deposits under the calculation. That will lessen the burden of compliance for banks with small retail deposit bases.

TagsTencent Launches China's First Private Bank, Tencent launches Webank, Webank Premier Li Keqiang, China's first private bank, China’s first online bank