ICBC hopes to gain an edge over Alibaba by allowing customers to transfer up to 30 million yuan into its product, known as "Everyday Increase."
ICBC has also fought back by limiting its depositors monthly transfers to Alipay to 50,000 yuan per month.
Bocom, China's fifth largest lender, has launched "Quick Benefit Channel," while Ping An Bank has a product called "Ping An Profit."
Bank of Beijing, a mid-sized lender, on Wednesday announced a partnership with smartphone maker Xiaomi Tech on mobile payments and sales of WMPs and insurance products.
Banks are also tweaking WMPs to make them more competitive.
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"We're trying to increase the convenience of our WMPs, like letting people buy them during non-working hours. We're also asking the bank regulator to let us lower the 50,000 yuan minimum investment for some products," said a wealth product manager at a mid-sized bank in Shanghai.
Calls for regulation
UBS estimates that if 10 percent of total bank deposits flow into online products, it could reduce banks' net interest margin by 0.1 percentage points, while lost fee income would amount to 4 percent of estimated 2014 net profit.
The China Securities Regulatory Commission said last week that it is working with other agencies to develop rules for Internet finance. Industry observers say that banks are lobbying for curbs on the proliferation of online products from third-party payment services.
"Regulators are trying to walk a fine line. They don't want to kill innovation that benefits consumers, but they also don't want deposit-taking activity that's completely unregulated," said Yan.
Analysts say that even if banks are able to draw funds into their own money-market products the trend of rising funding costs will continue, as the banks' products would have to match the yields offered by online rivals.
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Indeed, funds invested in Yu'e Bao and similar products eventually end up with banks anyway. Tianhong uses Yu'e Bao funds to invest mainly in interbank deposits and repurchase agreements. So whether banks borrow from Tianhong or raise funds from their own products, the cost is still higher than on ordinary deposits.
"The money stays in the system, but (online products) turn cheap deposits into expensive ones," said May Yan, Asia ex-Japan banks analyst at Barclays Capital in Hong Kong.