China is the scene of a growing rivalry.

In one corner is billionaire Jack Ma's Alibaba Group Holding Ltd, which holds the title as the country's biggest online retailer. And in the other are China's biggest banks.

This week, Alibaba launched MYbank, an online lender that will tap into Chinese savers' record $7.8 trillion of deposits and a banking revenue stream that is forecast to double by 2020.

Banks have been striking back by pushing into the business Ma pioneered－online malls. The moves are blurring the lines between banking and e-commerce as the government continues encouraging competition in the finance industry.

"China's banks have woken up and realized that the challenge from Alibaba's entry into banking is for real," said David He, a Hong Kong-based partner and managing director at Boston Consulting Group Inc. "For them, doing e-commerce is a defense as well as a counterattack."

Industrial & Commercial Bank of China Ltd, which as the world's most profitable company dwarfs Alibaba's net income by more than 10 times, set up a platform allowing retailers to sell the bank's customers wine, shampoo, appliances and more. China Construction Bank Corp, Agricultural Bank of China Ltd and others are also getting into the action.

ICBC's site, called Easy to Buy, is forecasting sales of 300 billion yuan ($48 billion) this year, after making 130 billion yuan since January. By comparison at Alibaba, its Tmall logged 763 billion yuan in sales last year. JD.com Inc was second best at 260 billion yuan.

The battle will play out entirely online: The banks are not planning any warehousing of inventory, leaving that to the merchants. MYbank and Tencent Holdings Ltd's online WeBank, which was launched in December, plan no physical branches.

WeBank started its consumer lending in May, where borrowers without collateral can get as much as 200,000 yuan at an annualized rate of 18 percent.

MYbank began online operations on Thursday as part of Alibaba's finance arm, Zhejiang Ant Small & Micro Financial Services Group Co.

It is one of a wave of new private banks being licensed by the government to target small loans and aims to use facial-recognition software to let users set up accounts.

Alibaba already has expanded into e-finance, with its Alipay payments system and Yu'ebao money-market fund.

"The potential of Web-based services, be it financial or retail, is huge in China, so it's not too late to join the game," said Wang Weidong, an analyst at Internet consultancy iResearch Consulting Group in Beijing.