HONG KONG (CNNMoney)

Yuan Ye has just sunk his $17,000 in life savings into an unusual investment: Yu’ebao, a fund run by Chinese e-commerce heavyweight Alibaba.

Yuan, the owner of a popular live music bar in the heart of Beijing, is not alone.

In just eight months, Yu’ebao has attracted more than 60 million investors and 400 billion yuan ($65 billion), sucking money out of China’s powerful state-owned banks.

The popularity of the Alibaba fund — along with similar products offered by tech firms Baidu and Tencent — has caught the attention of officials, who worry that depositors will be tempted to abandon traditional banks by the higher returns on offer.

Yuan was turned on to Yu’ebao by colleagues and friends from his band. They told him the service was easy to use, and offered high interest rates. Deposits in traditional Chinese banks are limited to an annual return of 0.35%, while Yu’ebao pays around 5%.

“I heard that; I said ‘Wow!’ ” Yuan said. “My friends said they had already put some money in … so I started to try. After I tried it, you just cannot stop.”

Related: China’s virtual landscape

Internet banking has been driven by a lack of investment products available to average Chinese. Overseas investments are heavily restricted, and China’s equity and corporate bond markets are relatively undeveloped.

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