March 17, 2015 – Chinese smartphone maker Xiaomi has started providing financial services, though the app is still in its testing phase.
A report has learnt that Xiaomi has added a function that allows users to buy money market fund offered by mutual fund manager Efund. A company source has confirmed that this is part of the latest update to its MIUI operating system. The services compete with similar products offered by Alibaba and Tencent.
“The product is still in beta stage and more details will be released accordingly,” a Xiaomi spokesperson said.
As of today, the fund has a seven-day annualized yield of 6.44 per cent – better than the 4.52 per cent offered by Alibaba’s Yu’ebao. China’s one-year benchmark deposit rate is 2.5 per cent.
Analysts said that the service is a natural extension of Xiaomi’s business model.
“So far Xiaomi has been selling its devices at near cost and instead pushed massive volumes and tried to monetize its app store in China. Wealth management and lending is simply another revenue source,” said Thomas Zink, a research manager at IDC Asia Pacific.
Xiaomi is also looking to build its own finance unit. In a jobs ad posted on Wechat by its MIUI unit, the firm said it is hiring credit policy specialists, credit management specialists and financial product managers. According to the ad, Xiaomi’s financial services will focus on providing consumer loans as well as wealth management products.
Zink cautions it will not be an easy ride for Xiaomi: “Generally, I don’t believe Xioami has a considerable edge over the competition. But looking at the growth rate of those funds, particularly over the last few years, there is still market potential. Nonetheless, growth has already begun to slow after yields came down. Also the Chinese regulator has been tightening its grip on the sector.”
Xiaomi said its vast user base, which it pegs at 100 million, will enable it to provide products at lower cost and that offer better user experience.