Xiaomi joins the Indian financial technology market
Last week, Xiaomi launched a personal loan service in India aimed at young professionals and millennials, as the Chinese smartphone maker looks to use its excellent position in the market for smart devices to get a foothold in India’s fast-growing financial technology sector.
Xiaomi is India’s leading smartphone and smart TV brand, having displaced Samsung from the top spot in 2017, just two years after it arrived in India in 2015. Although smartphones are the core of its business, Xiaomi earns low margins from its affordable devices and relies on services and accessories for profit. India is a hugely important market for the Chinese company, because its home smartphone market sees cutthroat competition, especially from Huawei, and because its expansion in Europe isn’t without challenges.
It’s therefore unsurprising that Xiaomi is looking to tap into its sizeable number of users in India to offer more services by foraying into online lending, bringing Mi Credit to the Indian masses. Mi Credit connects smartphone users with lending companies like Aditya Birla Finance, Money View, EarlySalary, ZestMoney or CreditVidya for personal loans. Customers can avail of personal loans of up to 100,000 rupees (about $1,400). The Mi Credit app comes pre-loaded on all phones equipped with Xiaomi’s MIUI Android-based operating system and can also be downloaded from the Google Play store.
The approval process happens in real time, allowing Mi Credit users to get personal loans quickly. The entire process of verification, pay-out and paying back the loan through e-mandates happens digitally, eliminating the hassle of tedious paperwork. Xiaomi’s main selling point for its new service is that users can get personal loans within five minutes — faster than the process at a bank.
Mi Credit has been in pilot testing for a while and Xiaomi says that it has successfully disbursed more than $5 million worth of loans during this period, with 20% of users taking out the maximum loan value of 100,000 rupees.
Xiaomi isn’t the only company that’s eyeing the Indian financial market. Its rival Samsung launched Samsung Finance+ in October 2019, but it provides financing only for purchases of its Galaxy smartphones. The big Chinese web giants, however, have gone further. Ant Financial, the finance company related to Alibaba, has invested in Paytm, the largest mobile payment platform in India. Tencent has also taken in a minority stake in Policybazaar.com, an Indian online insurance aggregator.
India’s financial technology market is booming, and the opportunities are huge. It’s estimated that 200 million people in the country don’t have a bank account. Xiaomi is making a bold move to tap into this opportunity, and if successful, it could help sustain its dominance in the Indian smartphone market — the largest smartphone market that’s still fast-growing.
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