(Chinese Version)

Editor’s Note:

After Tencent and Alibaba carried out WeBank and MY Bank, respectively, Xiaomi Technology followed suit and is set to open an online bank soon.

On December 27th, 2015, it was reported that Xiaomi had teamed up with New Hope Group and Hongqi Chain and established a private online bank. Lei Jun, Xiaomi Technology’s founder, revealed on his Sina Weibo page that the bank was called “XW Bank” (XW is short for Xingwang, which means new internet in Chinese. Together, XW Bank means “a new online bank”).

As the first private bank in Sichuan province and the first online bank in Middle and Western China, XW Bank is dedicated to providing customized financial service for general consumers and small and micro-sized enterprises.

Xiaomi established the private online bank in partnership with five other Sichuan-based enterprises, including New Hope Group and Redflag Chain etc. through its full-asset subsidiary Sichuan Yinmi Technology. New Hope, Xiaomi and Redflag Chain accounted for 30 per cent, 29.5 per cent and 15 per cent stake in the new bank, respectively, whose registered asset reached 3 billion RMB (around $432 million).

As a matter of fact, New Hope, Yinmi (Xiaomi’s full-asset subsidiary) and Redflag Chain’s application was approved by CSRC as early as in June last year, so they have been preparing for the official launch for six months.

More specifically, the new bank will target mainly young people as well as small and micro-sized enterprises and provide differentiated and smart financial products and services, in an attempt to perfect the financial system.

As for Xiaomi, it has already launched several online financial products that could work in conjunction with XW Bank.

As early as in February 2014, Xiaomi has already received the mobile payment license. In September of the same year, Xiaomi invested in JIMU, an online P2P lending platform. In May 2015, Xiaomi launched its own online lending product “Xiaomi Call Loan Assistant” and entered the finance market.

Later on, Xiaomi carried out “Bond Assistant” but failed to win over more users since the two products were very much similar in their positioning.

In September 2015, Xiaomi launched its first credit loan product “Xiaomi Loan” and allowed users to apply for an unsecured loan of as much as 1 million RMB (around $144,000).

However, Xiaomi started as a hardware maker, and has already gained a large user base. According to Xiaomi’ official data, it has already gained over 100 million registered users.

In this case, it’s natural for Xiaomi to get involved in the online finance business. After all, Xiaomi still played little role in bringing convenience to users in their everyday lives via financial products.

There’s no need to mention how widespread WeChat Wallet and Alipay have become in ordinary Chinese’s everyday life, since lots of Chinese have already formed the habit of using these two mobile payment tools. Generally speaking, thanks to mobile payment tools such as Alipay, WeChat Wallet and Apple Pay, Chinese consumers can already go shopping in major shopping malls without bringing any cash in first-tier cities.

Based on large user base on its e-commerce platform, JD managed to get many users into the habit of purchasing goods via JD Lending.

While Tencent and Alibaba both chose to establish private banks, Baidu chose to cooperate with traditional banks such as CITIC Bank and established a direct bank, similar to FINTECH to some degree.

For sure, XW Bank will become a major step in Xiaomi’s "adventure" in the online finance market. Now that Xiaomi is not only a hardware and software developer, but also has become the biggest shareholder of a private bank, its development will certainly speed up in the finance market.

As more and more financial products emerge, it will only be harder and harder to win Chinese users’ confidence. In this sense, it might be a rocky road ahead for Xiaomi.

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Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.