The China Banking and Insurance Regulatory Commission approved Xiaomi’s application to establish Chongqing Xiaomi Consumer Finance Co., Ltd. This means that Xiaomi has basically obtained a consumer finance license and can continue to deepen its business in the financial field. However, it should be noted that Xiaomi has had many financial security issues before, and the development of Xiaomi’s consumer finance remains to be seen.

Written by Wang Bie Nao

Produced by | Consumer Finance Channel

On January 17, the China Banking and Insurance Regulatory Commission website announced the preparations for the establishment of Chongqing Xiaomi Consumer Finance Co., Ltd. (Part 2) (called "Xiaomi Consumer Finance") approved the approval of Xiaomi Communication Technology Co., Ltd. to prepare to establish Chongqing Xiaomi Consumer Finance Company in Chongqing.

With the successful approval of Xiaomi Consumer Finance and the consumer finance license of Masha Consumer Finance, Chongqing has become the only city after Beijing and Shanghai to have more than two licensed consumer finance companies at the same time.

The China Banking and Insurance Regulatory Commission proposed that Xiaomi should strictly comply with relevant laws and regulations to review shareholder qualifications and handle preparation matters, and complete the preparation work within 6 months from the date of approval.

According to public media reports, Xiaomi Consumer Finance is a joint venture between Xiaomi Corporation and Chongqing Rural Commercial Bank Co., Ltd. (hereinafter referred to as "Chongqing Rural Commercial Bank"), Chongqing Jinshan Holdings (Group) Co., Ltd., and Chongqing University Shun Electric (Group) Co., Ltd. and Chongqing Jinguan Jie Lai Hardware and Electrical and Mechanical Market Co., Ltd. were jointly invested and established by five companies, with a planned registered capital of 1.5 billion yuan.

Chongqing Rural Commercial Bank, one of the owners of Xiaomi Consumer Finance, invested 450 million yuan and holds 30% of the shares. Chongqing Rural Commercial Bank has a long history. It was successfully listed on the A-share market on October 29, 2019. It is the first "A-H share listed rural commercial bank" in the country. At the same time, it also intends to develop consumer finance business. On the basis of existing 1 financial leasing company and 12 rural banks, it also intends to apply for more new licenses to lay out diversified business strategies and enhance the group's profitability.

Xiaomi has stated that the original intention of establishing Xiaomi Consumer Finance is to be based in Chongqing, link online and offline, radiate across the country, aggregate the advantages of shareholders, and facilitate the efficient connection of finance and consumption scenarios. Xiaomi, who was trying to build an ecosystem, met Chongqing Rural Commercial Bank, and they hit it off.

Xiaomi Group has been planning in the financial field for a long time. It has previously tested the consumer finance business by setting up a small loan company. In 2015, Xiaomi Finance was launched. With loans and third-party payments as its core businesses, it gradually obtained multiple financial licenses such as insurance, factoring, and banking, basically realizing a full license layout, and launched Xiaomi Finance APP, Xiaomi Loan APP, and Xiaomi Wallet. APP and other applications.

Even though Xiaomi has shown great ambitions in the financial field, the development of Xiaomi Finance is not smooth. In 2017, Lei Jun made a high-profile announcement that Xiaomi Finance would be one of the important development businesses. However, in 2018, the entire P2P industry was in trouble. Perhaps because of this, Lei Jun remained silent about Xiaomi Finance at the annual meeting that year. However, in April 2019, Xiaomi Finance showed signs of recovery again. Kingsoft Cloud, Xiaomi Finance, and Xinwang Bank signed a strategic cooperation agreement and announced the establishment of a new financial technology ecosystem.

Selling mobile phones and selling its ecosystem, how could Xiaomi be willing to give up this road that is conducive to monetization. Subsequently, on June 5, dozens of financial institutions, including Bank of China, Industrial and Commercial Bank of China, and Postal Savings of China, attended the Xiaomi Financial ABS Investor Conference. At this time, Xiaomi Finance, which has a "brand" attitude, has created another "credit farce".

Some users complained about Xiaomi Finance on platforms such as Jucomplaint and Black Cat Complaint, saying that they "repaid normally and were overdue without receiving any reminder for repayment or collection." According to the contract, the user paid the full amount into the Xiaomi Finance APP on the repayment date, but received an "overdue warning" text message from the fund lender, Minsheng Bank, warning that the repayment was overdue and that the overdue information would be reported. Go to the "Financial Credit Information Basic Database".

According to Xinhua News Agency, Xiaomi Finance played the role of an "information intermediary" in this incident, earning commissions by matching and "matching" bank funds with user needs. The contract stipulates that borrowers must first repay through the Xiaomi Finance APP, and then Xiaomi Finance will transfer the repayment to the bank.

According to Xiaomi Finance’s explanation, the problem with borrowing users this time was due to an abnormality in the docking system between Xiaomi Finance and Minsheng Bank for some reason, which resulted in the repayment information of some users not being updated in time. There was a malfunction in the system. When the bank discovered batches of overdue borrowers without checking the repayment ability of the borrowers, they claimed to report them to the credit report, which caused trouble for a group of users. No matter whether it is sending 100 yuan interest-free coupons to appease users or announcing that credit reporting will be restored within 30 working days, they cannot fix the security issues exposed by this "credit reporting farce."

In the financial field, the most important thing is security. However, after the "credit farce", there were cases of criminals pretending to be Xiaomi Financial customer service fraud cases. Because these scammers can tell the victim's personal information and the name of the school where they graduated, including the time and loan history of the loan on the Xiaomi Finance APP, making the victim believe it is true. This also exposes the possible loopholes in Xiaomi Finance's management of users' personal information.

Xiaomi has been exploring the financial industry for many years, but the dark history of the past will not become a thing of the past with a financial license. Xiaomi should have more respect for consumer finance and improve its ability to serve users. Ability, this is the foundation for going further and better in the field of consumer finance.

Hu Wei, assistant to the chairman of Xiaomi Finance and general manager of the Financial Institutions Department, once publicly stated that "Xiaomi Finance's Internet small loan sector has cumulatively issued more than 150 billion consumer loans, and the balance of loans on hand has exceeded 30 billion; the supply chain finance sector has relied on Xiaomi’s deep industrial chain serves the Xiaomi ecosystem. ”

Xiaomi’s financial achievements are currently mainly focused on Internet micro-loans based on general users and enterprise-based supply chain finance. Xiaomi users and Xiaomi's industry chain ecology is its own advantage that Xiaomi started with mobile phones, but it has not yet deeply cultivated it. For example, in terms of payment, insurance, etc., Xiaomi cannot make parallel comparisons with well-known companies in the industry. Obtaining a consumer finance license this time allows Xiaomi to delve deeper into the financial field, and also provides a new dimension for the construction of Xiaomi's ecosystem.