Xiaomi has the expected trimmings for a smartphone and device-maker: A retail channel for its products and internet services for its 300 million users. It's also becoming a bank.

«We are looking at the business we are doing in the non-financial sectors and how we can apply the technology, apply the artificial intelligence to power our financial business,» Hong Feng, chairman, and CEO of Xiaomi Finance and co-founder of Xiaomi, said at the Singapore Fintech Festival 2019 on Monday.

In May, the Hong Kong Monetary Authority issued Xiaomi an online-only banking license. The smart-device maker has also begun «beta» consumer lending services in India, according to a «Reuters» report. In China, Xiaomi's lending business has an $8 billion loan book as of mid-2018, the «Reuters» report said, citing documents it had seen.

Five Hours Per Day

In August, Xiaomi reported 792 million yuan ($112.98 million or S$153.68 million) in revenue from the fintech business in the second quarter, up 62.7 percent on-year.

«We have about 300 million active users. They are using our devices five hours per day,» Hong said. «We are collecting a lot of data about our users’ behavior, our users’ financial situation, and their different situations. When we’ve got the consent of the users, we are having those data analyzed and [they] provide a very accurate credit profile.»

Hong noted that wasn't particularly innovative any longer, with other providers on the mainland and elsewhere taking the same tack.

Unique Features

But he said Xiaomi is able to offer some unique features, particularly with more accurate fraud detection.

«It's relatively easy to pretend to be a good user if you are only facing the financial institutions for a very short period of time. But our users are using our phone 24-7 for an extended period of time so it's much harder to defraud,» Hong said.

He added the company was also able to leverage its smart devices for payment services, such as using the smartphone or smartwatch to pay for transportation passes, a service already offered in 200 Chinese cities' mass transportation systems.

Experience as a Manufacturer

Xiaomi isn't only looking at consumer lending. It's leveraging its experience as a manufacturer – of a range of products from smart devices to smart washers, dryers and refrigerators – to arrange to finance for other manufacturers.

«By doing all this business, we know how to evaluate a manufacturing enterprise inside out. We know exactly which factor to look into and how to look at their operation, management, and technology side,» Hong said.

«For the financial institutions, it's difficult to read the real or crisis situation for the manufacturing enterprises because in each industry is different on how they operate,» he said. «Usually, the financial institutions just read your balance sheet, with your revenue and those financial numbers and those are just after the fact of operations.»

Tracking the Product

Hong said his company was particularly interested in helping large OEMs onboard smaller clients, which can be a difficult process if the larger company isn't sure how long the smaller company might stay in business.

But Xiaomi has «end-to-end» data – tracking the product through its retail stores and internet services, Hong said.

«We know if they have a good quality product, if they are selling well or not well and also we know if this product has been frequently and constantly used by the end consumers. And all those end-to-end data provide very useful risk control methodologies for our financial institution partners,» he said.

Product Lifestyle

Hong pointed to a smart doorbell product maker his company founded two years ago, which Xiaomi was able to direct throughout the product lifecycle, from tapping the most appropriate OEM manufacturer, to watching the balance sheet in real-time, to making sure their e-commerce partners were paying the company correctly. Xiaomi has more than 20 companies working with at a similar stage, he said.

Xiaomi is estimated to be the fourth-largest smartphone maker as of early 2019, behind Samsung, Apple, and Huawei, according to data from Trendforce.

 finews.asia is an official media partner of the Singapore Fintech Festival 2019. This article is published in collaboration with «Shenton Wire».