Xiaomi banks on phone data for finance play in India

JAKARTA/MUMBAI: China’s Xiaomi (1810.HK) is poised to launch a consumer lending business in India in the coming weeks, making an ambitious tilt at the booming financial services market where data privacy concerns and fierce competition present formidable challenges.

The stakes are high for the world’s fourth largest mobile phone vendor, whose business model relies on low-margin hardware sales with services as a key long-term profit center. The company reported disappointing second-quarter earnings on Tuesday and its shares are trading at slightly over half their 2018 IPO price

Xiaomi is betting it can leverage its number one position in India’s smartphone market to tap into the country’s lucrative but crowded financial services sector. Yet, the mounting public concern over data privacy, which has forced tech giants like Google (GOOGL.O) and Facebook (FB.O) to change the way they do business, could make it a bumpy road for the Chinese firm.

Indeed, Xiaomi’s approach to data collection and privacy has raised eyebrows among some of those familiar with its international expansion plans. The company remains a small player in financial services in its home country, according to documents.

Xiaomi faces ferocious competition across Asia from banks, global tech giants, fintech startups and others who are scrambling for position in the region’s booming digital economy. In Indonesia, another key market, Xiaomi’s financial unit had to shut down in late 2018 due to a disagreement with regulators over licensing.

A source familiar with Xiaomi’s India efforts said the company was doing well there with its first offering, a payment app called Mi Pay that launched in March.