Xiaomi-Backed Online Bank Opening In China Soon

A Xiaomi Inc.-backed Chinese online bank is gearing up to launch soon following on the heels of establishing the bank.

According to a report in Reuters, New Hope Group Ltd., one of the bank’s investors, said Tuesday (Dec. 27) shareholders and regulators signed off on the name Sichuan XW Bank. “This is an important step in the process, marking (the bank’s) the official establishment,” said the statement, citing an unnamed person in charge at the new bank, reported Reuters. “(The bank) will be officially open to users in the near future.”

Sichuan XW joins a growing list of Chinese technology companies that are launching online banks to get access to small enterprises and consumers which they argue are underserved in the current system. WeBank, which has backing from China’s Tencent Holdings, is the first online bank to launch in China — with MYBank, which is a venture controlled by Alibaba Group’s Ant Financial Services Group, following shortly thereafter.

The move on the part of Xiaomi is to diversify beyond smartphones that are becoming increasingly saturated. With sales of smartphones declining, investors have expressed concerns about Xiaomi’s future growth. Xiaomi has recently been focusing on smart home devices as a way to boost sales.

The move on the part of Chinese technology companies to get into banking comes at a time when mobile payments are taking off in China, making online banks the perfect extension of mobile payments.  A recent survey by KPMG found consumers in China are embracing the push toward mobile payments at a much faster rate than consumers in the U.S. and U.K. KPMG’s annual China’s Connected Consumers Survey found that about 90 percent of 2,560 respondents made at least one online purchase using a smartphone compared to 74 percent of U.S. consumers and 74.6 percent of U.K. consumers.