Didi Chuxing ventures into fintech space
COMPANIES are increasingly seeking to diversify their businesses, and bundling all services into a nifty app seems to be the name of the game.
Chinese ride-hailing outfit, Didi Chuxing recently rolled out a new offering — financial services — via its smartphone app in a bid to boost profitability while building a connected ecosystem.
Among the new products that were introduced include credit and lending, wealth management, auto-financing as well as mutual protection and crowdfunding services for critical illnesses.
According to a news report, the largest ride-hailing service provider in China trialed the new services in ten cities that include Chongqing, Zhengzhou, and Foshan before the nation-wide launch.
Didi which boasts of about 550 million users all across the Chinese mainland set up its financial arm at the beginning of 2018.
The company’s spokesperson said that Didi’s venture into the financial services is part of a broader push to establish a more connected ecosystem, that provides competitive and reliable services to users.
China boasts the world’s largest online population and the biggest smartphone market, and Didi’s strategy to tap into the vast digital yet financially underserved community in China is consistent with the country’s other internet firm.
The move also comes amid heavier regulatory pressure on Didi’s core business of ride-hailing services that captured 90 percent of all e-hailing trips in China in 2017.
Effective this year, the Chinese government increased the permit requirement for drivers on any ride-hailing platform.
Meanwhile, Sun Naiyue, an analyst from the consulting firm Analysys International said that the main focus for Didi at the moment is to increase profitability as the company failed to post any profit since its inception six years ago.
“Didi has advantages in traffic and risk analyses because it possesses massive data on drivers as well users, who are affluent and represent a quality segment of consumers for new insurance and wealth management products,” Naiyue was quoted as saying.
As developing the financial services business is going to be the company’s development priorities in 2019, Sun opined that it would seek partnership with traditional online financial companies, operating at a low cost with high-profit margin.
In the first half of last year alone, Didi posted a loss of US$581 million. It is expected to spend more than US$20 million for the expansion of its workforce to bolster its safety standards, as well as to enhance customer service, according to company CEO Cheng Wei’s letter to employees last September.