Xiaomi, RealMe, OnePlus and now OPPO. Why are smartphone brands entering India’s fintech domain?
As India prepares for a cashless decade, yet another mobile phone company is likely to foray into fintech. OPPO is reportedly gearing to launch its own financial service, OPPO Kash, in India by June 2020. This app, integrated into its phones, will extend one-click micro loans with flexible repayment options.
The Chinese smartphone maker follows in the footsteps of its peers, Xiaomi and Realme, who launched their own digital payments solutions last year. Xiaomi has partnered with ICICI Bank to provide its customers personal loans from INR 1,000 to INR 1 lakh through Mi Credit. Its other financial product, the UPI-based Mi Pay application, is integrated within the brand’s MIUI interface across SMS, Contacts, Scanner, App Vault, and Settings. Xiaomi plans to fortify its financial services portfolio with products like insurance and supply chain financing.
In December 2019, Realme India introduced its payments service, Realme Paysa. During the launch, the company’s CEO, Madhav Sheth, said, “We aim to become one of the top five new entrants in financial services within three years and are evaluating the launch of mobile phone financing and payments in 2020.” Varun Sridhar, Lead, realme PaySa added that the company intends to acquire 2.5 crore customers within two years by making mainstream financial products accessible to Indian consumers.
OnePlus is also waiting in the wings to foray into the digital payments space with an app this year. Vikas Agarwal, general manager, India, OnePlus stated that this would be a big focus in 2020, especially as the brand introduces 5G-enabled phones in the country and builds a holistic business ecosystem to complement its premium handset customer base.
A key reason why mobile phone brands are getting into financial services is because of growing adoption of digital payments, especially UPI-based ones. A holistic fintech services portfolio helps in increasing customer loyalty, which is fickle in this domain.
According to Counterpoint, India’s smartphone user base will cross 700 million by 2020, and competition will be rife. Brands are, therefore, concentrating on providing micro loans to retain existing customers or attract new ones.
Shrinivas Gaikwad, financial principal, GrayLead Consultancy calls this a natural business progression since majority of their clientele are digital natives who access their fiscal needs on mobility platforms. “These tech-first brands invest heavily into technology and launch innovative fintech solutions to meet their target customers’ needs,” he added. “By embedding their solutions on their platforms, they can increase customer stickiness to their brand.”Bhavesh Rathod from DigiCypher Consultancy noted that as mobile phones become increasingly commoditized with shrinking profit margins, addition of financial services will ensure recurring revenues for brands. “By diversifying into the fiscal business, they need not rely solely on handset sales for revenues,” he opined.