Xiaomi Soon Will Launch a Consumer Lending Business in India Amid Huge Privacy Concerns

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by Janis Rijnieks · 3 min read
Xiaomi Soon Will Launch a Consumer Lending Business in India Amid Huge Privacy Concerns
Photo: Open Grid Scheduler/Grid Engine / Flickr

It has come to light that the world’s 4th largest smartphone manufacturer, Xiaomi, wants to enter the consumer lending business in the crowded Indian market in the coming weeks, recent news report.

China-based smartphone manufacturer Xiaomi has revealed that they will soon enter the consumer lending business in India in the coming weeks. Xiaomi is the 4th largest smartphone manufacturer in the world, and it’s primary business model relies on low-margin hardware sales. The company recently has reported quite disappointing second-quarter earnings and their share price is trading a little over half of their initial IPO price from 2018. 

While Xiaomi sits in the first position in the Indian smartphone market, the company thinks it can also enter the much crowded financial services sector.

Xiaomi’s first entered the fin-tech market by launching a Mi Pay service back in March. It is a payment app similar to Apple Pay or Samsung Pay.

“They seem to be following the market leaders, Apple and Google, where a smartphone eventually will become more than a phone and more of a financial play,” said a source familiar with the matter.

And now they are announcing to launch Mi Credit service in India, offering loans up to 100,000 rupees which is somewhere around $1,451. The interest rates are starting from 1.8%. At the moment, the service is operating in beta phase, but Xiaomi’s spokesman refused to comment on any specific details.

But by doing this, many experts have raised concerns about the company’s privacy measures and the data it’s collecting from its users.

Privacy Issues

It is said that Xiaomi uses data from phones to create a customer profile for credits and loans. The profile is based on a customers’ identity, life stage, lifestyle, social relationships, and brand loyalty.

But that’s not the issue. The issue starts when the customers, who apply for loans, have to sign broad documents which consents that the user agrees to share their personal data with Xiaomi. That includes everything from “professional and educational backgrounds” to “temporary messages history”.

Also, the “use of certain apps and websites”. If that’s not it, the agreement also includes a disclaimer which says that Xiaomi may share “personal information from time to time to Xiaomi affiliated companies” or any kind of affiliated third-parties.

These farce user privacy measures have already scared one of the potential partners in Indonesia which is the second largest over seas market for Xiaomi. While the bank stays unidentified, a senior executive at the bank explained that these privacy concerns was a part of the decision not to do business with Xiaomi.

He described them as an invasive data collection. While many experts in the field are worried about Xiaomi user privacy, it doesn’t seem to bother the actual users. One of the reasons could be the relatively low prices for the devices, compared to other manufacturers.

“Banks usually ask for a lot of documents before giving out a loan. If Xiaomi lends me money quickly, and without too many documents, I won’t mind sharing my data with the company,” said a Xiaomi phone owner in Aurangabad in Western India.

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