Dec 20, 2018 /EqualOcean/ - Yesterday, Du Xiaoman(度小满, used to be Baidu Finance) was granted CNY 20 billion line of credit by Bank of Tianjin(天津银行), in which CNY 10 billion will be used in educational installment and other scenario consumptions.
On October 26, Du Xiaoman was approved CNY 10 billion line of credit from Bank of Nanjing(南京银行). Less than two months, Du Xiaoman was granted another CNY 20 billion line of credit from Bank of Tianjin and formed a strategic alliance with above banks. By far, Du Xiaoman strategically cooperates with Agricultural Bank of China (中国农业银行), CITIC aiBank(百信银行), Bank of Nanjing and Bank of Tianjin.
As being a Top 5 Fintech company in China, Du Xiaoman is a late comer and waiting to grow. As EqualOcean previously stated, Du Xiaoman has a little share in third-party payment comparing to other Top 5 Fintech companies. Baidu Wallet(百度钱包), as a third party payment platform, only had 0.27% market share while Alipay(支付宝, belongs to Ant Financial) and WeChat Pay(微信支付, belongs to Tencent) took 53.76% and 38.95% respectively. The third party payment is reshaping China’s payment, and dated 2018Q1, the total transaction volume through the third-party payment exceeded CNY 40.365 trillion (USD 5.94 trillion), which increased 114.6% than 2017Q1’s transaction volume. As calculated, transaction through Baidu Wallet was CNY 108.98 billion (USD 16.03 billion) in 2018Q1. The great difference in the third-party payment between Top 5 Fintech and Du Xiaoman decides Du Xiaoman’s financial services could not be financed from third-party payments and hence, the cooperation between banks and Du Xiaoman seems that solved Du Xiaoman’s dilemma in providing financial services like Cash Loan, short-term financing and others.
Cooperation may be a win-win strategy for both, especially for strictly-regulated industries like the bank. Though Du Xiaoman does not have a strong customer stickiness like Alipay and Wechat Pay do, Du Xiaoman’s customer base is still considerably large accounting on Baidu’s search engine service. Since regional banks like Bank of Tianjin and Bank of Nanjing have fewer branches outside their bases, Du Xiaoman, as a national fintech company, is capable to stretch their business range to nationwide. Through cooperation, Du Xiaoman can make progress in financial services and regional banks can indirectly span their business to a broader scale.
Beyond, third-party payment players are most non-bank and used in their own apps, while banks are not competitive in apps and thus are unable to culture customer stickiness with their apps. With little customer stickiness, banks are hard to take parts in third-party payment market. Du Xiaoman is an ideal medium for banks to be involved in the third-party payment, which costs less time and resources than cultivating customer payment behaviors by banks themselves, even though Du Xiaoman took only 0.27% market share. The optimistic part is that China’s third-party payment market size is slowing down but still increasing and Du Xiaoman is at an early development status and filled with possibilities.