Analysts expect Xiaomi Corp. to expand into Internet finance upon learning that the company is testing a mobile app that allows users to buy money market funds.
James Yan, an analyst at International Data Corp., said that adding the app called Xiaomi Wallet to its offering is a natural move for the company for its more than 100 million users.
"It is important to boost user loyalty by offering more one-stop services," said Yan.
Wang Weidong, an analyst with Internet consultancy iResearch Group, said that Xiaomi Corp. has every reason to expand into the sector due to its large user base.
"It would be easy for the company to launch any new services because it has already got the distribution channel," Wang noted.
Xiaomi Corp.'s new app, Xiaomi Wallet, would allow users to buy money market funds offering higher interest than typical bank saving accounts.
According Lin Bin, co-founder and president of Xiaomi Corp., many financial institutions have teamed up with them for the test.
Despite the huge potential, Lin said that Xiaomi Corp. has no desire to get into the banking business, but merely wants to offer a new service to its customers.
Industry sources revealed that Xiaomi is busy recruiting a team of specialists for expansion into the finance and credit management sector.
It has already filed an application for a third-party payment license to compete primarily against Alibaba's Alipay, the largest mobile payment tool in the sector.
Xiaomi Wallet's function is similar to the online wealth management service of Alibaba called Yu'ebao.