On-demand apps branch out into lending and health insurance

Chinese ride-hailing giant Didi Chuxing has rolled out a suite of financial and insurance services in its mobile app, as its tries to diversify its offerings and generate new streams of revenue.

The move came after a company-wide reorganization in December, which aims to improve safety and efficiency, as its core business is under increasing scrutiny from authorities.

New products include health insurance, credit and lending, wealth management and auto-financing services.

"On the whole, financial services are expected to help Didi build a stronger network of collaboration and shared interests, and in turn, a tighter and more efficient transportation ecosystem," the firm said in a statement.

On its auto financing solutions, Didi said its finance arm will work with its new autosolutions business to "expand a quality supply base for China's vibrant mobility market by creating effective links between toptier drivers and partners and a high-quality supply of new energy vehicles, through competitive and reliable purchasing, leasing, trading and financing services".

Prior to their nationwide launch, the in-app services were tested in 10 cities including Chongqing, Zhengzhou in Henan province and Foshan in Guangdong province.

Zhao Yiyang, a senior researcher at the Suning Institute of Finance, called the move a critical step for Didi to gain new earnings via financial offerings, which may help offset losses from its core ride-hailing business.

In September 2018, Didi's founder and CEO Cheng Wei said in an internal letter to employees the company has not turned a profit during recent years, and suffered a net loss of 4 billion yuan ($582 million) in the first half of 2018 alone.

As well as having financial problems, the firm has also attracted concern over its safety record.

In 2018, two female passengers were killed in separate incidents involving Didi drivers, thrusting the issue of its security checks into the spotlight. Both passengers were using its Hitch service, an inner-city carpooling service.

In late November, the Ministry of Transport said Hitch, which reportedly is Didi's only profitable service, would remain offline until it corrected its safety problems, making it even more difficult for Didi to drive into a profitable future.

In early 2018, Didi officially launched a financial service unit to offer diversified financial products for passengers, drivers, car-owners as well as its business partners. Currently, it has obtained financial licenses in payments, online small loans, financial leasing, factoring and insurance.

Currently, Didi offers a full range of app-based transportation options for 550 million users, including taxi, express, premier, bus, designated driving, bike sharing and car sharing, ferried around by more than 31 million drivers.

"Didi has a solid, huge user base foundation, as ride-hailing is one among many high-frequency and just needed daily application scenarios," Zhao added. "As the largest ride-hailing company in China, Didi will be able to provide a wide range of financial offerings covering the purchase of cars, after-sales support, repair, maintenance, rental services and consumption."

Thanks to its huge database, Zhao said, Didi could use big data to "analyze passengers' behaviors and rate their credit" to lessen its risk.

According to Zhao, Didi has more advantages in providing financial services for drivers, as the company is able to collect relatively comprehensive information from drivers, such as online checks on a driver's qualifications or background, and offline behavior monitoring.

Didi is just one of a number of leading Chinese technology and internet companies looking to tap the internet finance sector, and elbow their way to new profits in a crowded marketplace.

Meituan-Dianping, China's largest on-demand service provider, said in November it has been cleared to issue 5 billion yuan of asset-backed securities. The funds will be used to provide more small and micro loans for merchants, the company claimed.

While popular news aggregation app Jinri Toutiao, owned by Beijing Bytedance Technology Co Ltd, also developed a financial business last year to provide consumers personal loan services.

Xue Hongyan, director of the internet finance research center at Suning Institute of Finance, stressed there is an emerging wave of popular internet platforms tapping into the finance sector.

"Today, users will spend a large amount of time on mobile social platforms, online videos, mobile games and news sites. Meanwhile it is really difficult for financial services platforms to attract users to spend time on them," Xue noted in the institute's official WeChat account. "The cooperation of the two sides will help optimize the allocation of their resources. For internet platforms, it will help offer better user experiences as well as generate new revenues."