Photo/Shetuwang

Jan. 4 (NBD) – Didi Chuxing, China's largest ride-hailing platform operator, launched financial services on Wednesday through its mobile app to seek new streams of revenues after years of losses.

The firm's financial services cover mutual insurance and crowd-funding products for critical illnesses, credit and lending, wealth management and auto-financing services, according to Didi's announcement on Wednesday.

Prior to the nationwide launch, the in-app services were piloted in 10 cities across China.

Didi entered the financial industry as early as 2015 by introducing accident insurances specially for passengers and drivers together with Ping An Insurance.

Nearly one year later, the ride-hailing service provider cooperated with China Life Insurance Company to provide vehicle insurance for 16,000 vehicles.

In early 2018, Didi inaugurated a financial services unit. The company has preliminarily established a financial ecosystem with five financial licenses covering payment, online microloans, financing and renting, commercial factoring and insurance brokerage, according to incomplete statistics.

Industry analyst Gu Tao (alias) told news outlet International Financial News that for most of Internet enterprises including Didi, branching out into the financial sector is aimed at making the best of their huge traffic.

According to a third-party research report, as of the end of June last year, the number of Didi's users has reached about 400 million with more than 15 million daily active users. Undoubtedly, based on its tremendous traffic and high level of customer stickiness, Didi boasts great potential for monetization via its financial business.

Moreover, the continuous losses of Didi's main ride-hailing business also pushed the company to make a foray into the financial sector, Gu Tao observed.

Cheng Wei, founder and chief executive officer of Didi, disclosed in September last year that the car-hailing firm has failed to make a profit in six years since it was established in 2012, with combined losses of around 39 billion yuan (5.7 billion U.S. dollars). It is obvious that Didi places big hopes on its financial services.

In fact, many Internet titans have been streaming into the financial sector to occupy the market share. Didi's foray into the financial sector will pit the company against other players such as Alibaba's Ant Financial, Baidu, Tencent, Meituan Dianping and Jinri Toutiao.

Yu Baicheng, head of the research institute of financial management website wdzj.com, noted that Didi has an advantage in the financial sector since it owns a large number of drivers who have demand for auto financing and insurances and users who have demand for wealth management.

Furthermore, Didi is also improving its capability of controlling and managing data risk by establishing a risk control and management platform. 

However, as it has become increasingly difficult to monetize the traffic, some are not that optimistic about Didi's future.

According to an industry insider, as a latecomer in the financial segment, Didi has missed the tailwind. It is hard to tell whether the ride-hailing company will make a difference in this sector.

Email: wenqiao@nbd.com.cn