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Chinese messaging app adds investment fund to its services
We’re all accustomed to mobile banking by now, but Chinese messaging app WeChat is taking things one step further by turning its mobile app into a bank. Well, maybe not fully ‘turning’ it into a bank, but certainly providing a bank-like service. The app is offering its users the ability to invest money in WeChat-approved mutual funds.
WeChat holding company Tencent has partnered with four mutual fund companies to support its upcoming service, which will be called Licaitong, according to China Daily. WeChat users will be able to deposit anywhere from .01 to 1 million yuan (up to $165,400). Users will be able to buy and sell money market funds within the app, earning as much as 6.435% returns annually, according to TechInAsia.
Alibaba, one of Tencent’s largest competitors, launched a similar banking service last summer. That service, called Yu'E Bao, reportedly has 49 million users and more than 250bn yuan ($41bn) under management. Baidu, another Tencent competitor, has an investment service called Baifa, although the company caps the total amount of investment in the fund.
WeChat’s Licaitong will launch later this year, although the exact date has not been announced.
WeChat has staggering user numbers, with nearly 300 million monthly active users globally and more than 200 million in China alone. Increasingly, those people are using the ‘messaging’ app for more and more – hailing taxis, buying movie tickets and splitting bills. Figures released this week indicate that the app may be stealing users from Sina Weibo, another popular Chinese web service.
Services like Licaitong could prove important for formerly single-service apps like WeChat, convincing users to stick around for longer periods of time and conduct more of their life’s business within the app. As pundits ponder the financial viability of apps like SnapChat, Chinese counterparts like WeChat are blazing trails and finding new services to add value to users and revenue to the mothership.
Dipping a toe into the financial market is a move that will be tough for companies in the highly-regulated US and EU markets, but it’s an incredibly smart move for WeChat. As iResearch Group’s Wang Weidong told China Daily, WeChat’s strong user base already sets it up for success. ‘The most difficult part in selling wealth management products is to find a large pool of customers,’ he said. ‘WeChat, which already has more than 400 million registered users and boasts 272 million global monthly active users, is a great gateway to allow fund companies to gain access to potential customers.’
It remains to be seen what form Licaitong will actually take, and how much enthusiasm there will be for the product. But if the numbers are correct and Yu'E Bao is any indication, there is a hungry market for banking services that drop their fees, provide good returns and cut out the banks. WeChat is providing exactly that, while building upon its already-robust service proposition.
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