Baidu makes next fintech move

Internet titan gains third-party fund sales license in latest foray into finance

Internet search giant Baidu Inc has obtained a license for third-party fund sales as part of its foray into internet finance.

A subsidiary of Baidu gained approval to sell funds from the Beijing-based securities watchdog, according to a statement released on Wednesday night on the government agency's website.

Du Xiaoman Financial, previously known as Baidu Finance, said it will join hands with financial institutions to offer fund sales services, by integrating Baidu's strengths in artificial intelligence and other innovative technologies.

Launched in 2015, the Beijing-based financial services group runs a mobile wallet service as well as provides consumer loans and wealth management services for its users.

So far, many of China's technology heavyweights, including Alibaba Group Holding Ltd, JD and Tencent Holdings Ltd, have already obtained licenses to sell third-party funds.

The companies are vying for domination of the country's burgeoning fintech sector, with their businesses covering payments, banking, wealth management, insurance, securities and micro-loans. However, the authorities have slowed approvals for the third-party fund sales license over the past two years.

Industry insiders said companies obtaining the license are not only seeking commissions from fund sales, but also enhancing customer stickiness within their financial ecosystem, to improve cross-selling and integrated operations.

Teng An Fund Sales (Shenzhen) Co Ltd, a fully owned subsidiary of Tencent, gained a license to conduct third-party fund sales from the local securities authority in January.

Before receiving approval, Tencent could only act as an online bridge between investors and fund distributors via its online wealth management platform qian.qq.com and its messaging app WeChat, which has more than 980 million monthly active users.

In 2015, Ant Financial Services Group, Alibaba's financial affiliate, bought Hangzhou Shumi Fund Sales for 199 million yuan ($29 million), obtaining a fund sales license in the process.

JD acquired its license in April 2017. Fund management firms can sell investment products through JD Hangjia, a platform allowing third-party financial institutions to build and operate investment product sales.

JD Finance, the financial arm of the Chinese e-commerce giant, said it serves financial institutions with its data analysis capacities.

"Baidu still lags behind its competitors in fund sales and needs to do more to expand its presence in the financial sector, ranging from wealth management and robo-advisory for consumers," said Li Chao, a senior analyst at market research firm iResearch.