Leading financial conglomerates and internet companies accelerated their efforts in the consumer finance market to seize growing opportunities in online consumption which has become a driver of economic recovery amid the COVID-19 pandemic.

Ping An Consumer Finance Co, in which financial conglomerate Ping An Insurance (Group) Co of China holds a 30 percent stake, officially launched its first collateral-free consumer loan product on June 30, two months after the company opened for business in Shanghai.

Adults aged between 22 and 45 can apply for consumer loans from the company on mobile phones, with a maximum credit line of 200,000 yuan ($28,618). The annualized rate ranges from 14 to 24 percent.

Similar to Ping An Consumer Finance that leveraged its major shareholder's expertise in artificial intelligence, blockchain and cloud computing, Chongqing Xiaomi Consumer Finance Co is built on new infrastructure including the artificial intelligence of things and the fifth generation of wireless technology. It held its opening ceremony on May 30.

With registered capital of 1.5 billion yuan, Chongqing Xiaomi Consumer Finance is the 26th consumer finance company that received regulatory approval to start business in China.

Xiaomi Communications Co Ltd and Chongqing Rural Commercial Bank Co hold 50 percent and 30 percent of its shares, respectively.

While ramping up efforts to join the consumer finance market, large internet companies and financial service providers have also sped up penetration in online consumption.

On-demand food delivery and lifestyle services company Meituan Dianping entered the credit payment market by launching a small credit payment product called Meituan Monthly Pay. This followed similar products launched by Ant Financial Services Group, JD and Tencent Holdings Ltd.

Since Meituan Monthly Pay was launched on May 29, the average number of transactions per day increased by more than 15 percent by the end of June. During the same period, the average transaction value per day increased by over 10 percent, statistics from Meituan Dianping showed.

Newcomers in the consumer finance industry and their new products will increase market competition among participants which include commercial banks, where the credit card business is already facing challenges from internet giants and leading fintech companies.

To deal with the impact of COVID-19, many banks stepped up efforts to encourage consumers to use credit cards while accelerating the recovery of credit card debt collection activities at the same time.

China Guangfa Bank Co and SPD Bank, for instance, issued vouchers to boost consumption and promote the use of their cards.

There is still a lot of work to promote high-quality development of the credit card business in China that was focused on card issuance in the past, Nicole Zhou, a partner at McKinsey & Company, said while delivering a report on China's retail banking on July 7.

"Banks must dig deeper into their existing clients to create 360-degree client profiles and push comprehensive product portfolios to the clients by classifying customers into groups based on various factors and integrating internal resources, products and channels across different departments of a bank," Zhou said.

"It is important for banks to find ways to improve the user experience of credit card holders, strengthen the application of digital technologies, better integrate their cards with lifestyle scenarios, and build seamless connections with other financial service products and channels," she added.