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Southeast Asian ride-hailing giant Grab is doubling down on its banking efforts with Grab Financial, its fintech arm: It announced it’s rolling out several financial services products across Southeast Asia (SEA), per CNBC.
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The announcement comes within weeks of its $1.5 billion raise from SoftBank’s Vision Fund, part of a significantly larger $5 billion Series H funding round. Grab, which acquired Uber’s SEA business last year, is in a tug of war with regional rival Go-Jek to become the go-to app for SEA’s 640 million consumers; the ride-hailing firm has earmarked financial services as a core pillar of its strategy for regional dominance.
Grab’s been aggressively pursuing the financial services sector over the last year. The firm entered into a joint venture with Japanese financial services firm Credit Saison last year, as well as with Chinese digital-only insurer ZhongAn earlier this year. The latest service roll outs have been announced under the banner "Grow with Grab," through which the firm will provide a comprehensive set of financial services in the region to small- and medium-sized businesses (SMBs) and micro-entrepreneurs, including loans to SMBs and insurance for its drivers.
Here’s a look at the other financial services products it’s launching:
- Grab’s rolling out a post-paid installment service to help consumers manage their payments. The credit service enables customers to accumulate spending on the company’s increasingly broad suite of products, like ride-hailing and food delivery, and pay the balance at the end of the month without incurring any additional costs. The service will be first made available in Singapore before a future launch in other SEA countries.
- The firm is also working on another pay later option. This would allow consumers to pay for purchases in installments, similar to point-of-sale (POS) credit offerings provided by the likes of Klarna in Europe and the US.
- Grab has also set a date for the launch of its insurance product venture with ZhongAn. The company has confirmed that its insurance marketplace effort will be rolled out in April and will sell insurance services from a variety of providers through its mobile app.
Grab’s financial services push highlights how tech players are positioning themselves to capture huge market share in emerging economies. While the majority of SEA’s over 600 million consumers are un- or underbanked — 73% of consumers lack a bank account, according to KPMG — the economy continues to grow rapidly: SEA’s internet economy is expected to exceed $240 million by 2025.
However, due to the lack of financial services infrastructure, incumbents are at a huge disadvantage for capturing this market. For instance, a lack of unified credit scoring cuts established lenders out the loop when it comes to some of the most lucrative segments of banking, like net interest revenues from lending.
Grab, in contrast, has vast swaths of data on its drivers and users, with a customer base of over 100 million, which can enable it to leverage this data to assess creditworthiness. And by offering financial services products to its existing user base, the ride-hailing firm is set to tap into a virtuous cross-selling opportunity. We expect these efforts to position Grab as a financial services behemoth in the region.
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Source: Business Insider – feedback@businessinsider.com (Mekebeb Tesfaye)