Southeast Asia’s Grab, which entered into mobile payments with GrabPay last year, has now marked its foray into the region’s financial services space. With the launch of Grab Financial, the company aims to leverage its network of consumers, micro-entrepreneurs and small businesses.
Grab, which started as a ride-hailing service, announced its partnership with Japanese credit card company Credit Saison on Tuesday to provide lending services, micro-financing products and services tailored for the region. Grab also announced a partnership with property and casualty insurance company Chubb to offer insurance solutions to its drivers.
Encompassing all of Grab’s fintech offerings, Grab Financial now offers payments services, rewards and loyalty services, financial services and agent services.
However, the company maintains aspirations to provide Southeast Asia with its leading mobile payments platform and the entry into financial services is a natural progression in that direction, Jason Thompson, Managing Director for GrabPay Southeast Asia told this portal.
“We are not trying to be this big overarching organisation. We want to work with banks and financial institutions because they have a lot more knowledge about financial services and we have a lot of knowledge about data. We know our platform and we know our data,” Thompson said in a brief interaction after the announcement at Money 20/20 in Singapore.
One of the most successful startups from Southeast Asia, Grab has been backed by heavyweight investors like SoftBank, Didi Chuxing, China Investment Corporations, Tiger Global and others in the past. It raised $700 million in debt facilities last year in October just months after raising $2.5 billion from SoftBank and Didi Chuxing. The company is reportedly valued at $6 billion, according to CB Insights.
Huge cache of consumer data
Grab Financial Services Asia taps into Grab’s huge cache of customer data gathered from the Grab app, which processes over a billion transactions annually. By analyzing behaviour and transaction data from the app such as transport movements, geo-location, and GrabPay transaction data, the company says it can offer alternative data points to assess credit worthiness, bridging the gap left by traditional credit scoring methods.
In the early stages, the joint venture with Credit Saison will focus on providing products to meet the needs of Grab drivers, agents and merchants, such as working capital loans, financing for smartphones and durable goods, as well as consumer goods financing.
In addition to providing its own financial products, the JV also plans to offer credit scoring services to financial institutions who can use the information to provide other services such as virtual credit cards. Further, Grab Financial will also explore partnering with banks and financial institutions in Southeast Asia.
Meanwhile with Grab’s partnership with Chub, using the Grab app, drivers will be able to select different insurance options to protect their vehicles, their livelihoods and, ultimately, even their families, with access to loss-of-income insurance, per-ride schemes, personal accident policies and motor insurance.
The companies will also explore leveraging data technology from Grab’s platform, including telematics, machine learning and predictive analytics to offer insurance solutions personalized to the specific needs of different private-hire vehicle drivers in Southeast Asia.
Aspiring to be SEA’s unilateral wallet
At a time when Southeast Asia does not have a clear leader in the mobile payments platform space, Thompson said Grab, with its data and network, “can become the unilateral wallet of Southeast Asia”.
Asked if GrabPay was hoping to be for Southeast Asia what Paytm became for India or Alipay for China, he explained, “People forget how long it took Vijay (Shekhar Sharma) and team to grow. It took many years for Alipay to become what it is now. We are a year old. Be patient, we will get there.”
He further added that the problems in Southeast Asia are not the same as India or China. “In India, you have a banking system that is wrapped around Paytm, there is a KYC system. It is a lot more developed in terms of identification. That does not exist here,” he noted. Nevertheless, Grab is already doing its KYC for drivers and bringing them into the banking ecosystem, he noted.
Grab’s entry into the financial services space comes the same day as China’s Alipay, the mobile and online payment and lifestyle platform operated by Ant Financial Services, announcing the expansion of its cross-border business in Southeast Asia, adding four new countries to its network.
With the expansion, merchants in Cambodia, Myanmar, Laos and the Philippines are now connected to 520 million active users in China via Alipay’s in-app marketing platform, the Chinese firm said. With the latest expansion, Alipay services are now available to Chinese visitors and local merchants in eight markets in the region. The countries are Singapore, Malaysia, Thailand, Vietnam, Cambodia, Myanmar, Laos and the Philippines.
Alipay said it is working with more than 250 financial institutions and payment solution partners in its ecosystem to enable cross-border payments for Chinese travelling globally.