Grab financial expands into the consumer ecosystem through micro investment and loans

• Grab has issued 13 million insurance policies and 400,000 outstanding loans and financing solutions
• It is launching micro-investment in Singapore and expanding insurance to include hospital cash cover and ride cover in new markets
• It will offer third-party consumer loans through its app with the funding as well as credit decisioning by its banking partners

According to the World Bank, 29% of the adult population in East Asia and 30% in South Asia are unbanked. Another study by Bain &Company, Temasek and Google claims that almost 70% of adults in Southeast Asia are either underbanked or unbanked. Targeting the financial needs of these underbanked consumers while bringing synergies with its ride hailing and payments business, Grab Financial group (GFG) is expanding its financial portfolio.

Last year it added micro-lending, micro-insurance, post-paid and instalment payment services. It now claims to have over 60 financial institutions partners, 400,000 outstanding loans in Q1 2020 (along with OVO) across consumers, drivers and merchant partners and 13 million insurance policies issued regionally. It was also chosen as one of the three wallets in Malaysia to disburse government aid recently.

Its focus last year was on expanding the merchant ecosystem, now it has announced a slew of products that will drive its expansion into the consumer ecosystem through micro transactions.

“We want to establish a more wholesome ecosystem that addresses both consumers and merchants. We want to enable users to grow their wealth, businesses and manage their finances and protect what they value”, said Lai, Senior Managing Director, Grab Financial Group. He added that GFG’s key differentiators were being accessible through micro transactions, convenience and transparency.

These products include its first micro-investment solution ‘AutoInvest’ as well as third party consumer loans and buy-now-pay-later payment plans to enable users to manage cash flows. In the micro-insurance space, it is adding hospital cash cover in Indonesia and expanding the ride cover to Thailand, Vietnam and the Philippines.

Making foray into wealth management

To expand its reach among consumers the company is focusing on bite size and micro transactions. The new investment product being launched in Singapore will have a minimum threshold as low as $1 investment, with an expected ballpark interest rate of about 1.8%.

“The small amount that consumer chooses is automatically set aside to be invested in high quality liquid investment fund by our partners like Fullerton Fund Management and UOB Asset Management,” explained Das, Head of Wealth at Grab Financial.  

Earlier this year Grab Financial had taken over Bento, a Singapore based roboadvisory start-up that now forms ‘GrabInvest’, its wealth management vertical. Das was the Founder and CEO of Bento.

Expanding its lending services

The third-party consumer loan platform will be launched first in Singapore, followed by Malaysia and other countries. With API integration the users can apply for these through the Grab App but the funding and credit decisions will rest with the FI partners. It is also launching ‘pay later’ loans in Singapore and Malaysia as well as expanding SME loans in four countries. GFG has the advantage of data synergies through the high frequency data from its open ecosystem and alternative data for credit scoring to power its models behind these financing solutions.

These new products come at a time during Covid-19 pandemic when there is a sharp decline in the Grab’s ride hailing business while the industry demand of digital payments and finance is accelerating. The company was reported to have laid off 360 staff to reduce costs earlier this year. These new offerings will strengthen its reach in an operationally challenging environment and increasing competition. The $850 million funding from MUFG and TIS in February will help fuel its growth but going forward it will become increasingly important for the company to achieve financial sustainability. Lai commented that there is a real demand for these products, however, did not commit to a timeline when the company will be able to show profits.