Although Grab is rumored to buy Uber’s Southeast Asia operations, this hasn’t prevented the company from trying its hand in other business ventures. The Singapore-based ridesharing firm is reportedly planning to offer microlending and insurance services to small businesses and entrepreneurs all over Southeast Asia.
At the Money 20/20 Asia summit held in Singapore, Grab announced that it’s partnering with Credit Saison, a $3 billion Japanese financial company with over 70 million credit cards in circulation. The joint venture will be called Grab Financial Services Asia. The venture will offer microlending and insurance services targeted at Grab drivers and customers.
Grab recently launched a mobile payments service last November 2017. Jason Thompson, the head of GrabPay, said that Grab’s latest venture into financial services is in keeping up with its commitment to enable entrepreneurship and livelihood across the region.
“Today we’ve helped create about five million jobs, for those people to grow their businesses, we need to provide them with financial services. Whether that’s nano-loans for working capital, the ability to buy a car, actually without financial services we’re going to restrict the business growth of that whole ecosystem. That’s the reason we’re doing it,” Thompson said.
Grab already has a loan book of over $700 million with a 1.5% default rate, which it accumulated from providing monetary assistance to drivers who use the money to hire vehicles and buy smartphones.
Banking to the Unbanked
Offering financial services to Southeast Asia’s 600 million inhabitants is a daunting challenge. It’s estimated that only 27% of Southeast Asians have a bank account.
Grab remain optimistic about the prospects of financial technology services in the region, however. The company has collected a large number of data points from its ride-hailing and payments apps, which it can use to make credit and risk assessments.
Grab Financial Services Asia will initially concentrate in providing financial products and services to Grab drivers, online-to-offline agents, and GrabPay merchants. Customers can apply for working capital loans to buy smartphones, laptops and other goods.
Grab will also use a driver’s driving style to determine if he is eligible to receive a loan or avail of insurance.
Grab’s planned entry into the financial services space is an indication that it is not content with dominating the regional ride-hailing market, which is predicted to grow to $13 billion by 2025. The firm controls 70% of the Southeast Asian ridesharing market and is present in 178 cities across the region.
There’s no word yet as to when Grab will offer lending and insurance services to its Philippine customers. There’s certainly a big opportunity for Grab to make inroads into the local financial scene, knowing that only 20% of Filipinos have insurance while a whooping 86% don’t have a bank account. Let’s just wait and see.