Tech

Moving beyond ride-hailing, Southeast Asia's Grab is rolling out financial services

Key Points
  • Grab Financial, a unit of Southeast Asian ride-hailing giant Grab, said on Tuesday it is rolling out several financial services across Southeast Asia.
  • Those include launching an online checkout system that would let sellers accept Grab's digital payment service, GrabPay.
  • Grab also said it will provide credit services such as a post-paid payment option where users accumulate their spending on the company's products like ride-hailing and food delivery and pay the total amount at the end of each month without additional costs.
Indonesia Grab bike riders waiting for passengers in Jakarta.
Afif C. Kusuma | iStock Editorial | Getty Images

Grab Financial, a unit of Southeast Asian ride-hailing giant Grab, said Tuesday it is rolling out several financial services across the region.

Those include launching an online checkout system that would let sellers accept Grab's digital payment service, GrabPay. The company also plans to provide a post-paid payment credit option, where users accumulate spending on the company's products like ride-hailing and food delivery and pay the total amount at the end of each month without additional costs.

That credit service will first be available in Singapore before expanding to other countries. Another option, to buy goods and pay for them in installments through Grab Financial, is also in the works.

The company added it will launch an online insurance marketplace in April for entrepreneurs following a joint venture with China's Zhong An earlier this year.

Last year, Grab teamed up with Credit Saison, a Japanese financial services company, to lend in the region. The joint venture also provides working capital loans to small businesses in Singapore while Grab pursues lending licenses in other markets.

Focus on small businesses and entrepreneurs

Grab's slew of financial products are geared toward small and medium-sized enterprises and entrepreneurs in Southeast Asia, who frequently struggle to get loans from banks and financial institutions. Small companies also struggle to get investor backing because they are often considered risky.

"We've experienced that ourselves," Reuben Lai, senior managing director of Grab Financial Group, told CNBC on Tuesday. "I have launched four businesses in Grab and, in particular, there was this incident — it was one of my projects where I knocked on the doors of 20 banks to get financing."

All but one of those lenders declined to loan any money, he said, adding that the banks said no because they were "not able to score us or to assess our credit worthiness on non-traditional methods." That happened a little over two years ago, Lai said, when Grab was already a relatively established start-up in the region.

Southeast Asia is home to about 640 million people, many of whom are connecting to the internet for the first time. A commonly cited report from Google and Singapore's Temasek Holdings predicted the region's internet economy will exceed $240 billion by 2025 as affordable mobile internet drives rapid growth in sectors like e-commerce and ride-hailing.

The region also has a large under-banked and unbanked population, which has turned it into a battleground for financial technology, or fintech, companies such as Grab Financial, Gojek, Sea, Alibaba-affiliate Ant Financial and Chinese tech giant Tencent.

For its part, Grab wants to "level the playing field for all the small businesses in Southeast Asia," Lai said.

Grab can make money from offering those financial services in different ways, he said. For insurance, for example, the start-up takes a commission based off of each policy that is sold. In the lending business, it makes money through either a revenue-sharing arrangement or through commissions.

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Still, Lai declined to say if the business is yet profitable and said it is in an "investment phase" at the moment. The focus, he said, is to scale up the company's financial products and drive customer engagement.

Grab recently said it secured $1.46 billion in new funds from the SoftBank Vision Fund as part of an ongoing funding round through which it has raised more than $4.5 billion.