Grab to lift the unbanked with share of financial services

RIDE-HAILING giant Grab has expanded its profile in the financial marketplace (following the launch of its mobile payment service, GrabPay, Nov 2017) by announcing a joint venture (JV) with Japanese company Credit Saison.

The JV, called Grab Financial Services Asia (GFSA), will begin to offer a range of financial services to the unbanked population in particular, in Southeast Asia – a market segment primarily ignored by the traditional financial institutions.

Credit Saison is Japan’s biggest lender with some 70 million domestic credit card customers. Grab is currently valued at more than US$6 billion and has investors behind it like Didi Chuxing and SoftBank.

The JV, therefore, will pack some serious financial muscle and while its target market is currently ripe for the picking, Grab’s previous business methods suggest the company may move its sights further up the finance food chain in time.

Grab already offers its drivers and agents micro-loans to finance capital expenditure, albeit usually for items that feed into the Grab ecosystem, such as smartphone and vehicle purchases.

In a further move which may disrupt the financial sector, GFSA intends to offer credit scoring services to other financial institutions of the “unbanked,” who are mostly ignored by existing credit rating agencies.

Through the course of its ride-hailing business, Grab gathers a great deal of personal information about its drivers and passengers, including geolocation, GrabPay transactions, geographic movements, and person-to-person reviews.

The JV intends to use this data pool to provide criteria, additionally, for its own lending facilities, and in a digital age where data is power, old-school financial institutions will be playing catch-up.

In Southeast Asia, estimates peg just 27 percent of the region’s 600 million population with a bank account, according to a KPMG paper. That leaves approximately 430 million potential Grab Financial customers.

“Many in our region have no access to loans that they can use to purchase a new home or grow their small business. GFSA is building a reliable alternative to traditional credit scoring methods that is customized for the unbanked majority of consumers and small businesses in South-east Asia, which will create economic opportunity for millions across the region.”

Jason Thompson, managing director of Grab Financial.

Grab has also gone into partnership with insurance company Chubb, offering policies to Grab’s 2.6 million drivers and agents, including critical cover, medical & accident insurance. All this is accessed easily through the Grab driver app.

The new platform was announced by Anthony Tan at Money 20/20 recently. Jason Thompson said, “The new JV, GFSA, puts in place a much-needed infrastructure that will accelerate financial inclusion in Southeast Asia.”

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