On Tuesday, Grab Financial Group, the fintech attached to the southeast Asian ride-hailing and food delivery leader, announced a set of new products and services from investment to insurance to third-party lending.
None of them, individually, is truly a game-changer. In aggregate, though, they offer a snapshot of a fast-expanding regional enterprise that isn’t going to wait to find out if it’s got a Singapore digital bank licence before setting an ambitious course.
We have come a long way since Grab launched its GrabPay Wallet in 2017 to tie in with its ride-hailing service. Already it feels like it has been around for ever in Singapore, steadily entwining itself with the everyday lives of consumers as all the best fintechs do.
First through reward points, then insurance joint ventures (ZhongAn) and credit cards (Citi, then a numberless card with Mastercard), the company has sought out niches and filled them where licences permit, mainly in Singapore, Malaysia and Indonesia, but increasingly across all of southeast Asia, framing the whole thing with its vision of accessibility and inclusion.
And so to Tuesday. Grab calls its latest strategy ‘Thrive with Grab’, an extension of its previous ‘Grow with Grab’, and its centerpiece is a product called AutoInvest, a micro-investment that takes the small sums of money that sit around on Grab platforms in between cab rides and food delivery, and invests them in an account offering a modest yield.
The underlying investment is done through fixed income funds run by Temasek-owned Fullerton Fund Management and Singapore’s UOB; they forecast a return of 1.8% annually, which is appealing in comparison to the 0.05% you get in a regular bank account in Singapore these days.
AutoInvest looks and sounds a lot like Yu’e Bao, the Ant Financial (now Ant Group) product that translates as ‘leftover treasure’. This used the same model of sweeping up cash dormant within its ecosystem, with no minimum amounts, and putting it into an investment product.
When Ant did this, it swiftly became the largest money market fund in the world, almost by accident, even if it has shrunk considerably over the last year and given that title back to JPMorgan.
The principle here is the same: make it more and more attractive for money to reside within Grab’s wallet, products and broader ecosystem, because not even a dollar within it will be neglected.
AutoInvest has grown out of Bento, the micro-investment business Grab bought earlier this year, and has been developed by Chandrima Das, former chief executive of ING Investment Management and managing director of Bank of Singapore who founded roboadvisor Bento in 2016. It carries the same mandate to democratize access to retail wealth management that Bento had, but marries it with the reach and exceptional single-app convenience of Grab, like an Alipay or a WeChat.
AutoInvest was just one of several new products launched on Tuesday, and Grab is no longer really a wide-eyed ingenue in any of the fields within which they will reside; the two insurance products it launched bolt on to a business that has issued 13 million policies since April 2019, with Grab already entrenched as one of the largest digital insurance distributors in Asia for Chubb.
It has enmeshed itself in the basic finances of consumers and merchants alike across a region with a population of more than 600 million.
Perhaps the most interesting thing about the announcements is that they come while a joint venture between Grab and SingTel is down to the last 14 applicants for five digital banking licences Singapore is due to announce later this year.
What does it say, to announce so much activity with that decision pending from the Monetary Authority of Singapore? Is it a reminder to the MAS that Grab is committed to southeast Asian financial services disruption, a galvanizing twist to the bid? Is it an illustration that, licence or no licence, there’s plenty it can do under its existing permissions? Is it a signal that Grab isn’t waiting around as it presses on with what it wants to do?
It chimes with the hire of Charles Wong, Citi’s head of retail banking, who will run the digibank if they get the licence – but they haven’t waited to find out before hiring him.
If Grab can do this much without a digital licence, does it even really need one?
Reuben Lai, senior managing director at Grab Financial Group, addresses this question, suggesting that it would bring “a more fulsome set of licences and products” both for retail and for small and medium-sized enterprises.
Having once unbundled banking products, he says, a digibank licence would create an incentive to bundle them all back together again.
A further sign of Grab’s arrival in the financial mainstream was the $850 million investment it secured in February, mostly from MUFG and partly from data centre and cloud services provider TIS. Clearly the money will be extremely helpful in the development of new businesses but there’s also something of a badge of honour here, one that shines in both directions.
MUFG has built a reputation for finding extremely promising financial institutions outside of the established heavyweights and backing them with commitment, sensitivity and trust: Bank of Ayudhya in Thailand, Security Bank in the Philippines.
MUFG is a very powerful name to have in your corner. At the same time, MUFG knows that technology and engagement with more youthful populations outside of Japan are vital to its long-term growth.
We don’t have a timeline to profitability. We know that our research has shown there is a real demand for our products
– Reuben Lai, Grab
“They’re definitely strategic and not just a provider of capital,” Lai tells Euromoney.
They have rolled out products together in Thailand and Vietnam already, and Lai says there is a strong pipeline for the next six to 12 months.
“This really underscores our open ecosystem approach,” he says. “We really rely on our partners to jointly create products with us.”
There is, of course, another reason that investment like MUFG’s is important for Grab Financial: for all its expansion and scope, it has yet to make a profit.
“We don’t have a timeline to profitability,” says Lai. “We know that our research has shown there is a real demand for our products.”