Grab heads into 2020 with wealth ambitions

Singapore

WHEN it comes to Grab, some cards are still held close to the chest.

For one thing, Grab would not be drawn into whether it would apply for a digital banking licence here, with the deadline a mere five weeks away. But its latest march into the wealth segment offers some clues.

Grab is moving to tap the trillion-dollar wealth market across South-east Asia by offering low-cost investment products.

With this ambition, Grab is open to tying up with existing wealth platforms to offer at a start simple cash products that offer a yield above the tiny interest derived from having cash sitting in banks, said Reuben Lai, senior managing director of Grab Financial Group.

Grab will either partner or invest into a platform, with talks not confined to talks with regional platforms, but global options as well, he added.

Grab will, from the first half of next year, offer a handful of cash products - that is, money-market funds - with more complex products to follow.

It may find a like-minded friend in Singapore roboadviser StashAway, which just a week ago rolled out a cash management portfolio without the terms typically tied to traditional fixed-deposit products.

Grab will work with various asset managers and banks, but will look at whether the products are relevant for mass consumers in both pricing and liquidity, according to Mr Lai.

Grab has also just hired a former veteran from investment powerhouse BlackRock, Philip Chew, to run Grab's investment and new businesses unit.

"What we don't want to do is what typical financial institutions do where they charge 3 per cent to 5 per cent upfront - it's a huge put-off. We are going to do away with all these upfront fees and have a pay-as-you-go model in a very transparent way," said Mr Lai.

He also sees the eventual launch of exchange-traded funds (ETFs) by Grab Financial as "fair game", adding that banks have not been aggressive in pushing ETFs despite their low-cost nature.

Banks here have savings plans tied to investments such as ETFs. DBS has recently launched ETF products with a flat annual management fee of 0.75 per cent without further sales charge, platform fees and lock-in period.

Still, when asked about the current fee model, Mr Lai said: "I don't think fees (out there) are low."

Mr Lai also pointed to worrying sentiment that some millennials believe their parents don't have enough money to save for retirement. "They'll say: 'Parents, please stop spending money on tuition, save me, save yourself'."

Grab's blitz in pay-as-you-use models for its consumer finance push comes as 70 per cent of its drivers in Malaysia have signed on a usage-based insurance sold by Grab's partner Zhong An Insurance that offers per-day coverage for a daily payment.

Grab has also recently hired Leslie Teo, former GIC chief economist, to head up its data science team, with the aim of looking at how to better price financial products, Mr Lai said.

Given the bigger push into wealth and insurance, GrabPay will look to engage the mass affluent in the coming months as well, having become the dominant e-wallet in Singapore, Malaysia and Vietnam, said Ooi Huey Tyng, who manages the GrabPay business in most of Asean.

In about 18 months, GrabPay secured e-money licences in six countries, and now commands the largest total payment value (TPV) in three, she said, while declining to disclose the absolute figures.

With the rapid build-out of the GrabPay wallet, the TPV has also more than doubled in the last six months.

Ms Ooi said GrabPay also now channels about 25 per cent of the payments done at hawker centres here via SGQR, Singapore's unifying QR code to help process payments across different payment modes.

In the last three months alone, the use of SGQR on GrabPay has jumped by more than two times.

She hopes to drive more user stickiness on GrabPay with its launch in Singapore and the Philippines of a Mastercard virtual debit card.

In the Philippines, the Grab wallet allows regional consumers to top up the funds without a bank account, and now to spend online on a virtual card.

The virtual card will also allow users to convert their e-wallet funds to foreign currency for spending on "competitive" rates, said Ms Ooi.

With this "Asean wallet", consumers can also redeem their reward points across the region in a "transparent and instant" way, she added.

With more co-branded cards on the way, Grab is working off its 166-million user base to bring partnering banks to the table.

"They like the fact that our users are not just any users, they are digitally engaged millennials. If they're engaged with the platform, they also tend to spend overseas or shop online," pointed out Ms Ooi.

Likewise, Mr Lai noted that partners look at Grab as the most efficient way to target the growth potential in South-east Asia.

"Many people will say: 'Are you trying to do an Ant Financial?' And my answer is: 'China is one country, we are 10 countries'. It's very, very different. With the one time the partners plug into us, they get access to our 170 million subscriber base in South-east Asia... and the licences that we've acquired."

When asked about the concern over the trust gap that consumers may have with Grab, if it gets a digital banking licence here, Mr Lai noted that Grab "doesn't take this lightly".

"It is not wise of us to assume that people will suddenly be willing to put S$50,000 into our account, primarily because we have mainly been a transacting account. That's our go-to market strategy: offer a transacting account, get people used to it, acquire customers, and then deepen our relationship through financial services which increases retention and this lifetime value," he said.

"I'd like to say though that we entrust our lives to total strangers each time we ride on the Grab platform. So we need to build trust... but we've done so on the mobility side and, using this same thinking, we hope to do so on financial services."

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