GRAB is stepping up its efforts to court micro-entrepreneurs and small and medium enterprises (SMEs). On Tuesday, the firm launched a slew of financial services targeted at businesses, including an online payment checkout system and a deferred payments product for users of its platform.
It will also roll out its insurance marketplace next month, in collaboration with Chinese insurtech firm Zhong An, as it eyes becoming the region's largest insurtech policy provider and fintech lender on a single platform.
Experts BT spoke to said that the company is quickly zeroing in on a space traditionally underserved by financial institutions (FIs). Jan Ondrus, an associate professor at ESSEC Business School Asia-Pacific, said traditional banks are not well-equipped to address SMEs and micro-entrepreneurs because of the high risks and low predictability related to their activities.
"Too often, this segment had to use the services of other parties (such as loan sharks) which were more likely to accept providing financing but at a high cost," he said. "This problem is an opportunity for Grab to leverage on their collected data on the SMEs and micro-entrepreneurs to better manage the risks."
The slew of newly announced services are part of the "Grow with Grab" roadmap for businesses launched by the company during Money 20/20 Asia, a conference held in Singapore to explore the future of payments, financial services and fintech.
Grab's online payment check-out function, called Pay with GrabPay, allows online sellers to accept GrabPay on their websites. The company also launched a Point-of-Sale device integration function so that merchants can tap Grab's user base without having to change their hardware or sales and accounting systems.
Reuben Lai, senior managing director of Grab Financial Group, said: "While SMEs contribute more than 50 per cent of Asean's GDP, two-thirds of SMEs cite business funding and financing as their biggest problem. The Grab app has served more than nine million micro-entrepreneurs over the last six years. As a result, we can leverage our scale and data insights to bring financial services products to market at a more competitive price point than anyone else."
Grab also appears to be aiming to mirror Alibaba affiliate Ant Financial's success in China. Under "Grow with Grab", it will roll out Pay Later, a service that allows customers to pay for Grab services at the end of the month instead of immediately.
The service is the first product launched under Grab's joint venture with Credit Saison, with users bearing no additional costs. Rival Gojek already has a similar product called PayLater in Indonesia. In the coming months, the company will also launch a Pay Later instalment payment product to allow consumers to buy goods right away and spread instalment payments at no interest rate over multiple months.
Amit Joshi, professor of digital marketing and strategy at IMD Business School in Switzerland and Singapore, told BT that Grab will become a major fintech player if it succeeds in this play. "Similar to Alipay, the idea is to start with SMEs, then scale up in that market, before entering other adjacent fields."
Prof Joshi added that the ride-hailing market is facing regulatory and supply side pressures around the world, whereas financial services are potentially more lucrative.
Fintech firm Credit Culture's founder, Edmund Sim, believes for Pay Later, data is key in ensuring that the default cost can be contained for businesses while allowing consumers to budget and pay for their purchases.
Grab has also been partnering financial institutions to provide loans to drivers and businesses, and is now pursuing lending licences across South-east Asia. It currently holds e-money licences in six countries.
Asked at a press briefing whether Grab will eventually apply for a banking licence, Mr Lai said: "We are happy with how it is now. If we need to apply for it, we will apply for it. For us, it is key to work closely with regulators."
If Grab continues down this path of financial services, it may inevitably take away some of the market share from the traditional FIs, said Eddie Lee, vice-president of the Singapore Fintech Association. That said, FIs also have their strong clientèle base that were built through years of relationship management.
"In the recent years, banks and FIs have been adopting technology for their products and services, with some having their own internal fintech accelerator and some partnering the fintech startups to jumpstart their digital journey," said Mr Lee.
"Hence, we are seeing more collaboration between the traditional FIs and the innovative fintechs in the positive direction, where they will eventually bring more efficiency and convenience to end consumers."