While Uber is concentrating on ridesharing in various forms, Grab, the Singapore based rideshare company is investigating other avenues for revenue. Grab is also in negotiations to buy out an Uber’s Southeast Asian presence in a deal that might give Uber a 30% stake in Grab. This deal will give Uber access to the fintech market as well.
This is not the first time that Grab has started to develop fintech applications; they launched a mobile payment service during November 2017. This month, Grab went one step further and provided a micro-loan and insurance policy service for Grab drivers and businesses that are registered in the GrabPay system.
This new collaboration is set between Grab and $3 billion valued Credit Saison, which is Japan's largest lender with over 70 million credit and debit cards circulating around the world. The new venture is called Grab Financial Services, and it has already signed on US Chubb insurance as a partner.
GrabPay's head, Jason Thompson stated to the media in Singapore's Money2020 event that Grab is focusing on enabling more cash fluidity and greater access to cash for businesses in Southeast Asia. He said "Today we've helped create about five million jobs for those people to grow their businesses, we need to provide them with financial services. Whether that's nano-loans for working capital, the ability to buy a car, actually without financial services we're going to restrict the business growth of that whole ecosystem. That's the reason we're doing it."
Grab's new initiative will use social networking as a viral way to reach all their potential new users. Through drivers, events, and agents that are all linked to Grab's network, GrabPay will grow naturally and exponentially. While this is a great method of increasing use of financial products, the one thing that stands in their way is the famous "credit score." While in the western hemisphere credit scores are easy to obtain, since they are based on a person's bank account and credit card usage, in Asia, it is much harder to gauge since only 27% of the population have a bank account. This is why GrabPay decided to add a new metric, the style of driving that a Grab driver uses.
By introducing a new metric, the old credit score system will be able to adapt to the new reality that is Asia and increase the number of insurance and loan recipients that are part of Grab's ecosystem.
Grab CEO Anthony Tan
For its initial announcement and first drive, GrabPay will target business customers. Although, according to Thompson, this will change as the new system becomes familiar to both the company and the customers. At the moment Grab has over $700 million in car loans and insurance policies provided to their drivers.
Grab covers eight countries and is a major player in Southeast Asia. Its GrabPay service is starting in Indonesia, which is Southeast Asia's largest economy, this is where Grab partnered with Indonesian Kudo, a payment network in a deal that will surpass $100 million.
According to Thompson, the Kudo partnership will allow Grab to test the new service, how it operates, what its weak points and strengths are and through an initial phase, bring about a more comprehensive and focused service that will be used to cover the rest of Grab's sphere of influence. GrabPay will most probably roll out its new service, after quality testing in Indonesia sometime towards the end of 2018.