Published March 13, 2018
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Date: March 13, 2018
Categories: Capital & Strategic Issues, Consumer Credit, Data & Analytics, Data Management, Financial Technology, Foreign Direct Investment, Performance Management, technology, Trading & Data
Keywords: Grab, Credit Saison
The joint venture company, Grab Financial Services Asia, will draw on Grab’s reach to millions of Southeast Asian consumers, micro-entrepreneurs and small businesses, and vast datasets on consumer behaviour, as well as Credit Saison’s expertise in credit analysis and consumer lending, to offer micro-financing products and services tailored specifically for Southeast Asia’s fastest growing economies.
The consumer lending venture was announced as part of the launch of Grab Financial, the fintech platform within the Grab ecosystem. Encompassing all of Grab’s fintech offerings, Grab Financial offers: payments services, rewards and loyalty services, financial services and agent services.
Building Reliable Alternatives to Traditional Credit Assessment Through Data Analytics
At the heart of the new company’s offering is Grab’s unique ability to gather and analyse alternative data points on consumer behaviour, which can be used to develop sophisticated credit and risk assessments. Only 27% of adults in Southeast Asia have a bank account, according to World Bank estimates, making it extremely difficult for banks to assess credit and risk ratings by analyzing traditional data points such as bank account details, income and spending habits, or existing debt. This in turn restricts consumer access to credit.
Grab Financial Services Asia taps into Grab’s huge cache of customer data gathered from the Grab app, which processes over a billion transactions annually, to provide a sophisticated, alternative resource for measuring credit ratings. By analyzing behaviour and transaction data from the app, such as transport movements, geo-location, and GrabPay transaction data, the company can offer alternative data points to assess credit worthiness, filling the gap left by traditional credit scoring methods. Using this data and Credit Saison’s expertise in credit scoring, risk management, and product formulation, the JV will offer a range of lending products and services. In the early stages, the JV will focus on providing products to meet the needs of Grab drivers, agents and merchants, such as working capital loans, financing for smartphones and durable goods, as well as consumer goods financing.
In addition to providing its own financial products, in the near future the JV will also offer credit scoring services to Financial Institutes who can use the information to provide other services such as virtual credit cards. Grab Financial Services Asia will also explore partnering with banks and financial institutions in Southeast Asia and globally to provide other financial products, enabling these traditional institutions to unlock new opportunities in segments that they have been unable to address due to the absence of reliable credit information.
“The new joint venture, Grab Financial Services Asia, puts in place a much-needed infrastructure that will accelerate financial inclusion in Southeast Asia. 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 customised for the unbanked majority of consumers and small businesses in Southeast Asia, which will create economic opportunity for millions across the region,” said Jason Thompson, Managing Director, GrabPay Southeast Asia.
Hiroshi Rinno, CEO of Credit Saison, said, “Grab is one of the most trusted and widely used platforms in Southeast Asia, with millions of people relying on the app every day, which gives it a highly valuable insight on consumer behaviour in real-time. This partnership opens up so many possibilities for Credit Saison, for Grab, and most importantly Southeast Asia’s unbanked and underbanked, and we are excited to get started.”
Credit Saison is the largest credit card issuer in Japan, with 35 million credit cards and 36 million pre-paid cards in circulation that bill US$62 billion annually. Its product portfolio includes unsecured consumer lending, shopping credit loans, mortgage loans, micro/auto insurance and leasing. It is also an active technology investor, currently investing in wallets, e-commerce, payment gateways, mobile point of sale (mPOS), biometric payments, location-based marketing, Internet of Things (IoT) and robo-advisory. Its investments in Asia include a joint venture with HCM Development Bank in Vietnam, and Saison Modern Finance, a joint venture with PT. Modern International Tbk, in Indonesia, and an acquiring business for WeChat and AliPay in China. In Southeast Asia and India, it is a limited partner in six active venture capital funds.
Launch of Grab Financial latest milestone in Grab’s mission to serve as a gateway to economic opportunity
The launch of both fintech platform Grab Financial and its consumer lending venture is the latest advancement of Grab’s mission to expand financial inclusion in Southeast Asia. In April 2017, Grab acquired Kudo, Indonesia’s leading online-to-offline (O2O) e-commerce company, and is now in the process of integrating its team, technology, and merchant and agent network into the Grab Financial platform. Grab also launched its GrabPay mobile wallet for peer-to-peer and peer-to-merchant payments in November 2017 in Singapore, and has announced that it will roll out mobile wallets in the rest of its markets in Southeast Asia in 2018.
Grab’s focus on developing a financial services infrastructure tailored to the needs of its customers in Southeast Asia mirrors its success in developing transport solutions addressing the region’s specific needs. Grab operates the largest transportation network and is one of the most frequently used mobile platforms in the region with nearly 4 million daily rides.
Today, the Grab app has been downloaded onto over 86 million mobile devices, giving passengers access to the region’s largest land transportation fleet comprising over 2.6 million drivers. Grab offers private car, motorbike, taxi, and carpooling services, as well as on-demand food and delivery services, across 191 cities in 8 countries in Southeast Asia.