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Grab, the Singaporean ride-hailing firm, has secured an undisclosed investment from the consumer credit reporting firm Experian as part of its ongoing Series H funding round, per a press release.
Grab, which aims to raise $6.5 billion for its Series H round and secured $300 million from asset manager Invesco earlier in June for the round, has been increasingly broadening its financial services push. And the strategic partnership with Experian is aimed at helping the firm double down on its efforts to offer financial services to the region's huge underbanked population.
Here's what it means: Grab's been aggressively pursuing the financial services sector over the last year - an effort the Experian tie-up should help accelerate.
- Southeast Asia's (SEA's) largest ride-hailing company has earmarked financial services as a core pillar of its strategy for regional dominance. Alongside its ride-hailing business, Grab's launched a slew of financial services products and ventures under its fintech unit Grab Financial Group. Among the services it offers are GrabPay, its mobile wallet solution, and an insurance and loans business. It's also working on launching a post-paid installment service to help consumers manage payments, and last month announced a partnership with Citi to launch cobranded credit cards in SEA. The company also confirmed rumors that it's considering spinning out Grab Financial Group, per the Financial Times.
- Grab's unique position to tap into Asia's huge un- or underbanked segment illustrates why financial services is a key strategic pillar for the firm. The majority (73%) of SEA's 600 million-plus population don't have a bank account, according to KPMG. And this scarce infrastructure means capturing the region's fast-growing market is especially difficult for incumbent financial institutions (FIs). In contrast, Grab's platform already exists as a form of infrastructure for the region's customers - one that's considerably cheaper to operate than a wide-spanning brick-and-mortar footprint for the firm. Offering financial services via this platform enables Grab to take advantage of its vast swaths of data on its users, allowing it to conduct key metrics like creditworthiness that incumbent FIs lack access to. And by offering financial services products to its existing user base, the ride-hailing firm stands to tap into a virtuous cross-selling opportunity. The strategic partnership with Experian will enable the company to further customize its proposition for its users, including widening access to loans for entrepreneurs, according to Experian.
The bigger picture: As they look to remain relevant and get closer to customers who've long been out of reach, incumbent players are increasingly trying to hitch rides with the likes of Grab.
For legacy players, partnerships with platform-based businesses like Grab offer a rare opportunity to tap into these players' huge user bases. In the past, being relevant to, and reaching, consumers meant FIs needed to have a large footprint of physical branches. As more and more consumers turn to digital platforms for their needs, including financial services, these physical presences are no longer necessary.
Instead, by partnering with the likes of Grab, incumbents like Experian and FIs like Citi can tap into these players' ecosystems and reach huge numbers of consumers. Citi's partnership with Grab, as well as Goldman's agreement with Apple to launch cobranded credit cards, is an example of this growing trend. However, as more incumbents look to ink deals with digital players, the competition to sign up the most successful platforms is going to be fierce.
Given this, we anticipate established FIs that fail to adequately transform their businesses for the digital age will struggle to position themselves as preferred partners for the likes of Grab.
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