New methods of banking are here to stay, thanks to the global epidemic, and Grab is beefing up its financial services offerings in Singapore to meet changing expectations.

As Grab's financial arm gets closer to launching its digibank operations in 2022, we see more activity from it. Grab Financial has been partnering up with several payment gateways this year, including AsiaPay, FOMO Pay, and Revenue Group, to increase merchant acceptance and adoption of its GrabPay wallet across the area.

Its merchant services were enhanced in October, including the addition of "buy now, pay later" (BNPL) alternatives and new ventures into the crypto arena. 

With the advent of mobile payments, its famous GrabPay wallet, launched in 2017 to enable cashless payments for its ride-hailing and delivery services, has evolved into a widely embraced payment option even outside of the Grab platform. E-commerce sites or online stores, as well as physical stores, handled about 40 percent of the group's total payment volume in 2020.

Grab's financial services department, which was established in 2018, has also developed digital financial products such as microloans, microinsurance, and buy now, pay later (BNPL) services.

Grab Financial Group's (GFG) loan disbursements surged 4.1 times year over year in the second quarter of this year, while gross written premiums increased four times.

Financial disruption

According to Lim Kell Jay, Singapore CEO of GFG, traditional banking methods will alter, and it was sped up during the epidemic as more individuals remained at home.

"When you apply for a traditional loan, an insurance policy, or an investment, you will almost always be required to meet with a bank agent. People want to bank from home, on their phones, so there will be less of it," he observes.

Financial organizations are now faced with the task of doing virtual due diligence and digitizing the traditional KYC (Know Your Customer) process. According to Lim, this has resulted in the "fractionalization of finance", as evidenced by increased demand for products like BNPL and microinsurance policies, which are arguably easier to get.

"These things will develop because traditional banks' more complicated and complex services may no longer be applicable. It's difficult to achieve that when you don't have a human in front of you," he continues.

While financial services are a new venture for Grab, it already has a leg up on its fintech competitors, having created an ecosystem of users, driver-partners, and merchant-partners over time.

With millions of customers around the country, GFG can acquire deeper insights from a larger pool of data in order to better understand their needs and provide more personalized and localized solutions.

"Our platform's client base is not only engaged but also transacting, which is a small but significant distinction. We are able to provide financial services to these customers as a result of this," Lim explains.

He points out that GFG's digital roots help it generate more granular risk evaluations, which are especially important as guardrails for its BNPL and lending services to prevent clients from spiraling into debt.

It also has a fraud detection system to reduce the risk of fraud and safeguard against unusual or suspicious transactions. GrabDefense has kept fraud losses on the Grab platform to approximately 20 basis points of revenue, well below industry averages. The International Data Corporation's Future Enterprise Awards 2021 just named it Best in Future of Trust.

Another important strategy for expanding GFG's capabilities is to form strategic alliances with both the corporate and public sectors. "We don't think we can do it on our own. There are so many aspects of financial services that we can't possibly be experts in all of them," Lim explains.

GFG had secured a partnership with Mastercard to launch the GrabPay card, which can be used throughout Mastercard's global network of merchants, to make GrabPay more widely utilized online and offline.

Collaborations with Adyen and Stripe help accelerate GrabPay's adoption as the preferred payment method for online sites outside of Grab's in-app services, while partnerships with Chubb and NTUC Income enable the development of microinsurance policies that are accessible, affordable, and simple enough to scale, according to Lim.

In the future, BNPL will be a key emphasis area for GFG as it rises in popularity among younger consumers, particularly for online shopping.