Embedded Finance

Grab a seat at the Embedded Finance table

Grab’s implementation of embedded financial products and push to integrate financial services into all sectors of its platform is an excellent example of how companies can use fintech to build a complete customer experience.

The Singapore-based gig-economy platform Grab originally began as a taxi ride-hailing service app in 2011 called MyTeksi, founded by Anthony Tan and Tan Hooi Ling. With just an initial grant of $25,000 from Harvard Business School and Anthony Tan's personal capital, MyTeksi took off. These two Harvard graduates were on a mission to improve the affordability, quality, accessibility, and safety of taxi rides in Malaysia. With its core product offering a taxi-dispatch service with GPS enhancements that allowed passengers to hail the nearest taxi with ease via the app, MyTeksi quickly became a major game-changer for the people in Southeast Asia. 

MyTeksi rebranded as GrabTaxi the following year, and in partnership with HDT Holdings, introduced 100 BYD e6 electric taxis in Singapore to form the biggest e-taxi fleet in Southeast Asia. GrabCar and GrabBike services launched in 2014. As alternative forms of transportation that used personal cars and motorcycles instead of taxis, this was an effort to overcome the lack of public transportation during peak travel hours in dense cities. In 2016 the company officially became Grab, and by 2018 the platform was quickly becoming the largest tech startup in the region. Grab officially stepped into the embedded financial market with the acquisition of financial technology firm iKaaz Software, fueling all of the platform’s payment transactions across the South East Asian countries it operated in. 

By the end of 2018, the mobile platform began to extend beyond ride-hailing services into food, grocery and package delivery, business enterprise services, mobile payments, and financial products. With the addition of GrabExpress, GrabMart, GrabPay, GrabFinance, GrabRewards, GrabFood, and more over the next decade, Grab continued to develop its ecosystem into what's known today as a “super app.” Super apps are often created to consolidate products and services, including financial features and functions, of multiple mobile apps into a single platform. In a region where many people were left out of the digital economy, Grab services provides meaningful access to millions in Southeast Asia through a single app. Grab’s focus is on developing a full suite of services for customers' everyday needs. 

Grab’s explosive growth created a multi-channel marketplace with a current presence in over 400 cities and eight countries, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. According to Grab, the total online food delivery market will be valued at $170 Billion in 2025, while the mobility market and digital payment market will increase to $235 Billion and $1.3 Trillion, respectively, by 2025. Focusing on hyper-localized problems to leverage their customer base, Grab tapped into providing the fundamental services that Southeast Asia consumers care about most. Because cities in Southeast Asia are becoming increasingly congested, people there have limited public transportation options. Accessing basic needs like groceries, banks, and transport are time-consuming, and expensive with options typically limited to what is available nearby. Through Grab’s super app, millions of consumers are provided with easy access to everyday transportation, delivery of goods, financial services, and more, making Grab a household name across Southeast Asia. Today, Grab boasts a total user count of 180 Million people with 31 Million active monthly users, and 24 Million monthly transacting users. 

Grab’s mission to drive Southeast Asia forward by creating economic empowerment is a journey fueled by not only operating across the delivery, mobility, and digital financial services sectors simultaneously, but also providing customized financial services to customers and employees. Grab’s rise is rooted in financial innovation, the creation of superior customer experiences, and the interconnectivity of its user experience, financial products, and rewards program.


The Greatest of Grab Trio: GrabExpress + GrabFood + GrabMart

Claiming the “Everyday, Everything App,” Grab launched two of its most popular services GrabExpress and GrabFood in 2018. And by the end of 2019, the release of GrabMart soon followed suit. To create streamlined customer experiences across package delivery, online grocery, and food delivery, Grab focused its operations on expansion into those services. Grab advanced its value proposition and revenue by offering all types of services people would want or need on a day-to-day basis via its platform. 

Across all of Grab’s core offerings, customers can earn, redeem and pay with points through a lucrative rewards program. GrabRewards incentivizes customers to continue spending by only using GrabPay, the heart of Grab's platform and financial ecosystem. GrabPay lays the groundwork for the company's expansion of digital banking services enabling instant transactions with ease, convenience, and low fees. 


The Peak of Financial Interconnectivity with GrabPay

The move to layer financial products and rewards programs into its platform is what makes Grab a force to be reckoned with. Southeast Asia is still a largely cash-based transaction economy with a large proportion of the region’s 683 Million people remaining unbanked. This market of consumers are in need of better access to cashless payments and banking solutions for their everyday financial needs. Grab addressed this economic disparity by launching GrabPay. As a mobile wallet payment solution, Grab built what is now one of the region’s largest cashless payment solution for people with limited access to the banking system. 

Customers use GrabPay Wallet, a licensed e-Money wallet containing stored value with a top-up balance feature. Grab’s payment network is underlined by a proprietary risk and fraud detection system enhanced with advanced AI machine learning that progressively builds on historical data. The eWallet can be used for bill pay, shopping online, making person-to-person (P2P) payments, transferring funds, and earning rewards on transactions. Initially operating in a closed-loop system, the GrabPay Wallet is now split into two main categories: a non-transferrable balance, and a transferrable balance. Funds topped up from credit cards or foreign debit cards cannot be transferred out; they can only be spent within the Grab ecosystem. But funds from other sources, such as local debit cards, PayNow, P2P funds, and QR codes, can be transferred out. 

PayNow is a service run by The Association of Banks in Singapore and offered by participating banks allowing customers to send and receive Singapore funds from one bank to another using their mobile phone number. Available 24/7, 365 days a year, transfers are free and instant, and are supported by nine major banks in Singapore. GrabPay’s integration of PayNow virtual payment addresses (VPA), acts as a unique identifier that can be linked to an individual's GrabPay Wallet. Grab customers can set up a PayNow VPA to top up their GrabPay Wallet straight from their preferred bank account, or top up by scanning or uploading a QR code using the Scan and Pay function in their native banking app. Customers can even top-up someone else's wallet using PayNow. 

Businesses can join the GrabPay Online Merchant app to instantly gain access and exposure to leverage Grab’s consumer market. All merchant partners using GrabPay only incur a 1 percent fee on all transactions. Alongside the opportunity for merchants to kickstart partnerships in other Grab verticals like GrabFood, GrabExpress, and GrabRewards, this service enables their customers to pay for goods and services directly through the Grab app. Each merchant receives a QR code for their physical location with a one-tap feature that streamlines the checkout process as well as access to GrabPay website integration for online transactions. 

With over 4,000 merchants across the GrabPay network in Singapore alone, consumers can easily use GrabPay in retail stores, restaurants, and e-commerce sites. The app automatically transfers daily earnings to a linked bank account by the end of the business day, with merchants receiving their funds within 48 hours. GrabPay for merchants is also incentivized as dual-purpose because the app also acts as bookkeeping and accounting software in real-time. Merchants get paid faster, and have access to daily and monthly transaction reports, can refund shoppers instantly, and customers earn reward points each time they use the app for transactions with any partnering merchant. 

To provide enhanced security, Grab partnered with Mastercard to introduce physical numberless GrabPay cards. Connected directly to the GrabPay Wallet, cards are available to customers that do not have formal bank accounts. The service has also extended into buy-now-pay-later (BNPL) with GrabPay PayLater. This service is only currently available in Malaysia and Singapore, it enables consumers to consolidate their bills and pay the following month, or in four monthly installments with no interest or hidden fees. 

According to Grab, 77 percent of all transactions on its platform are conducted via GrabPay. Digital payments are expected to cross $1 trillion by 2025 in Southeast Asia, and GrabPay accounts for nearly one in two dollars spent in the region.

Everyday Customers can Grab Top-Tier Rewards  

Grab launched its rewards program by the end of 2016, enticing its customers with a tiered loyalty program that connects across all of Grab’s vertical markets. 
The only way for customers to earn GrabRewards points is by using the GrabPay e-wallet, GrabPay card, or PayLater by Grab within the platform's ecosystem or with Grab’s merchant partners. Customers can earn up to 2 percent back in points, with every dollar spent earning a small percentage of points based on their tier of membership. 

GrabRewards points also don’t expire. Instead, as long as customers complete one Grab transaction per month, the validity of all their points extends by six months. Benefits include better discounts, priority services, and partner exclusives as customers rise in membership tiers. In essence, Grab customers are rewarded for almost everything they do in the app from transportation, delivery, food, and commerce. Grab’s brand loyalty is further solidified as customers use the Grab platform to save and earn discounts. Through the rewards program, customers are incentivized to use Grab for all their daily needs. 
GrabFinance: Consumer Financial Services for Everyday People

The ride-hailing business that has taken Southeast Asia by storm formally expanded into its own branch of financial solutions in 2019 called GrabFinance. As the payments landscape in Southeast Asia continues to evolve, Grab’s mobile wallets have become a launchpad for offering additional financial services such as loans, insurance, investing, and digital banking. Grab has continued to enhance and expand its suite of financial offerings under Grab Financial to include loans, micro-financing, health insurance, and wealth management services for the millions of underserved and unbanked consumers, micro-entrepreneurs, and small businesses in the region. 

Expanding its financial services, Grab offers AutoInvest, GrabInvest, small business loans in partnership with Citi Bank, and a joint venture with ZhongAn International, a Chinese insurance giant to offer digital insurance products to Grab’s customers, employees, drivers, and merchant partners. 

The Grab AutoInvest program enables consumers to invest small sums of money through Grab’s app every time they spend, turning transactions into investment opportunities with as little as S$1. On the other hand, GrabInvest in partnership with Fullerton Fund Management and UOB Asset Management provides a low-risk alternative to fixed deposits and endowments for their customers. This program promotes financial flexibility with the option to invest any time, track the performance of the portfolio in the app, and make instant withdrawals. 

Citi is the first banking partner to offer personal and business loans on the Grab app. Customized for small business micro-lending and financing, the program includes access to the Citi Grab credit card with digital applications for both loans and credit processed directly through Grab’s platform via API. For qualified customers who meet Citi’s lending criteria, there are flexible repayment options ranging from 12 to 60 months at very competitive rates for the region. Customers are also allowed to convert the available credit limits on their credit cards into a cash loan that is payable in monthly installments.  

Grab’s implementation of embedding financial products and the push to integrate financial services into all sectors of its platform is an excellent example of how fintech companies take full advantage of building a complete customer experience. Through embedded finance, Grab’s customers not only shop, order food delivery and transportation, they leverage Grab to pay, save, and invest. Grab’s customer engagement, retention, and customer lifetime value will improve as the company has become more central in its customer’s lives.

“Our evolution into a super app was guided by the everyday problems we wanted to solve for the people we care about, and accelerated by the growing appetite for digital services in a rapidly transforming landscape. From on-demand mobility and deliveries to digital financial services, enterprise services, and more, we believe we are only scratching the surface of the opportunity ahead of us.”

- Anthony Tan, Co-founder, and CEO of Grab (2021).

Written by Alviere