Grab launches micro-investment, third-party loan and BNPL offerings
Grab, the Singapore-founded car share turned super app, is further reinforcing its position in the financial services sector with a string of new offerings.
It has launched its first micro-investment service, alongside a third-party loan platform and buy now, pay later (BNPL) products for ecommerce websites.
Called ‘AutoInvest’, Grabs micro-investing offering allows its Singapore-based users to automatically invest with every transaction.
The product launch follows Grab’s acquisition of robo-advisory firm Bento in February.
Customers set the limits, which can be as low as $1. They can earn returns of around 1.8% per annum, which can be withdrawn at any time with no penalties.
But any returns they do make have to be cashed out through the GrabPay wallet. They can only be spent on Grab services or merchants which accept GrabPay’s card.
Investments are directed to liquid fixed income funds offered by Fullerton Fund Management and UOB Asset Management.
Future of GrabInvest?
Launched in March, GrabInvest – of which AutoInvest is a part of – is one of a number of fintech services aiming to disrupt the South East Asian market.
At the end of March, Singapore-based robo-advisor Smartly pulled out of the race citing “intense” competition for why it closed.
But the margins are tight for these investment service upstarts. “Many robo-advisors have failed to disrupt the investment services of the incumbents and are still unprofitable,” a 2018 Morningstar report reads.
Robo-advisory services like GrabInvest need to manage huge amounts to make a low-maintenance fee structure work for them.
A 2019 HSBC report said robo-advisors in North America would need to be managing between $11.3 billion and $21.5 billion to simply break even.
In the meantime, banks are also spilling into Singapore’s robo-advisory space. In 2018, OCBC unveiled its robo-investment service OCBC RoboInvest. Then last year DBS launched a hybrid human-robo investment service for its retail investors.
Third party loans and BNPL
Investing aside, Grab is also extending its credit offerings by opening up its consumer loan platform to third party providers.
This fintech is integrating with bank’s application programme interfaces (APIs). This will enable users to search for and apply for loans directly within the Grab app.
Whilst Grab’s BNPL lets users shop online and choose the option to pay in interest-free instalments at the checkout.
“Eligible users” – which suggests some sort of credit check to use the service – can choose either monthly instalments or defer the whole payment to the following month.
“We hope to unlock the tremendous potential in financial services in the region in ways that serve all Southeast Asians,” says Grab Financial Group’s senior managing director, Reuben Lai.