Fintech for good
Super-apps such as Grab have potential to expand financial inclusion for consumers and small businesses.
published : 30 Sep 2019 at 04:30
newspaper section: Business
writer: Tarin Thaniyavarn
Ten years ago, one could hardly imagine surviving a day with just a phone in Thailand. Fast forward to the present: you can book a ride to work, order meals or groceries to be delivered to your doorstep and pay for all these services using the Grab app on your phone in six Asean countries. The advancement in technology has played a big part in this new reality.
With a rising middle class, high mobile adoption and internet penetration, Thailand is experiencing an economic growth fuelled by the technology industry. The local digital economy is forecast to be worth US$37 billion by 2025.
However, it has yet to achieve its full economic potential. According to a Bank of Thailand survey, 30% of Thai households remain unbanked. Without access to basic financial services, it is almost impossible for the people to save money let alone to borrow or invest, which as a result, limits their potential to grow and contribute to the economy.
Lack of access to finance is also the root cause of many challenges that Southeast Asians face, such as income inequality, poverty and a low standard of living. This is where the real opportunity for financial technology lies: to help Southeast Asia achieve its full economic potential through driving financial inclusion.
Making optimum use of technology, fintech can apply a fresh approach to existing banking processes and close the financial access gap, offering the unbanked leverage and opportunity they never had. Driving financial inclusion is especially crucial for Thailand as it strives to become a cashless digital society under the Thailand 4.0 strategy.
As one of the leading tech companies in the region, Grab has access to e-money licences in six major economies in the Asean including Thailand. Our fintech arm, Grab Financial Group, has identified three areas where Grab can contribute to comprehensive financial inclusion in Thailand:
1. Accelerate the realisation of the cashless society: From transport to food and grocery delivery, millions of people are already using Grab app to meet their daily needs. By introducing GrabPay, we are helping more Thais go cashless. Through our partnership with Kasikornbank to introduce the GrabPay e-wallet, cashless payments are already available for all Grab services and we hope soon at offline merchants too.
On top of that, the ubiquity of the Grab app can help us reach the unbanked and underbanked population, to not only offer them a safe digital wallet but also a way to obtain other financial services. Many underbanked driver-partners have successfully established reliable income records, which allows them to access basic financial services such as bank account opening and short-term financing, enabling them to participate in as well as contribute to the digital economy.
2. Increase economic efficiency with super apps: As a super app, Grab has an ecosystem that is self-reinforcing, and e-payment can facilitate growth of other services such as food and parcel delivery. With consumers adopting cashless payment, micro-entrepreneurs can minimise time spent dealing with cash and increase productivity, generating more income opportunities.
It is also the gateway to enable more services such as GrabRewards, Subscription Package, Remittance and PayLater: offering more flexibility and convenience to consumers while increasing efficiency in the economy.
For example, consumers can track their spending easily using GrabPay and take advantage of other Grab offerings such as Subscription packages and PayLater to manage their spending. Travellers and foreign workers can avoid time wasted queuing for remittance and foreign-exchange services while enjoying competitive rate.
3. Use Big Data to provide safe financing: Small businesses are the backbone of many Southeast Asian economies. Yet, financing is one of the biggest challenges they face, resulting in the proliferation of loan sharks. Based on a report by Credit Suisse, over one-third of Thailand's population doesn't qualify for bank loans.
Capitalising on the scale of Grab's platform, we are now using big data to run alternative credit assessment on our driver partners and merchant partners, offering them safer financing. This is enabling them to grow faster and compete more fairly in the economy.
We are already witnessing how accessible financing helped transform lives in an economy such as Thailand. Hachi Tea, a GrabFood merchant partner, managed to expand its bubble tea business and create more job opportunities after obtaining an SME loan to invest in expansion.
Nevertheless, financial inclusion is a challenging task and one that cannot be achieved alone. It requires every fintech player to shoulder the responsibility of creating products that benefit the people while working closely with stakeholders including financial institutions, regulators and the authorities to establish a healthy and sustainable ecosystem.
Such a vision is not something that can be built overnight but one that Grab is fully committed to. We believe Southeast Asians deserve the rights to basic financial services, just as firmly as we believed everyone should enjoy safe and reliable transport when GrabTaxi was started seven years ago.
Grab will continue to innovate, consult with authorities and improve on this journey to uplift millions of lives in Southeast Asia as well as to be a key driver in realising Thailand 4.0.
Tarin Thaniyavarn is the country head of Grab Thailand.