'Super-app' model including insurance put to the test in Asia
(Bloomberg Opinion) --After sending rival Uber Technologies Inc. packing from Singapore and other Southeast Asian markets, homegrown ride-hailing firm Grab Pte. has set itself a stiffer target. It wants to be a regional super-app.
Think of it as a digital conglomerate that hooks customers for one thing, only to promise them value for several others, sort of like a Netflix Inc. subscription that also tracks your blood pressure and orders a pizza as you watch “Scarface.” Thanks to the path set by China’s wildly successful Alipay and WeChat Pay, getting the consumer finance angle right has become a must for Asia’s wannabe super-apps.
Take insurance, which is where Grab is making a splashy foray. Using Chinese partner ZhongAn Online P&C Insurance Co.’s technology, Grab will open up its app as a platform for insurers to sell policies minus agents and brokers. The first provider to sign up is Chubb Ltd., which will offer Grab’s Singapore drivers protection against loss of income from illness or accidents.
This is still flying close to Grab’s core transport proposition. The real test of the firm’s fintech chops will come when it can sell insurance to riders — especially around events that have nothing to do with them going from A to B.
The insurance market in Southeast Asia’s six large markets by premiums is $100 billion annually, a figure that’s expected to double as penetration increases in countries like Indonesia. This is the distribution opportunity Grab is after.
The big prize, though, will be cross-border remittances. Grab has the requisite licenses from Singapore and the Philippines. A product will be out in the first half of this year, says Reuben Lai, head of Grab Financial. Now, Filipino workers in Singapore aren’t Grab’s usual ride-hailing customers. Will they find the remittance commissions low enough to junk Western Union Co.?
Grab is basically a transport service, but the fact that its drivers take cash from customers and credit them the excess fare digitally makes it almost like a no-frills bank for those who have never had an account.
Making the most of this surrogate ATM network is key. If Grab can make a dent in insurance, Singapore businesses like NTUC Income, a workers’ cooperative that leads online searches for everything from travel assurance to domestic helpers’ medical insurance, would be on notice to innovate.
The challenge before Grab co-founder Anthony Tan is simple. Can he do finance better and faster than Go-Jek Indonesia PT, the rival spawned by his Harvard University classmate Nadiem Makarim?
It’s too early for answers, though when it comes to being a super-app Go-Jek has been ahead in its home market of Indonesia, as my colleague Shuli Ren noted in November. It also recently snagged DBS Group Holdings Ltd., Southeast Asia’s largest bank, as a partner. One thing is certain, though: Business lines like food delivery, over which Grab and Go-Jek are fighting tooth and nail, are a natural extension of the transportation DNA common to both firms. Finance is a different animal.
People have their own reasons for wanting to go from one place to another. How to get there, and how much to spend, are separate decisions. But if transport is built around consumer pull, most finance works on push. People have to be told what they should do with their money. Whom they need to do it with — and at what cost — is often inseparable from that discussion.
Singapore is a great testing ground for fintech because the city-state wants to cut flab in traditional industries by increasing competition. A homegrown disrupter (Anthony Tan and his co-founder Tan Hooi Ling are Malaysians, but they couldn’t have dislodged Uber without winning Singapore) might just be the answer. However, two of them — Grab and Go-Jek — may be one regional super-app too many for Southeast Asia. And that’s why Grab can’t afford to flunk its finance test.