In an interview with Rajiv Chandna, Grab Financial Group’s head of growth, business development and strategy, The Asian Banker delves into the financial service provider’s cooperation with banks, its partnership approach and what is in the pipeline for 2019.
It was back in March 2018 when Grab Financial – which offers different kinds of services: payments, loyalty, financial, agent – was launched in Southeast Asia. At the same time, Rajiv Chandna, a former senior director for strategy in Standard Chartered Bank in Singapore, joined Grab’s new fintech platform as head of its growth, business development and strategy division.
Chandna’s more than a decade of professional history, which includes working for AIESEC – a non-governmental, not-for-profit organization – Cadbury Plc, UBS Investment Bank and the Boston Consulting Group prepared him to take part in Grab’s mission, which is to expand its financial inclusion in Southeast Asia.
More than a year after joining Grab Financial, Chanda talks about key milestones they have achieved and the steps taken to overcome the challenges they continuously face.
Here is the transcript:
Boon Ping: Why don’t we start with the genesis of Grab Financial Group?
Rajiv Chandna: I guess the story is embedded as all of the Grab stories in our drivers. As we started to scale our transport, our food, our mobility business, we started hitting roadblocks very quickly. Our drivers couldn’t get loans, our drivers were not allowed to open bank accounts. We couldn’t send money, we couldn’t settle with our drivers the next day. All these issues.
The genesis of all is that we’ve struggled to scale our business and from the transport side, we had a unique angle on the underserved and unserved market, from Grab Financial Services’ standpoint. Very quickly, for the founder’s vision was we had this huge opportunity. We’ve got so many people engaging with us regularly, let’s focus on financial inclusion as a growth area.
BP: What path did you take in responding to those needs?
Rajiv: We made a clear decision right from the start that we wanted to be a financial omnibus for our customers, for our drivers, for our merchants that were on the platform. We knew that we didn’t want to do this alone, or even couldn’t do it alone. So our mantra has been partnerships. When we started a lending business, we found a joint venture partner in Credit Saison. When we wanted to start insurance, we found a joint venture partner in ZhongAn. In Egypt, the local partners helped us scale. In Thailand, that’s Kasikornbank. In the Philippines, that’s BDO, SM Group. In Malaysia, it is Maybank. That has helped us scale very quickly in each one of these markets. Fundamentally that’s the story. We’ve been running pilots of lending to our drivers, and we are very proud.
BP: So it’s not a business of disrupting or disintermediating. You are the customer interface, the front end origination.
Rajiv: We are now doing three types of lending. We are lending to our drivers and we are lending to merchants and we are trying to scale. We are now scaling a pay later product for our consumers. In every instance, we do credit scoring ourselves.
Sharing the same vision
BP: For each of your markets, you work with different partners and keep the business distinct. Are you also looking for financial services partner that has similar footprints or is it a conscious effort to work with only the dominant player in each of the markets?
Rajiv: What differentiates us is, I guess two things: One is the partnership approach and these are strategic partnerships where our intentions are aligned. The second thing, the big learning is that wins are hyper-local. What wins is deep local expertise. It’s especially more relevant in financial services because of the way people use money and interact with cash and cashless, and banks and financial institutions, a behavior built not in over 10, 20, 30 years, but hundreds of years. The social trust between people and every market is very different.
When we worked with our partners, we found partners who obviously shared our vision for the society in terms of financial inclusion, but also have the deep local expertise. Because that’s what really moves the needle in financial services. But when it comes to developing localized solutions for insurance product, we’ll again work with a number of local partners in each market for insurance.
BP: What key metrics are you looking at?
Rajiv: We are very metrics-driven around all of those things. But the most obsessive metric, the one that we track the most is customer satisfaction, the net promoter score (NPS). We basically measure us against NPS goals. For all of the lending-related work that we’ve done, every time we’ve launched a product, we go and do an NPS survey with our borrowers. And we are very proud to say that our NPS goals are on par with what people would score an iPhone, an Apple products. That’s a remarkable achievement for a lender, for your borrower to say, “This lender is as good as an iPhone.”
Safety, security and conduct is our number two metric. For our drivers, their option so far was to go to a loan shark because they don’t have access to regular bank financing, personal loans. They are interacting with the lender that’s providing them, but we want them to make sure that they’re responsible. We want to be a responsible lender, but we also want to enable them to be a responsible borrower.
A “win-win” partnership with banks
BP: In many markets, banks are coming to you. Do you always see eye to eye in terms of how you define your platform and how the banks define platforms?
Rajiv: I guess as a starting point, we are going after a population that banks are not interested in or are less interested in and continue to be less interested in: people who have an unmet, under-met need of financial service. There is a clear collision there, where partnership makes a lot of sense for us. All of our partnerships are nonexclusive, they’re open partnerships. We welcome other banks if they want to come and join us. I do think that the broader fintech narrative – especially some of the vested fintech firms – which say we want to be a global bank or we want to make banks irrelevant, is a very unhelpful narrative.
Banks are not going to become irrelevant anytime soon. But I do think that banks need to actively partner. This notion of bank as a platform, open ecosystem, open architecture is spoken about, but never executed. Where it comes closest to execution is when there is a regulatory hammer, such as the revised payment services directive (PSD2) in Europe, or open banking regulations, such as in the UK. That’s where it starts to make a difference. There is a narrative from the fintechs about where to disintermediate, which puts banks potentially on the defensive.
BP: When you cooperate with banks, what brings you together?
Rajiv: I guess data is one way to say it. What’s in it for a bank is access to understanding consumer behavior and access to designing products and services, consumer first. Moving away from a product-driven approach to a consumer-driven approach is a really big deal for a bank. They see us at the forefront of that, they see our technology stack. And obviously access to a consumer base that’s losing relevance and engagement for mainstream banks.
BP: Losing the ability to trust the mandate?
Rajiv: Trust is one way of saying it, but I sometimes see it as indifference, which is maybe even worse. Financial services is something that happens while you’re living your life. People are not looking for a loan. People want to buy a house or a laptop for their kids. They don’t want insurance, they just want safety. That conversation tends to be a lip service for banks and we shine a different light on it. Our biggest competitor in this region is cash. That’s what we are fighting for. And we’re not going to do it alone. We need partners who want to and are able to make a dent in that competitive landscape of cash. For us, we learn a lot from our banking partners.
BP: In the true sense of the platform it is the connectivity and the use of data, not products.
Rajiv: Context is the most important part. Then to get to the context, data helps us, and then to get to the right product, data does inform. But the overall thing is, what’s the context? That not only is relevant for lending and insurance, but also for payment. So we have a geo-location capability. If a merchant works with us, and they want to work with a certain group of consumers, that’s for payments and lending. If a bank either may not give me a loan or may not give me the facility in two days, which is what I need.
BP: In the lending business, you are also a bit of a competition to the banks.
Rajiv: Our starting point is we are in the unmet/under-met region. Banks don’t want to participate, or don’t want to participate by themselves anyway. As a distribution platform, we can give them access that they wouldn’t have otherwise. There are lots of clear areas where there’s a win for a customer, there’s a win for a bank, and a win for us.
An open platform of participation
BP: What are your short-, medium-term goals and long-term goals? What is the ambition for financial services?
Rajiv: The number that’s closest to our heart when we talk about it is, from a financial services standpoint, we want to enable 100 million customers across Southeast Asia and across drivers, merchants and consumers by 2023. We want to become a part of their lives by bringing the most innovative capabilities to them in the right context. We don’t want to push products. We want to be contextually correct.
BP: In some cases you’ll be enabling, you’ll be facilitating products from other financial institutions (FIs).
Rajiv: Correct, we may need a distribution license or a brokering license. License is part of the game. But I don’t think we are about to produce insurance products on our own. The reality is that the products that we may want to bring to the market may not be available. For us, the most important thing is customer satisfaction and speed. If we can work with a partner to bring a product to the market fast and make sure that it’s a high quality experience, we’ll do that. Where we think that we can’t find partners, where we want to bring gig economy insurance products to the market and we’re encouraging insurance companies to come work with us to produce those products. Switch on/switch off insurance. If they can’t, then we’ll have to work with partners constantly to keep developing relevant products for our ecosystem. And it’ll always be that case. If nobody does it for us, then we’ll have to do it on our own.
BP: How are you expanding that ecosystem to increase acquisitions?
Rajiv: We are entering into these strategic partnerships. So with Tokopedia in Indonesia, where Tokopedia now uses our wallet as their core wallet for customer interaction. It’s a huge source of customers.We’ve got the largest financial ecosystem in Indonesia now. We’ve got Tokopedia for online, largest e-commerce company, Grab, largest transportation, and we’ve got Lippo Group for offline acceptance, and we’ve got a whole number of malls. We’ve covered offline, online and transport. And what connects this is our wallet, which operates seamlessly on those three. You can access the range of financial services irrespective of which platform you access it from. That is truly the value of the platform. Grab is a platform, and everything that we do is designed around “How do we become that open platform of participation with partners?” Because, again, we are not going do it alone.
BP: In more mature markets, what are the challenges and what are the opportunities?
Rajiv: We sit at the intersection of merchants and consumers. We are enabling our merchants to interact with the consumers in a very targeted way. I am worried about (if) I am losing relevance, I’m worried about customer acquisition. And we give them access to a demographic that they might be relevant in, as in we are in almost every smartphone in Singapore. So we’ve got a cross-section.
BP: What are some of the immediate initiatives that are in the pipeline?
Rajiv: Scaling lending, scaling insurance will be the big story of 2019. We’re going to launch our wallet in the Philippines and Thailand also in the next month or so. That’s going to be the other big story. And then the other will be partnerships. We’re still actively looking for partners who want to work closely with us, so that’s going to be core to our mission still in 2019.