2020 Top Ten Asia Fintech Trends #2: Battle of the super-app hopefuls: Grab vs. Gojek

Written by || February 07 2020

Southeast Asian ride-hailing giants Grab and Gojek aim to reinvent themselves as digital banks amidst rising concern about profitability among cash-burning tech startups. Becoming a profitable digital bank is the only way either of the companies will have a crack at super-app status. Bundling ride hailing, food delivery, plus other odds and ends won't do the trick. China's WeChat - the world's first and only super app to date - cemented its dominance by introducing a handy e-wallet and later building out a more comprehensive suite of digital banking services.

It's the right time and place for Grab and Gojek to launch digital banking services. Nearly every Asean country is pushing financial inclusion policies undergirded by fintech. The barrier to entry is low: a smartphone, reliable Internet connection and steady income. Most of the key economies in the region are growing fast.

What's less certain is how many people want to bank with their ride-hailing app. Neither Grab nor Gojek has deep financial expertise. Though they're targeting the unbanked and underbanked - who are less attached to traditional banks than their counterparts in developed economies - competition is fierce. The vast troves of customer data the ride-hailing companies have will be a boon to their banking efforts, but partnering with incumbents is also necessary. For that reason, the ride-hailing giants are working with both major banks and credit-card firms. 

Meanwhile, Grab has several major advantages. First, the Singapore-based company acquired Uber's Southeast Asia business in 2018 for an undisclosed sum. The acquisition gives Grab a presence in all of Asean's largest economies. Grab leads the ride-hailing segment in Singapore, Malaysia, the Philippines, and Vietnam. Gojek only leads in Indonesia, although that market is larger than the aforementioned four combined. 

At the same time, Grab is applying for a full digital bank license in Singapore together with telecoms giant Singtel. The companies say that their digital bank will cater to digitally oriented customers who prefer more personalized services, as well as SMEs which often struggle to access credit. The license would not allow Grab to offer full banking services outside of Singapore, but the city-state could serve as a crucial testbed for Grab to develop its fintech acumen. 

Gojek is not as well positioned for regional expansion, although its payments business is growing fast at home. In the four years from its founding in 2014 to 2018, GoPay's (the fintech arm of Gojek) transactions reached US$6.3 billion, 30% of the total in Indonesia, according to the companyGoPay reportedly has 4,000 merchant partners and has worked with 300,000 micro businesses and SMEs.

Still, GoPay faces stiff competition in Indonesia's payments market from Grab-backed Ovo. Ovo has a 37% market share, while GoPay has just 19%, according to data cited in a September Tech In Asia report. Ovo is reportedly accepted in about 90% of Indonesia's shopping malls thanks to the backing ofthe Lippo Group conglomerate, a major player in the country's retail segment.