Grab eyes Malaysia and Indonesia next for digibank launch

Grab is launching its digibank in Malaysia and Indonesia next year. Earlier this year, GXS Bank, a joint venture between Grab and Singtel, and Kuok Brothers, was one of the five applicants which received a digital bank licence from Bank Negara Malaysia.

The bank launched in Singapore last month and aims to revolutionise banking services for its customers by leveraging its technological capabilities and the power of the GXS, Grab and Singtel ecosystem. Charles Wong leads the GXS Bank's operations in Singapore as CEO. According to Grab in a recent LinkedIn post, its learnings on lending behaviours on its superapp is feeding into its banking ambitions. Knowing that MSMEs and gig workers in Southeast Asia are under-supported by conventional banks, Grab is using the data it has on their earnings and behaviour to extend more accurate credit to them. This resulted in the launch of its first financial product, the GXS Savings Account.

Grab expects to break even for its digibank operations by 2026, the company said during its first Investor Day recently. Meanwhile, it also expects to break even on a group adjusted EBITDA basis by the second half of 2024. For the second half of the year, group adjust EBITDA loss is expected to be US$380 million, a 27% improvement compared to the first half of 2022. With a focus on sustainable growth, the company also expects group revenues to grow strongly between 45% to 55% year-on-year in 2023 on a constant currency basis.

On the grocery and mart deliveries front, Grab has entered into a strategic partnership and investment with Indonesia's Trans Retail. The partnership aims to accelerate the expansion of on-demand grocery deliver while creating better grocery shopping experiences for consumers in Indonesia.

Trans Retail operates more than 110 hypermarkets and supermarkets across 28 Indonesian cities. The strategic partnership is expected to see deeper integration between both companies, where Trans Retail will integrate all of Grab’s core services into its grocery stores, while Grab will leverage Trans Retail’s hypermarket infrastructure to scale on-demand grocery delivery at lower costs.

(Read also: Marketing digital banks in SG: Standing out amidst the clutter of ads)

The partnership comes shortly after Grab closed its dark store operations in Singapore, Vietnam and the Philippines last month. As part of the closure, Grab is moving its operations to Trans Retail's facilities, leveraging its vast retail footprint, warehousing capabilities, and purchasing power to enhance its current groceries and everyday essentials on demand offering. This is also expected to reduce Grab’s operating costs.

In terms of expansion, Grab's pilot monthly subscription programme, GrabUnlimited, has since expanded to Indonesia, Malaysia, Singapore, Thailand, and the Philippines. According to Grab, its early adoption has shown greater user engagement and retention, larger basket sizes and increased order frequency. Average GrabFood GMV from GrabUnlimited subscribers is 2.4 times higher than from non-subscribers, with subscribers also transacting two times more on average compared to non-subscribers. Grab expects to integrate more services into the benefits, and tap on its network of brand partners to offer specially curated experiences.

Separately, months after it rolled out GrabMaps in June, the company said it is now 100% self-sufficient with the hyperlocal service, with its operations in all eight countries now fully powered by Grab's own map tech and location-based inelligence. Grab estimates this move to avoid tens of millions of dollars in potential third-party mapping fees every year. GrabMap solutions draw on data from millions of orders and rides served daily, with real-time feedback from partners on road closures, business address changes and more.

Meanwhile, driver-partner levels today are approximately at 77% of pre-pandemic levels while it has seen 19% higher batch rates, as well as 11% increase in trips per transit hour. Anthony Tan, CEO and co-founder of Grab, said the company has been firing on all cylinders to improve its profitability trajectory and deliver growth in a sustainable manner and the new targets reflect just that.

At the same time, Alex Hungate, COO of Grab, said it is driving growth through strategic initiatives such as GrabUnlimited, GrabForBusiness, groceries, local partnerships, and advertising. While firms such as Shopee and foodpanda, for example, have been plagued by job cuts in recent times, Hungate said in a separate Reuters interview that it does not foresee making mass job cuts and is in fact selectively hiring.

He explained that the company had been concerned about a global recession and was extremely "careful and judicious about any hiring", Reuters said. Hence, it has yet to reach the "desperate point" of mass layoffs or a hiring freeze. It is currently on the hunt for roles in data science, mapping technology and other specialised areas, he added. At the end of 2021, Grab had approximately 8,800.

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