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Banking & Finance

Fintech at core of Grab's $700m investment plans in Indonesia

Southeast Asia's largest unbanked population is already wired

Grab CEO Anthony Tan, third from right, made his latest digital technology pitch to officials in Jakarta Feb. 2.

JAKARTA -- Grab, the most widely used ride-hailing app in Southeast Asia, announced Thursday plans to invest $700 million in Indonesia over the next four years, most of it to develop mobile payment and financing services.

In addition to cash and regular credit cards, Grab launched GrabPay and GrabPay Credits last year to enable customers to pay for its services using credits.

The Singapore-based company now wants to go deeper into financial services. Indonesia is already Grab's largest market, and it offers a huge unbanked population with strong cell and smartphone penetration.

"We see opportunity for creating financing options," said Anthony Tan, Grab's chief executive and co-founder. "We see this huge, unbanked population becoming bankable. If we can [...] give access to those who don't have access to credit, it's a massive opportunity."

Only 75 million Indonesians have bank accounts -- less than a third of the population. Meanwhile, 170 million people have at least one cell phone, and smartphones are proliferating.

Grab plans to help its drivers obtain loans to purchase vehicles and smartphones that support their operations, and to develop financing services for the Indonesian public at large.

"Grab will continue to work with its banking partners, including Nobu Bank, to extend financing opportunities to all Indonesian consumers," the company said.

Nobu Bank is a unit of the Lippo Group, a Chinese-Indonesian conglomerate and strategic partner of Grab. Lippo and Grab are planning to launch a mobile payment platform that will let Grab customers make payments at Lippo's dozens of shopping malls and department stores around the country. Lippo is also expanding its e-commerce website, MatahariMall.com.

Grab also said Thursday that it will open a research and development center in Jakarta. It already has centers in Singapore, Beijing, and Seattle. It will also invest up to $100 million in startups focusing on "mobile and financial service industries."

Tan said the planned investments complement the Indonesian government's plan to create the largest digital economy in Southeast Asia by 2020.

Grab recently raised $750 million in funding with Japan's Softbank as the biggest contributor, taking the company's capitalization over $1 billion.

Grab said it currently runs more than 630,000 drivers around Southeast Asia and has had 33 million downloads of its app so far. It reported that use of its services in Indonesia grew 600% last year, but declined to comment on revenue.

Grab competes there with Jakarta-based Go-Jek and U.S.-based Uber, which have recently established relations with traditional taxi companies after opposition from established operators to ride-hailing operations sparked large protests by Jakarta taxi drivers early last year. Grab said it will continue partnering with individual drivers, but not taxi companies.

Last month, it announced the appointment of a retired police chief, Badroddin Haiti, as its president commissioner -- a move many see as designed to tackle regulatory hurdles.

Nikkei staff writer Wataru Suzuki in Jakarta contributed to this story.

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