"‘Southeast Asia Uber’ Grab Accelerates Entry into Internet Banking... What About Korea’s Reality?"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kangwook Cho] Southeast Asian ride-sharing company 'Grab' is accelerating its entry into internet banking. However, in South Korea, despite internet-only banks having officially launched over two years ago, they have yet to bring about significant changes in the market.

According to the financial sector on the 8th, Grab recently acquired Singaporean robo-advisor startup Bento Invest.

Following this, Grab is reportedly planning to rebrand the acquired Bento Invest as GrabInvest. This is expected to become a new core business of Grab Financial Group.

GrabInvest plans to launch asset management products in Singapore within the first half of the year. Additionally, it will operate under a retail asset management license from the Monetary Authority of Singapore (MAS).

Since most asset management markets, such as retirement planning solutions in Southeast Asia, focus primarily on the wealthy, GrabInvest is expected to concentrate on asset management products targeting Grab’s driver partners and small business ecosystems.

Last month, Grab formed a consortium with Singapore’s largest telecom company Singtel, holding 60% and 40% stakes respectively, to obtain an internet banking license. Considering this, experts believe that Grab will accelerate its entry into internet banking through Grab Financial Group by offering nearly all digital financial services including loans, insurance, payments, and asset management.

Seungmin Lee, a researcher at Hi Investment & Securities, explained, “Grab Financial initially only had GrabPay, created for ride-sharing fare payments, but now offers various financial services such as rewards (GrabRewards), loans (GrabFinance), and insurance (GrabInsure). Especially for Pay, over half of the transactions occur outside ride-sharing, and as of the second half of last year, transaction volume grew by more than 40%.”

Furthermore, Grab has announced plans to shift from GrabPay to an open ecosystem strategy within its own ecosystem.

Lee said, “As part of this, Grab is building APIs for its e-commerce platform. The postpaid payment service PayLater, currently available only for Grab Ride, GrabFood Orders, and GrabExpress delivery, will also be offered.”

On the other hand, although Toss Bank was selected as the 'third internet-only bank' operator at the end of last year, expectations for internet-only banks remain modest.

Despite K Bank and Kakao Bank, the first and second internet-only banks, having launched over two years ago, they have not led to significant changes beyond a brief initial impact.

Since the launches of K Bank and Kakao Bank in April and July 2017 respectively, the asset size of internet-only banks reached 12.7 trillion KRW as of the end of September last year, showing rapid growth of 2.4 times compared to the same period the previous year.

However, Kakao Bank’s customer growth rate, which initially exceeded 20%, dropped to the 2% range within about a year, and K Bank’s quarter-over-quarter customer growth rate, which was over 34%, plummeted to 7%. Interest rates at internet-only banks have also become similar to those of commercial banks.

Because of this, some argue that the regulatory environment, which does not align with the original purpose of introducing internet banks, needs to be revised. There are also claims that strict major shareholder qualification requirements and personal data protection laws are obstacles to developing innovative services.

This content was produced with the assistance of AI translation services.