Competitive activity in the robo-advice space is picking up as non-financial institutions want their piece of the pie.
Ride-hailing service Grab entered the Singaporean market at the beginning of 2020. As demand for automated investment services continues to rise, it is unlikely to be the last tech company to do so.
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Technology companies trying to break into the financial services industry is not news per se. Until recently Ant Financial’s Yu’e Bao was the wold’s largest money market fund; in 2019, Google announced its intention to partner with Citi to launch a bank account; and in the same year, Apple officially launched its Apple Credit Card.
However, Grab – Singapore’s answer to Uber – is the first tech company to venture into the automated investment space. In February 2020, the ride-hailing company acquired robo-advisor Bento. Grab will offer automated investment services through its app to Southeast Asian customers later in the year.
Data from our 2018 Banking & Payments Survey shows that the majority of global affluent millennials take pride in being the first to try a new product. This represents fertile ground for technology companies wanting to enter the wealth field. Tech companies and robo-advisors also have a similar customer demographic: primarily young, digital-savvy millennials.
From an efficiency perspective, providing a holistic view of not only a client’s finances but also their other activities will be welcomed by consumers, as it reduces the hassle of using multiple apps. So there are many reasons this new wave of innovation will prove sustainable, which is likely to entice additional players.
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By GlobalDataAs the willingness to try new products and services decreases with age, older generations are unlikely to become Grab’s prime target group – at least not initially. They will be accustomed to a provider that focuses on wealth management, rather than a provider that has other non-financial services products as its core business. This demographic is also more reluctant to use a pure robo-advisor, so using such services through a non-financial services company may not appeal.
However, should Grab be able to establish its brand in the wealth space (and potentially branch out into other aspects of financial services), there is no reason why older generations will not follow suit. After all, Indonesia’s Gojek is no longer a mere two-wheeled ride-hailing service, but has become a $10bn multi-service mobile platform. It now offers a wide range of services – including e-wallets and house cleaning services – targeted at the wider population.
Grab’s significant customer base and brand value, millennials’ desire to try new products, and the forecast rise in demand for automated investment services will aid Grab in taking on Southeast Asia’s established robo-advisors.
