From cold war to hot war: Go-Jek competes with Grab in Singapore’s fintech market

As Go-Jek launches the beta version of its app in Singapore, the e-payment turf war is heating up.


In scenes reminiscent of a fintech Cold War, Go-Jek has been quietly forming partnerships and making acquisitions in what was evidently a preamble to a major offensive at the heart of its rival’s territory.

Both sides were quietly stockpiling weapons. Last month, Grab announced a partnership with United Overseas Bank (UOB) to offer payment services to users. Just days apart, Go-Jek confirmed it would team up with DBS to offer similar services.

Now, with the launch of Go-Jek’s beta version of its ride-hailing app in Singapore, its city-wide war with Grab went from a cold to a hot war overnight.

Source: crunchbase

The war represents a clash of fintech superpowers

As Indonesia’s leading transportation and logistics provider with more than 10 million app downloads, Go-Jek is well-positioned to put up a fight. With its mobile wallet venture Go-Pay, the company has the ability to leverage its extensive distribution network for its major fintech offensive.

At the same time Grab is making significant strides in Singapore’s e-payment space with its mobile wallet GrabPay and seminal venture in alternative lending, Grab Financial Services Asia.

The joint-venture of Grab with Credit Saison, Japan’s largest consumer financing company, has been financing unbanked consumers, micro-entrepreneurs and small businesses across Southeast Asia since its launch in March 2018.

Credit Saison has brought decades of expertise in consumer lending to the table. While Grab, being a homegrown company, has an extensive customer base across variable transportation, food service and ecommerce models. This relationship has given GrabPay a significant headstart over Go-Pay in Singapore.

The two companies are using slightly different scaling approaches

Go-Jek’s model elsewhere has been to capture the local corporate sector through enticing sign-up offers including driver bonuses and discounts. It will apply this to its Singapore operations by using financial incentives to promote the use of its digital wallet and e-payment methods.

Go-Jek has already started a banking revolution in Indonesia.  It made significant headway among segments of the population not covered by formal banking, increasing e-payment penetration and promoting the cashless economy. However, the Singaporean unbanked market is far smaller and the bulk of it has already been captured by GrabPay. The same business model that drove Go-Jek’s expansion elsewhere is unlikely to work in Singapore.

One area Go-Jek may seek to innovate is the person-to-person (P2P) lending sector. Singapore is already earmarked to become Asia’s P2P lending hub due to its standing as a major business and financial hub.

The city-state’s new Payment Services Bill will provide further thrust to the P2P market. There is an opportunity for Go-Jek to work with local partners and devise alternative credit systems to support P2P borrowing in Singapore’s thriving startup ecosystem.

Go-Jek’s founder Nadiem Makarim is known for his business aggression and will be eying the P2P sector for expansion. Go-Jek has already launched three strategic partnerships with three Indonesian P2P lenders. It will likely be looking for similar partnerships with Singaporean players.

GrabPay, on the other hand, has been using a multi-pronged, bottom-up approach. It focuses on monthly targets of onboarding merchants through its loyalty program (GrabRewards) and extensive discounts (GrabBenefits). Once merchants are onboarded, it has a captive audience to which it can roll out its other services to.

Back-to-back rollouts of remittance products and payment solutions based on its expansive driver data, mark a dynamic strategy from Grab to secure the huge chunk of the cashless economy in Singapore. The company is also planning to launch a built-in P2P credit transfer feature in early 2019.

Go-Jek or Grab, who will win?

As a late entrant into the Singapore market, Go-Jek has its work cut out if it wants to widen its reach to compete with Grab.

The Grab group has been the undisputed king of ride-sharing services since its takeover of Uber’s Southeast Asian operations.  Its ride-sharing dominance offered the perfect platform for the expansion of its digital wallet system.

Beyond that, Grab’s use of data has been and will continue to be central to its expansion. Its database is a powerhouse of information that is constantly being mined and analysed to develop micro-financing products and services tailored specifically for Southeast Asia’s fastest growing economy. Partnerships with Samsung and Microsoft will only increase data harvesting and analytic techniques, which will further drive Grab’s expansion into fintech sectors.

Additionally, GrabPay has already found a home within the Singapore fintech landscape and the platform can be expected to push its digital wallet momentum forward with its ever-growing niche segments and data-driven tools.

Despite Grab’s head start, in the two-horse race to grab the largest share of the payments market, it is the Singapore consumer who will emerge victorious.

Citizens will have a choice between two major and trusted players for making e-payments for services and goods, and ultimately, that choice and healthy competition will benefit Singapore’s consumers.