From loans to literacy: Addressing Southeast Asia’s financing gap

In Southeast Asia, financial inclusion remains a critical challenge, particularly for gig-workers and micro, small, and medium enterprises (MSMEs). Traditional financial institutions often exclude these groups due to their lack of fixed incomes or credit histories. The options they have is to ask friends and family for money—or turn to money lenders with high interest rates. 

Thus, people who have small or irregular incomes can end up paying more to access a loan than someone with a full salary. That’s an example of financial inequality.

It’s a complex challenge to overcome, but digital platforms like Grab offer pathways to closing the gap: 1) By leveraging data to serve a clientele that tends to be overlooked by the formal banking system; and 2) with a number of events and offerings geared towards the financial literacy of Grab’s driver- and merchant-partners.

Indeed, with a variety of loan products tailor-made for this clientele, our loan disbursals increased 57% year-on-year to USD 1.5 billion in 2023, as per Grab’s just-released ESG report.

Grab’s initiatives for financial inclusion

We can extend these loans to a clientele without a formal credit history and with flexible incomes, by leveraging the extensive data from millions of transactions on Grab’s platform. This allows us to assess the creditworthiness of our partners.

Grab offers various financial products specifically designed for gig-workers, including emergency cash loans, and product-based loans. The former is often used for medical treatments for themselves or their families, or vehicle repairs and upgrades, says Beng How Toh, head of driver-partner lending at Grab. The latter is designed to facilitate the purchase of essential items like smartphones, or household appliances. If driver-partners have to save up before they can repair their vehicles or smartphones, they could miss out on earnings and end up in a downward spiral. With access to Grab’s microloans, they can quickly return to earning an income.

Grab ensures that gig-workers do not incur more debt than their expected income by applying stringent eligibility criteria and borrowing caps. This approach allows for manageable repayment schedules. Repayments are structured with deductions from the drivers’ earnings, making the process seamless and stress-free. This system not only provides immediate financial relief but also helps build a financial history for these workers—which potentially makes them eligible for future access to bigger-ticket credit, for example from one of Grab’s digital banking partners.

Notably, one in three active driver-partners has already taken out a loan through Grab, which speaks to the usefulness of these products.

“For many of our driver-partners, taking a loan from Grab is their very first loan from a formal institution,” says Darren Lee, regional programme manager for driver-partner loans at Grab.

But gig-workers aren’t the only ones benefiting from Grab’s lending portfolio. Our research has found that 60% of MSMEs that need financing also struggle to obtain loans from traditional sources. Grab’s Merchant Cash Advance product has been instrumental in supporting small businesses across Thailand, Indonesia, and the Philippines. By providing flexible and affordable business loans, Grab helps MSMEs improve cash flow and invest in growth.