Japanese banking giant to invest in SE Asian ride-hailing biggie.

Grab, one of the largest fintech apps used by millions of users to hail rides, order food and make payments, will receive a $700 million investment from Mitsubishi UFJ Financial Group (NYSE: MUFG), Japan’s biggest bank. (Nikkei Asian Review)

The two companies will tie up to offer new smartphone-based apps to offer services such as lending and insurance, said the Nikkei Asian Review. Further, it said they will soon announce a deal officially, based on information from people knowledgeable about the matter. The Review pegged the size of Mitsubishi’s investment at 80 billion yen ($727 million).

Super-app from two giants

Mitsubishi and Grab plan to collaborate on a “super-app” that will leverage Grab’s customer data and Mitsubishi’s financial muscle. It will enable the banking giant to offer loans, insurance, and other daily services.

Grab has more than 170 million users, as estimated from the number of its apps downloaded. It operates in eight Southeast Asian countries including Singapore. It is a fintech “unicorn” valued at an estimated $14 billion and backed by SoftBank Group.

Mitsubishi will help with obtaining regulatory clearances for the app, where required, and with the assessment of the credit-worthiness of loan applicants. The app would also help with the financial inclusion of Asia’s unbanked population. According to the Review, while the Japanese population is nearly 100% banked, only about half of Indonesians have bank accounts. In the Philippines and Vietnam, the rate of banking inclusion is just 30%.

Other benefits for Mitsubishi from the tie-up with Grab include exposure to the latter’s digital skills and services, data analysis prowess and AI systems.

Techs, fintechs, and banks

Worldwide there have been various mergers or collaborative tie-ups between traditional banking incumbents and tech giants or smaller fintechs.

Cases in point are the Apple and Goldman Sachs partnership for a credit card, and Google’s plans to launch a checking account service in collaboration with Citigroup.

Meanwhile, in the US, while there were precedents of banks acquiring fintechs, for the first time a fintech has acquired a bank. Personal loans platform LendingClub has snapped up digital bank Radius Bancorp for $185 million.

However, according to Bloomberg, Mitsubishi posted its first quarterly loss in over a decade earlier this month. Banks’ profits are under pressure from the continued incidence of negative interest rates over the past five years.

Mitsubishi is non-committal

Meanwhile, Mitsubishi UFG Bank issued a denial of these reports. “Certain media outlets published reports today regarding a capital and business alliance between MUFG Bank and a Singapore-based ride-hailing service,” it said. “However, these reports are not based on any announcement made by MUFG Bank. MUFG Bank will promptly make public any matters which require disclosure if they occur.”

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