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Grab/Bento: who wins

And what this acquisition says about the state of robo-advisors and the meaning of luxury in business.



DigFin said last month that wealth management will be the key to success for virtual banks. Grab, which is gunning for one of Singapore’s VB licenses, validated this by announcing it had acquired Bento, a local robo advisor. Thank you, Grab.

Technically the internet company will roll Bento into Grab Financial, its existing platform of financial services for drivers, riders and merchants, initially in Singapore and then elsewhere. Bento has been rebranded GrabInvest.

Should Grab win the VB license, in partnership with Singtel, it will probably move all of its finance-related services there. In theory it could maintain separate financial services in both the ride-hailing app and in the bank, but this seems inefficient.

But in the event Grab doesn’t get the license, it has an existing business rationale to acquire Bento. And if it does get the license, it will need an annuity business, because deposits don’t make a lot of money.

What else does this deal suggest?

Market observers – consultant, bankers, asset management executives – agree the deal adds up for Grab.

Three reasons why

First, it gets Bento’s capital markets services license, which lets it provide fund management to retail investors. Normally it takes six to 12 months to get such a license, along with an estimated $250,000 in lawyers’ fees. Grab can be up and running its investment business almost immediately.

Second, it gets Bento’s technology. Scuttlebutt among Singapore sources suggests this may not be the best robo in the world – but Bento has both retail and B2B experience, and robo can be pretty commoditized. Does Grab need to pay top dollar for “the best”?

Third, it gets Bento’s expertise. Bento founder Chandrima Das is well known and well regarded. She’s got tons of experience, including on the distribution side (insurer Prudential, wealth manager Bank of Singapore) and the asset management side (ING Investment Management, M&G). She set up Bento in 2016.

She’s got investment chops. It’s the kind of DNA that Grab and other VB applicants lack. Plus being a Singaporean fintech founder, she brings a feel-good story to the Grab franchise, itself a Southeast Asian champion.

Add up points one, two and three, and Grab can begin offering wealth management services to real customers well in advance of its would-be VB competitors. It probably has a full year’s head start. That’s huge.

There’s more.

Some more reasons why

Fourth, Grab is buying a robo advisor that has existing bank clients around the region. Bento started life as a B2C play trying to use tech to create actively constructed portfolios that could outperform a benchmark. Like most B2C propositions, this didn’t work.

The company was also under the canopy of Mesitis, a local wealth-management fintech aspiring to be a broad-based digital wealth shop. Das wanted to go her own way, took Bento independent, and pivoted to building digital solutions for Asian banks.

As a result, Bento is a known quantity to the Monetary Authority of Singapore. It’s already working for traditional lenders. So it’s a safe acquisition for Grab.

Fifth – and now we’re getting gossipy – Grab probably got Bento cheap. Neither Das nor Grab Financial executives were willing to speak with DigFin about this story. But robo advisors are struggling. B2C hasn’t worked because customer acquisition costs are astronomical. B2B has, but it probably yields consultant valuations, not a Big Tech valuation: it too is something of a commoditized service. And Bento was not the biggest player in the region.

Grab has reportedly looked at all kinds of M&A deals. (Now we’re getting speculative.) In the world before WeWork imploded or before Lyft and Uber IPOs fizzled, Grab could have borrowed as much as it wanted and acquired a Betterment or a Nutmeg, or an Aviva or an ING Direct.

The mood has changed.

This is probably a good thing. Bento’s tech and investment know-how should be perfectly fine, and Grab doesn’t have to leverage itself to buy an expensive overseas business. There are lots of small robo shops in Asia that would be delighted to be snapped up, and Grab was probably able to offer stock instead of cold hard cash to get its robo.

Who else wins from this deal?

Who else wins from this deal

Other robo advisors. Grab has a big customer base throughout Southeast Asia. By promoting GrabInvest, it is going to make digital wealth management a thing. People will get exposed to it. Robo advisory is still a nascent business. The more that people get robo offerings, the better for everyone in this space.

Moreover, Grab has made robos look desirable. There are a few other combos bidding for a Singapore VB license that include a robo partner, such as Razer with Quantifeed. But this could turn into a frenzy. For robo founders, 2020 could be payday.

Are there losers?

Maybe. Grab’s VB competitors are already on the backfoot.

This deal is mostly positive. The question isn’t who loses. It’s how hard will it be for Grab to monetize its new wealth offering.

Veterans of wealth management businesses still argue the business requires trust and a human touch. Maybe they’re fuddy-duddies.

Maybe they know what they’re talking about.

People still trust banks, especially in Asia. Is a customer catching a lift to Changi Airport going to say “yes” to Grab’s suggesting she buy a portfolio of ETFs? There’s more to this than “seamlessness” or “frictionless” or “convenience”.

Customer acquisition is hard. That’s why pretty much every robo in Asia is struggling or has shifted to B2B.

Banks have spent tons of money and time trying to digitize their offerings, because their relationship managers are too expensive to waste on small-ticket customers – and they’re still trying to turn deposits into fee income. The reality for banks has been that only the wealthiest customers are interested in funds.

But Grab is a superapp, you say. And look at superapps in China – look at Alibaba and Yuebao! Biggest money-market fund in the world! Suck on that, J.P. Morgan!

Yeah, but no one has replicated the Chinese fintech experience outside of China. Grab is innovative, of course. The company is taking the Uber playbook and adding on top Chinese-style payments and financial services. But it’s a long way from proving it can convert millions of customers into digital investors. Others have tried and failed.

Here’s what Grab has done. Grab has acquired a small but capable robo, possibly for very little, and is rolling those capabilities into an existing fintech platform. If it gets the banking license, it gains an additional route to scale. Ultimately what Grab has bought is the luxury of trying.

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