Gojek and Grab: the rise of the south-east Asian super app
They started out as Uber copycats but Grab and Gojek have changed everyday life for Indonesians with their payment technology. Mercedes Ruehl from Tech Scroll Asia looks at how the two multi-billion dollar companies have moved from ride-hailing into banking
Filmed and produced by Tom Griggs; graphics by Kari-Ruth Pedersen
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MERCEDES RUEHL: They're super apps at the forefront of mobile tech, and they're not based in the US or China, but Southeast Asia. Gojek and Grab started as Uber clones, carrying passengers and delivering food. Now they're an indispensable part of daily life. But the rivals are also leading online an payments revolution. Is this the future of digital banking?
Southeast Asia has a population of 650 million, and for most people here, the only way to get online is a mobile phone. For Gojek and Grab, that's a huge market, one that's helped them to grow into multi-billion dollar companies. Indonesia, the world's fourth most populous country, is where the battle is most intense.
Their apps have helped small businesses like Ratu Boboko to expand and thrive. Ruri says that since signing up with payments provider OVO in 2018, her sales have taken off. She now delivers as far as 20 kilometres away.
MERCEDES RUEHL: Emma trained as a masseuse, but the only job she could find while living in the same city as her children was to work in a laundry earning just $2 a month. By linking with Gojek, she's now doing what she was trained to do and earns about 200 times more.
MERCEDES RUEHL: What's more, her husband Johannes works full time as a Gojek driver, after finding he could earn more doing that than selling baby food.
The size and scale of the opportunity hasn't gone unnoticed. Big ticket investors have spent billions to fuel Gojek' and Grab's expansion. But like other fast-growing internet startups, actual profitability is an aspiration rather than a short-term, or even medium-term goal. The companies are burning through cash as they attempt to reach more and more consumers, offering ever more options. And what they've realised is that these services aren't the real prize. The route to profitability is the system that underpins them all-- digital payments.
The transformation taking place in Indonesia goes beyond ride hailing, food delivery, even massages on demand. Two companies that didn't exist a decade ago are inserting themselves into the daily lives of Indonesians in a way that is inconceivable to those living in Europe or America. Gojek and Grab, essentially Southeast Asia's answer to big tech, are radically transforming the way money moves around Indonesia. This is a digital financial revolution.
OVO works closely with Grab.
JASON THOMPSON: I may be biassed, but I think Indonesia is the centre of FinTech right now. We see what's happening in Europe-- it's about cards, it's about bank. If you look in China and India, it's really completed now, with the FinTech evolution underway. The next biggest society is Indonesia.
MERCEDES RUEHL: Grab and Gojek offer basic financial services to those without a bank account. Their [? E-wallet ?] can be topped up anywhere. But now, they're moving into core banking services, like business loans and microlending.
ANDRE SOELISTYO: I would like to see a world where most Indonesians have access to some sort of accounts. And accessing financial products will be as easy as just clicking a button.
MERCEDES RUEHL: But Indonesia's population of 264 million is spread across 17,000 islands. Less than half of those people have a bank account. And even now, most of Indonesia's economy runs on cash. Digitising will take a radical change of mindset.
Paimo runs one of the most popular food stalls in the Central Javanese city of Semarang.
MERCEDES RUEHL: He used to deal only in cash, and he even paid for a new home with $100,000 worth in notes. But Paimo has now gone digital and runs his business almost entirely through an app.
MERCEDES RUEHL: Traditional banks have found it hard to provide for people like Paimo, but his link with Gojek makes him a far more attractive prospect.
RIDZKI KRAMADIBRATA: The under-banked and unbankable in the country is so huge. It's more than 50% right now. It's a huge opportunity on its own. I think our "enemy" is cash. Peoples' behaviour is still towards cash. It's actually a big opportunity for us to change this behaviour toward a better payment community.
MERCEDES RUEHL: These digital payments platforms are spreading through the economy. The L Jody Band been make her living on the streets of Semarang for more than a decade.
MERCEDES RUEHL: Religion is getting in on the act, too. The Baiturrahman Mosque now gets nearly a third of its donations through mobile apps. Even government services can be topped up by phone. Critics say the two companies are creating a duopoly with huge influence. Like their big tech peers in the US and Europe, this dominance may result in greater scrutiny.
JAMES LLOYD: Well, I think the regulatory challenges faced by big tech are, to some degree, common across markets insofar as their core use cases-- e-commerce, ride hailing, social messaging, and so on-- are, for the most part, not really stringently regulated to begin with. Obviously, moving into financial services anywhere involves quite a lot of regulatory oversight. And as a consequence, many of these companies are not really that well designed from the outset for that level of supervision.
MERCEDES RUEHL: Indonesia used to centre its tech ambitions on manufacturing. But within a few years, Grab and Gojek have changed that. They may have started out as copycats, but it's now their Western peers that are looking to Asia. It's here they can get a sense of what's possible in the next phase of the internet revolution.