The key to winning the competition lies in deposits, a key source of bank earnings because they provide funds that banks can use to make loans and generate interest income, analysts said.
So far, Trust Bank has a head start, given its ability to tap into the strong ecosystem of FairPrice Group. It also holds a full bank licence, which has allowed it to function like a traditional lender.
GXS and MariBank were subject to a S$50 million regulatory cap on retail deposits, imposed by the MAS during the lenders’ first two years of operations to safeguard consumers’ interests. MariBank also began rolling out its offerings in 2023, nearly a year later than its rivals.
Based on its 2023 financial statement, Trust Bank’s customer deposits stood at S$1.8 billion. That surged to S$3 billion for the first half of 2024, with customer numbers hitting 806,000, the bank said in an update last August.
Trust Bank CEO Dwaipayan Sadhu told CNA that it would provide an update soon on its progress to “become Singapore’s fourth largest retail bank by customer numbers”.
“We’re making good financial progress,” he added.
Maribank has attracted S$503.8 million in customer deposits as of end-2023, while GXS has S$436.8 million, according to the annual statements.
GXS told CNA that its deposits have grown 48 per cent year-on-year as of end-September 2024.
But it’s not just about convincing customers to sign up – these digital banks have to keep them active on their platforms.
This means either using the product they have signed up for or trying other products.
They include cards, personal loans, insurance as well as investment and wealth management products, although each of them presents their own set of challenges.
For instance, revenue margins for credit cards have come down drastically, said Mr Nandy.
Insurance and investments are lucrative businesses that can help attract deposits and shore up fee income, but they are “emotional products that people would buy after there’s trust in a brand”, he added.
“It takes time to build up a brand and trust,” said Mr Nandy. “You have to play the long game.”
Agreeing, Mr Chopra said: “On the investment front, with the younger generation being more savvy when it comes to their investments, offering investment products can be a great move, but this needs to start with first building trust and loyalty with its customers to compete with the likes of robo-advisers.”
It is still early days for Singapore’s digital banks, said analysts, with profitability likely to happen a few more years down the road given the challenges in a mature market like Singapore’s.
