Two digital banks were launched in succession at the turn of the month, close to two years after the Monetary Authority of Singapore (MAS) announced the four successful bids for digital banking licences here.
GXS Bank, backed by Singapore Telecommunications (Singtel) and Grab, unveiled its app and savings account on Aug 31. The following day, Standard Chartered Bank and FairPrice Group introduced Trust Bank, along with a credit card, savings account and family personal accident insurance.
With MAS’s blessing, GXS is one of two digital full banks launching here — the other being Sea’s MariBank. Meanwhile, Trust Bank rides on Standard Chartered’s qualifying full bank (QFB) licence, which the British multinational bank received in 1999, and is not part of the four new licence winners.
GXS’s main product is the GXS Savings Account, which is targeted at gig economy workers, self-employed entrepreneurs, small businesses and those new to the workforce.
At launch, customers can deposit up to $5,000 into their accounts. According to GXS, the account allows them to earn interest daily at 0.08% p.a. In contrast, POSB, which is part of DBS Group Holdings and Singapore’s most commonly-used bank, offers 0.05% for the first $10,000.
To encourage the habit of saving, GXS customers can also customise up to eight Savings Pockets within their accounts. Designed to help users save for specific goals, customers earn greater daily interest with Pockets at 1.58% p.a.
According to Charles Wong, Singapore CEO of GXS, the bank will leverage Grab and Singtel’s platform users, which total more than three million Singaporeans daily. “GXS is uniquely positioned to learn and to refine the banking experience so that it is extremely personalised and relevant to customers because we are part of a powerhouse ecosystem that includes Grab and Singtel.”
Wong had spent two decades at Citi before joining Grab in April 2020 as senior managing director. He took on the lead role at GXS in April.
GXS’s digital bank app will be available in Apple’s App Store and the Google Play Store from Sept 5. It will not be immediately available to the public, however. According to GXS, its services will be rolled out progressively, starting with “selected employees and underbanked customers” within GXS, Grab and Singtel, followed by consumers.
Supermarket chain enters banking
Meanwhile, Standard Chartered and FairPrice Group are banking on Singaporeans’ marketing needs.
Trust Bank boasts connections to Link Rewards, the rewards and loyalty programme integrated with the FairPrice Group ecosystem. To entice new customers, Trust is offering up to 21% off purchases across NTUC FairPrice, Kopitiam, Cheers and Unity.
For years, NTUC has had multifaceted banking links with OCBC Bank. With the launch of this venture with Standard Chartered, products such as the NTUC Plus! Visa co-branded card will be cancelled by Jan 31 next year.
Trust’s savings account provides customers with a base interest rate of 1% p.a. on deposits up to $50,000. Deposits above $50,000 will earn an interest rate of 0.05% p.a. In addition, NTUC union members receive a bonus interest of 0.4% p.a. on deposits up to $50,000 when they make five eligible Visa purchases on their Trust card. Non-members will receive a lower bonus interest of 0.2% p.a.
The Trust credit card, which also functions as a debit card, is a first-to-market numberless card. It also allows customers to select their own repayment date upfront.
On the insurance front, Trust is providing family personal accident insurance by Income at a premium of 50 cents per month. Customers who sign up for a Trust credit card will also pay no premium for the first two months, with no limit on the number of dependents covered.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
Trust Bank CEO Dwaipayan Sadhu says the digital bank took 20 months to develop. “Through listening to our customers and by leveraging the strengths of our partners, we are committed to bringing real tangible value to our customers in Singapore through accessibility and convenience, and making Trust a part of their everyday lives.”
Speaking at the launch event, Deputy Prime Minister Lawrence Wong says the pandemic has accelerated society’s embrace of digital services.
Singapore’s seniors, for example, have started using digital banking services, says Wong, citing a study by the Singapore Management University. The study found that 80% of bank customers aged 60 and above used digital banking in 2021, up from just 20% in 2019.
“With greater digital adoption in financial services, there is much potential for the banking sector to relook how to do things differently and serve customers better,” Wong adds.
Unlike GXS, which plans to expand into Malaysia and Indonesia, Trust Bank currently has no regional plans. Outside of Singapore, GXS received a digital full bank licence in Malaysia earlier this year, while Grab and Singtel each snagged a 16.3% stake in Indonesia’s Bank Fama in January.
Trust Bank CEO Dwaipayan Sadhu. Photo: Albert Chua/The Edge Singapore
Fight for deposits
Interestingly, the maiden products from these two digital banks are their savings accounts, putting them in direct competition for funds with the incumbent local banks and the QFBs.
The local banks’ main advantage is their relatively low-cost current account savings accounts (CASA), which are usually from transaction accounts, hence the importance of transaction banking to banks. Among them, DBS’s market share is around 52%.
Transaction accounts are usually sticky, like the home one lives in. Users are unlikely to move unless there is a host of push and pull factors. A few basis points here or there may not be sufficient to move significant portions of CASA. At any rate, deposits are liabilities.
If the new digital banks offer higher deposit rates, they may soon need to launch, at the very least, simple unsecured loans linked to their credit cards, in which case credit risk management has to be robust.
At any rate, the rapid launch of new digital consumer banks is believed to be drawing attention to Singaporeans’ savings accounts and the interest rates offered by the three local banks.
UOB is the latest to raise interest rates for its flagship savings account. From Sept 1, UOB One account holders can earn up to 3.6% p.a. on balances above $75,000 and up to $100,000, provided they receive a salary of at least $1,600 and charge at least $500 to their credit card that month. This is up from an interest rate of 3%, announced only at the start of August.
UOB’s headline rate hike came two days after OCBC Bank announced higher interest on its flagship 360 savings account. Customers can earn interest of up to 4.05% p.a. On their first $100,000 deposited in an OCBC 360 account, up from a maximum of 2.38% p.a. previously.
DBS Bank was the first to increase rates with its signature Multiplier account. On Aug 1, Singapore’s biggest lender revised its interest rates from 3.0% p.a. to 3.5% p.a. For savings above $50,000 and up to $100,000.
Similar to the tiered structure of other banks’ savings accounts, customers can only receive the headline interest rate if they credit their salary to the account or spend on associated credit cards, among others.
Incumbents with a smaller presence here such as RHB Singapore are also joining the fray. On Sept 1, the Malaysia-headquartered bank announced it had revised the interest rates on its deposit account to up to 2.5% p.a., with an additional 3% bonus interest p.a., claiming to be the highest amid the recent spate of competitive rising rates released by local banks.