Digital & Technology

Analysts Call for Increased Customer Engagement by Digital Banks in Singapore

Singapore's digital banks are being urged to step up their efforts to attract customers, according to industry analysts.

Last year, Ms Irene Ho, a 41-year-old Singaporean, applied for a credit card with Trust Bank, a newly established digital bank in the city, backed by Standard Chartered and FairPrice Group.

Despite already possessing several credit cards, Ms Ho was seeking one that offered rebates specifically for grocery shopping at NTUC FairPrice. "It's where I buy most of the groceries I need at home. With inflation, every cent counts," she explained. As an incentive for signing up in September last year, Ms Ho received a cash voucher and a bag of rice.

Unlike traditional banks, Trust Bank operates exclusively through a mobile app, without any physical branches. Account openings and card applications are conducted entirely online. Trust Bank is one of five digital banks that commenced operations in Singapore over the past year. The other two banks catering to retail customers are GXS Bank, backed by Grab and Singtel, and MariBank, owned by Sea.

The Monetary Authority of Singapore (MAS) granted approval for these digital banks in 2020, aiming to foster competition within the financial sector. "The whole argument for digital banks is that they have zero physical footprint," noted Mr Zennon Kapron, founder and director of consultancy firm Kapronasia. "They can operate at a lower cost and pass some of that savings onto customers in the form of better rates on deposits and lower cost of borrowing."

However, these disruptors face challenges in Singapore's small market, with less than 2 percent of adult residents lacking a bank account. Furthermore, incumbent banks have significantly enhanced their digital offerings in recent years. Consequently, while the initial launches have garnered some customers, industry observers believe that the new digital banks still have a lengthy path to achieve success and, ultimately, profitability, as reported by CNA.