Why Singapore digital banks can’t stop at banking

High interest rates have driven growth for Singapore’s digital banks, enabling GXS, MariBank, and Trust to offer competitive promotional rates despite staying unprofitable. 

For instance, MariBank maintained a 2.7% interest rate for its savings account throughout 2024 and then lowered it to 2.5% this year. 

While digital banks in Hong Kong restricted their higher promotional rates to a select group of customers for six months, their counterparts in Singapore have consistently extended these rates to all customers without any time limit.

MariBank CEO Natalia Goh / Photo credit: MariBank

They also achieved notable improvements in net interest income. MariBank shifted from incurring a net interest expense in 2022 to generating net interest income in 2023. Meanwhile, GXS and Trust grew their net interest income by 6x.

“This was the first time in history in which digital banks can attract customers and still have healthy net interest margins,” Alexander Pariyskiy, associate partner at McKinsey, tells The Business Times. 

That said, the next phase is more tricky – getting customers to use their digital bank accounts for daily transactions.

Building momentum with deposits and loans

In 2024, Singapore’s digital banks all capitalized on their growing deposit bases to roll out loan products.

For instance, Trust’s deposits reached S$3 billion (US$2.3 billion) by June 2024, with customer loans and advances totaling S$486 million (US$365 million). CEO Dwaipayan Sadhu notes that over 16% of Singapore’s adult population are Trust customers. 

Neither MariBank nor its parent company Sea discloses its loan or deposit figures, but the bank emphasizes its efforts to lower barriers to financial services. CEO Natalia Goh notes that recent product launches such as Mari Invest were designed based on customer feedback.

Meanwhile, the combined deposits of GXS and its Malaysian subsidiary GXBank exceeded US$1.1 billion as of September 2024. CEO Muthukrishnan Ramaswami says that the bank observed consistent deposit growth last year, even as interest rates began to decline.

“While we’ve adjusted our interest rates, we still remain attractive for savers,” he adds. 

Fighting to become the top choice

The promise of digital banks lies in the wealth of customer data they gather from their ecosystems. GXS benefits from parent companies Grab and Singtel, MariBank from sister firms Shopee and Garena, and Trust from major backers Standard Chartered and FairPrice Group.

The combination of data and AI can break down silos between product offerings, creating solutions catering to individuals based on their saving, spending, and investing habits. Currently, traditional banks do not offer such solutions to customers below the affluent bracket. 

What going beyond banking looks like