Singapore’s digital banks get 2023 report card, miss profitability mark

IN FOCUS

In today’s newsletter, we look at:

• How Singapore’s five digital banks stacked up against each other in 2023
• Foreign lenders, the cornerstone of Indonesia’s P2P lending sector
• How a Chinese insurtech firm expanded to Southeast Asia by acquiring a Vietnam-based firm

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Hi there,

Bank BTPN’s Jenius is a pioneer in Indonesia’s digital banking industry, being the first to launch in 2016. While the sector is considered young in the country, it’s even younger in neighboring Singapore, where the first digital bank was established in 2022.

Given their infancy, none of Singapore’s digital banks have achieved profitability, as my colleague Simon highlights in this week’s Big Story.

In 2023, the combined revenue of the city-state’s five digital banks was US$72 million, which is just 6% of what South Korea’s KakaoBank generated in the same year.

One way for Singapore’s digital banks to turn profitable is by extending more loans and charging a higher interest on these products than the interest they pay on deposits. In both areas, Trust Bank seems to be one step ahead: It has attracted the most deposits and disbursed the most loans compared to its peers GLDB, Anext, GXS Bank, and MariBank.

Meanwhile, I delve into the foreign funds being channeled into Indonesia’s peer-to-peer lending space in this week’s Hot Take. As of April, the sector grew 4% to hit US$655 million. But these numbers aren’t at their highest despite the increase, indicating further growth is possible.

— Budi

THE BIG STORIES

1️⃣ No profit, no problem: Singapore’s digital banks in 6 charts

Image credit: Timmy Loen

If South Korea’s KakaoBank is the benchmark, Singapore’s digital banks still have some ways to go.

2️⃣ China’s Huize targets SEA market with Vietnamese insurtech acquisition

THE HOT TAKE