How Trust Bank is pulling ahead of its competitors

Written by Kapronasia || July 25 2023

It isn’t the most obvious recipe for success: digital banking and groceries. But it seems the Standard Chartered-FairPrice Group offshoot Trust Bank is doing something right. By late May, just eight months after its launch, the Singaporean digibank had accrued US$739.5 million in deposits and was – by its own estimates – on track to break even in 2025.

The first thing we would say about Trust Bank’s success is that it does not have to play by the same rules as the much-publicized and hyped winners of for digital bank licenses. In fact, Trust launched stealthily last September while the headlines were dominated by speculation about the (mainly) Big Tech companies launching their respective digital ventures.

In fact, there was no complicated application process for Trust. Rather, in August 2020, the Monetary Authority of Singapore (MAS) awarded Standard Chartered Significantly Rooted Foreign Bank (SRFB) privileges. As Singapore’s first SRFB (the UK bank has, after all, been in Singapore since 1859), Standard Chartered was permitted to secure an additional full bank license to establish a subsidiary to operate new or alternative business models, one of which is a digital-led bank with ecosystem partners. And because one of the city-state’s most prominent foreign lenders is behind Trust, the company does not face the same kind of scrutiny from regulators as GXS Bank, Maribank, ANEXT and Green Link Digital Bank.

The secret sauce for Trust seems to be the combination of built-in incumbent advantages and its tie-up with FairPrice. Apparently, Singaporeans really like the incentive points they can earn by making purchases at stores operated by FairPrice. One source Nikkei Asia that the points “are the single most important reason to use Trust.” FairPrice Group operates about 250 retail outlets, including both hypermarts and convenience stores, so there are many opportunities to accumulate points. Customers making purchases with a Trust debit or credit card at FairPrice stores can earn incentive points that correspond to 0.5% of the amount spent.

Trust is also using the tried-and-true tactic of direct cash subsidies. Open an account with your smartphone and buy something at a FairPrice store, and receive a gift certificate worth SG$25. It is also possible to receive a SG$10 gift certificate by referring family members or friends to Trust.

So how do flashy tech companies compete against Trust? For now, the answer is not very effectively. Both Grab-Singtel’s GXS Bank and Sea’s MariBank have been constrained by an MAS requirement that their deposit base not exceed S$50 million. That restriction has prevented them from aggressively promoting the digibanks to the general public. In practice, that has meant a limit of S$5,000 on each customer’s deposits at GXS Bank.

That said, it appears the MAS is amenable to lobbying from the tech companies. As of July 20, both GXS Bank and MariBank said they were raising their deposit limits to S$75,000. That’s a significant jump from the previous limit and indicates both of the holders of digital full bank licenses in Singapore can now grow their deposit bases significantly and get serious about lending.  

We will be interested to see how Grab-Singtel and Sea try to quickly add new accounts. They have lots of options to offer freebies through their other services, like ride hailing and food delivery, or in Sea’s case e-commerce. That said, they have less money to burn than Standard Chartered and FairPrice and may struggle to offer anything that can compete with the appeal of Trust Bank’s grocery discounts.