Digital banks – unlike most incumbents – tend to lose money, and MariBank is no exception. In 2023, its second year of operation, Sea’s Singapore digibank lost a cool US$38.6 million, which it unsurprisingly attributes mostly to expenditure on staff. Surely, there is some marketing spend in there too. How else, after all, does one rapidly onboard customers in a market like Singapore, where everyone already has a bank account, or several accounts?
Now, it is definitely early days, but still, looking at MariBank’s revenue of S$10.1 million (US$7.5 million), one has to wonder just how much potential it has. To put MariBank's revenue into context, RHB Bank, which is based in Malaysia and is not among the largest lenders in Singapore, earned 7.47 billion ringgit (US$1.6 billion) in revenue last year. MariBank could increase its revenue by 100 and still not reach half of RHB Bank's annual revenue.
Even if the Monetary Authority of Singapore (MAS) waives all restrictions on customer deposits at MariBank and Grab-Sintel's GXS Bank, we cannot see Singaporeans shifting funds out of their preferred incumbent banks to take advantage of elevated interest rates that cannot last.So while deposits at MariBank did increase to S$503.8 million in 2023, the baseline was extremely low – just S$2 million in 2022. There is no guarantee that customer deposits will increase as quickly in the future.
Yet MariBank needs a much larger deposit base if it expects to grow its lending business – which is currently miniscule. Sea’s Singaporean digital bank only disbursed S$4.9 million in loans last year.
In contrast, Sea has increasingly successful digital banks in both Indonesia and the Philippines, where there are significant underbanked populations that can benefit from well-designed digital banking apps. Both the Indonesia and Philippine banks are profitable, and have not been operating for a lot longer than MariBank.
Ultimately, Sea will have to develop a compelling value proposition for MariBank, whether that is derived from synergies with its Shopee e-commerce platform or something else. In the absence of such a value proposition, MariBank could struggle to build a deposit base large enough to finance high-margin banking services.