The Singapore digital banking market is heating up

Written by Kapronasia || February 12 2024

Of the five digital banks in Singapore, just three are active in the retail market, and with good reason. The city-state’s population has an exceedingly low number of financially excluded people, with Allianz Global Investment estimating that 98% of Singaporeans aged 25 and up have a bank account. That is not to say there are not opportunities for digital banks, but it depends on how one defines “underbanked.” 

We are not surprised to see that Singapore’s digital banks are starting to compete in the premium segment. Though their incumbent counterparts have strong niches in this segment, the higher-margin products combined with the potential to effectively leverage their digital acumen make this an attractive market for both Trust Bank and Sea Group’s MariBank. Grab-Singtel’s GXS Bank will likely be competing in this segment before long as well.

Trust might have made a name for itself with an unusual bundling strategy – a tie-up with grocery giant FairPrice Group – which has targeted the mass market (we all have to go grocery shopping, right?), but with the recent launch of Trust+, Standard Chartered’s digital spin-off is clearly moving upmarket. To qualify for Trust+, customers need to maintain an average daily balance of at least S$100,000 (US$74,370) for the calendar month. Those who do will be elevated automatically to Trust+ from the first day of the following month. Customers earn up to 3% per annum on deposits up to S$500,000, a cap that Trust says is higher than at most other banks. And instead of groceries, the reward programs for this type of account are linked to upmarket lifestyle brands: Golden Village Gold Class, Edge at Pan Pacific Singapore, Far East Hospitality, Standing Sushi Bar, Tanuki Raw, Tenuta by Park90, The Dragon Chamber and Tribal.

Given that 7.5% of Singaporeans are millionaires and that by 2030 that figure could rise to 13%, Trust definitely can cultivate a niche market. The typical Singaporean will not have S$500,000 or more in deposits to put it a secondary bank account, but Trust+’s target market does.

Meanwhile, Sea’s MariBank has been working on growing its assets under management (AuM) with its Mari Invest investment account. Mari Invest's total AuM has reportedly reached S$200 million (US$149 million). While MariBank ostensibly competes with incumbent financial services firms, it also cooperates with them. For instance, its Lion-MariBank SavePlus Fund is distributed exclusively through Mari Invest but is managed by Lion Global Investors, a Great Eastern subsidiary and a member of OCBC Group.

We reckon that Singapore’s affluence is adequate for the new digital banks to compete viably in the premium retail banking segment and gain some traction. However, the digital upstarts, are not at this point a serious threat to incumbents like DBS Bank, which had S$320 billion AuM in the first half of 2023, or OCBC, which had about S$274 billion AuM during the same period.