On July 30, GXS Group CEO Muthukrishnan Ramaswami told Bloomberg in an interview that the Singaporean digibank expects to swing to a profit by March 2027 in part by doubling its loan book every six months. “We’re not competing for the same customer that the big bank is trying to get,” Ramaswami said. “There are so many people who are underserved that there is enough money to be made by serving them.”
This looks to us largely like old wine in a new bottle. While Singapore does have SMEs who are underserved by traditional banks, there is plenty of competition to win their business among fintechs. This includes two Singaporean digital wholesale lenders, Ant Group’s ANEXT Bank and Green Link, who are entirely focused on the non-retail segment.
GXS, on the other hand, has a digital full bank license, and also serves the retail segment – which is very well banked. Building a sustainable retail banking business in Singapore will be a costly (think lots of customer subsidies like high deposit interest rates) and time-consuming endeavor. To that end, GXS’s losses jumped to S$152.1 million in 2023 as it ramped up operations. Further, deposits are currently capped at S$75,000 per customer as part of licensing arrangements and risk tolerance assessments.
In the interview with Bloomberg, Ramaswami mooted goals such as reaching S$3 billion in deposits and a S$2 billion loan book by 2027. At present, GXS’s average Singapore loan size is roughly S$6,000. Higher volumes and cost-effective digital channels will increase profits, he said.
That remains to be seen. Grab used to play up the strengths of its ecosystem as a way to build the digital banking business in Singapore, but lately we hear less about it. We suspect that the building a bank based on ride-hailing and food-delivery services is challenging. There is no natural segue from those on-demand services to banking. The latter is built on customer trust and requires a different kind of relationship with customers than what exists for ride hailing and food delivery.