In a trailblazing move in June 2019, the Monetary Authority of Singapore (MAS) announced that it would issue five new digital bank licenses, further strengthening the city-state’s position as a progressive regulatory environment with a digitally savvy population with high affinity for fintech adoption. This momentous announcement aimed to capitalise on the digital adoption trend, enhance customer experience, and, above all, foster healthy competition in the financial services industry, as the invitation extended to non-banking players as well. Notably, organizations such as Grab-Singtel and Sea Group secured Singapore’s first digital full bank licenses in 2020, while ANEXT Bank, a subsidiary of Ant International, operates one of the two digital wholesale banks catering to SMEs, further expanding financial inclusion for businesses.
In this new era of digitally powered businesses, it is evident that financial services and banking continue to attract competition and remain one of the fastest ways to reach the end customer. Singapore, with its highly digitalized and connected ecosystem, enjoys significant digital penetration. In light of these evolving trends, Singapore’s traditional banks—DBS, OCBC, and UOB—continue to invest millions of dollars in transforming their technology infrastructure and leveraging AI and emerging technologies to enhance customer value propositions. As a result, they are rated highly on app stores. However, new-age digital banks have an edge in reaching customers more efficiently, being cost-effective, nimble, and secure, while achieving scale through technology.
Value at the Core
According to MAS, 98%[1] of Singapore’s adult resident population holds a bank account demonstrating a mature market, stiff competition, and high entry barriers for new players. Yet, the newly launched digital banks have carved a niche for themselves with unique value propositions. Grab and Singtel’s GXS Bank caters to the needs of entrepreneurs, gig economy workers, and early-jobbers with its GXS Savings Account, featuring an intuitive tool called “Saving Pockets.” This feature is designed around the Singaporean consumer’s habit of allocating different pockets of funds for different financial goals.
Delivering value to customers on a daily basis while remaining agile is the goal of all customer-centric organizations. However, the sheer scale of traditional banks can sometimes impede processes and slow down quick delivery. This is where digital banks have an advantage. Trust Bank, a partnership between Standard Chartered Bank and FairPrice Group, has captured a unique “savings on everyday spending” value proposition by integrating its offerings into the FairPrice Group ecosystem, providing regular promotions across the group’s multiple touchpoints. This shift in value delivery and customer centricity remains the key differentiator between traditional and digital banks.
Building for the Ecosystem Play
The shift in strategy from a traditional channel approach to a digital-only model is not just a technological endeavor but also a reflection of a deep understanding of evolving customer preferences for exceptional user experiences and on-demand services. Additionally, the financial services push by technology giants—such as Apple with Apple Pay, Google with GPay, and Amazon with its extensive range of financial offerings—served as a rallying call for the entire financial services industry.
In light of these emerging trends and new business models, MariBank, wholly owned by Sea Limited, offered up to 30% cashback vouchers as a promotional incentive for Shopee buyers during the shopping season when they paid with a Mari Savings Account. The bank further enhanced its offerings by introducing a no-frills credit card, seamlessly integrating itself into the lifestyle needs of its customers. Beyond serving individual consumers, MariBank also caters to SMEs, leveraging its e-commerce synergy.
One of the key promises of digital banking in Singapore has been improving financial access for underserved segments, particularly small and medium enterprises (SMEs), which traditional banks have struggled to serve due to limited financial histories and high customer acquisition costs. This is where the ecosystem play can be a game-changer, as seen in the case of ANEXT Bank. A subsidiary of Ant International, ANEXT Bank partnered with the B2B platform Proxtera, which connects more than 400,000 SMEs across Asia and Africa, effectively reaching both buyers and sellers on the platform. By November 2023, ANEXT had welcomed three new platform partners with the aim of making financing more affordable and accessible to an additional one million regional SMEs within the year.
Adopting an ecosystem approach—bundling products and services, transitioning beyond “just banking,” and offering customers frictionless, integrated experiences—will help define the leaders and laggards in this new era of banking. This strategy will not only enable banks to serve a larger customer base but also leverage access points while unlocking new revenue growth opportunities.
Addressing the Profitability Challenge
With customer acquisition, innovation, and value proposition taking centre-stage, most digital banks that have been operational since 2022 have yet to demonstrate profitability. Several challenges need to be addressed, including market maturity and saturation, interest rates, and the untapped yet underserved segment.
While customer acquisition is crucial for any business, continuous engagement and retention are the key drivers of long-term profitability. Notable milestones, such as GXS Bank doubling its growth rate from January to September 2024 and serving more than 3 million[2] customers in Singapore, Malaysia and Indonesia and as well as Trust Bank reaching the one million customer[3] mark in 2025, making it the fourth-largest retail bank in Singapore by customer numbers—are commendable. However, these banks must now pave the way for sustainable financial performance in the years to come.
What lies ahead
With definitive strategies, a diversified product mix, and enhanced credit solutions, digital banks are on track to scale their technology, expand their product portfolios, and grow beyond borders. GXS Bank is set to launch its business banking solutions in the first quarter of 2025, with progressive rollouts in Malaysia and Indonesia. Meanwhile, MariBank is bridging the gap between the global bond market and local investors, and Trust Bank’s TrustInvest, in partnership with global investment company abrdn Investments, aims to help customers start investing in just five taps.
In the coming decade, banks with innovative business models that deliver unique value propositions and work toward creating an ecosystem will continue to flourish. However, the future will belong to those that can achieve this while delivering exceptional customer experiences and building financially sustainable business models.
[1] https://www.mas.gov.sg/news/parliamentary-replies/2020/reply-to-parliamentary-question-on-number-of-adult-singaporeans-not-having-a-bank-account
[2] https://www.gxs.com.sg/news-press/gxs-group-saw-accelerated-growth-in-2024
[3] https://thedigitalbanker.com/trust-bank-reaches-1-million-customer-mark-launches-trustinvest-to-radically-simplify-investing/
