Singapore's Digital Banks Show Improvement, but Profitability Remains Challenging.

Singapore's three digital banks, Trust Bank, GXS Bank, and MariBank, have reported smaller net losses in their most recent financial year, compared to the previous year. However, the path to profitability remains challenging due to a small market and existing banking services. Despite this, Trust Bank grew to become the fourth-largest retail bank by customer numbers, with around a million customers. The digital banks aim to find a niche in the market to succeed.

Singapore's three digital banks, Trust Bank, GXS Bank, and MariBank, have reported smaller net losses in their most recent financial year, compared to the previous year. This progress indicates a turnaround for the banks, which have been operating for over two years. Despite the improvement, the path to profitability remains challenging due to the small market size and the prevalence of existing banking services.

Trust Bank, which is 60% owned by Standard Chartered Bank and 40% by the enterprise arm of NTUC, has grown to become the fourth-largest retail bank by customer numbers, with around a million customers on its books [2]. This growth suggests that the bank has found a niche in the market, offering services that appeal to a significant customer base.

The digital banks are also expanding their product offerings to include loans for small and medium-sized businesses, as well as investment products. For example, GXS Bank has launched an investment solution that includes a money market fund and group personal accident insurance coverage. Similarly, MariBank has expanded its product suite to include two investment funds and is planning to launch another higher-yield fund in the coming months [2].

The digital banks' ecosystem approach also plays a crucial role in their strategy. GXS Bank, for instance, partners with Grab and Singtel to offer end-to-end solutions to customers, such as data plans and electrical appliances. This integration allows the bank to deepen engagement with its customers and provide a comprehensive service offering.

However, the digital banks face significant challenges. The retail banking space in Singapore is "fiercely competitive," and customers are sensitive to prices. Additionally, the small market size makes it difficult for the digital banks to achieve economies of scale and break even [2].

In conclusion, while Singapore's digital banks have made progress in reducing their net losses and expanding their product offerings, the path to profitability remains challenging. The banks must continue to find their niche in the market and leverage their ecosystems to succeed.