Singapore's Digital Banks Struggle to Attract Customers and Boost Profits.

Singapore's digital banks have struggled to attract customers and generate profits despite the launch of new services. Traditional lenders continue to be favored by consumers such as Eugina Sim, who prefers to save with established banks. Digital banks owned by Grab and Sea have faced challenges in the competitive market, highlighting the difficulties of transitioning from traditional banking to digital banking.

Singapore's digital banks have been facing an uphill battle since their launch, struggling to attract customers and generate profits. Despite the introduction of new services, traditional lenders continue to dominate the market, as evidenced by the preference of consumers like Eugina Sim, who opts for established banks over digital alternatives.

Digital banks owned by Grab and Sea have been particularly challenged in the competitive market. Grab's GXS Bank and Sea's MariBank have both seen their deposit interest rates decline, mirroring the broader trend of falling interest rates globally. For instance, GXS Bank has reduced its primary savings account rate from 2.38% to 1.08% over the course of 2025 [2].

The declining interest rates have put pressure on the digital banks' net interest margins (NIMs), making it more difficult for them to turn a profit. GXS Bank, for example, is on track to break even by 2026, while Trust Bank and MariBank have seen their losses narrow in 2024 [2].

To offset the impact of low interest rates, digital banks have been offering alternative investment options. Trust Bank, for instance, has introduced three plans to earn up to 2.5% a year from September, and MariBank has launched an income fund that pays a monthly dividend to customers [2].

However, the digital banks face an ongoing challenge in convincing customers to switch from traditional banks. Fintech industry analyst Zennon Kapron notes that while digital banks offer competitive returns on savings, they must also ensure a compelling user experience to retain customers [2].

The traditional banks, meanwhile, continue to fight for market share, with UOB and OCBC also reducing their deposit interest rates. UOB has cut rates on its flagship UOB One account for the third time in the past two years, while OCBC Bank reduced rates on its 360 account for the second time in 2025 [2].

In contrast, DBS has maintained its Multiplier account rates at between 1.8% and 4.1%, reflecting the bank's focus on maintaining customer loyalty and stability [1].

The macroeconomic uncertainty faced by Singapore's largest banks, including DBS, UOB, and OCBC, further highlights the challenges faced by the digital banks. While DBS reported a good quarter with a 1% increase in profits year-on-year, UOB and OCBC both saw their quarterly profits decline by 6% due to falling net interest income [1].

In conclusion, Singapore's digital banks are navigating a challenging landscape characterized by declining interest rates and intense competition from traditional lenders. To succeed, they must not only offer competitive investment options but also provide a compelling user experience to retain customers.

References:
[1] https://finance.yahoo.com/news/singapore-largest-banks-deliver-mixed-085059339.html
[2] https://www.straitstimes.com/business/singapores-digital-banks-trim-deposit-rates-mirroring-moves-by-incumbent-players