Competition in Singapore’s banking space is heating up with the arrival of digital banking on its shores. It joins the likes of Hong Kong and the United Kingdom in embracing digital-only financial services and positioning itself as a regional centre for fintech innovation.
For the uninitiated, digital banks are banks that exist entirely online without any physical branch operations, such as the ones you may be accustomed to with traditional banks. All banking activities, including customer service, are conducted through the digital bank’s respective apps.
The past month alone saw two rival digital banks, Trust and GXS, launch their respective apps just days apart.
Trust Bank is the product of a unique joint venture between Standard Chartered and FairPrice Group, while GXS is formed by the Grab-Singtel consortium. They join the likes of Ant Group’s ANEXT Bank and SEA’s upcoming Maribank, in what has been termed a new wave of digital bank offerings in Singapore.
On the surface, both Trust and GXS are aimed at retail customers, but a closer look reveals that both banks come with their own value propositions that cater to different segments of the population.
Here is a table for quick comparison:
In 2020, the Grab-Singtel consortium was awarded one of two full digital banking licences from the Monetary Authority of Singapore (MAS), allowing them to take deposits and serve both retail and corporate customers.
Nearly two years later, GXS Bank was finally unveiled with the launch of a single product — the GXS savings account.
The GXS savings account offers a decent base interest rate of 0.08 per cent per annum, which is paid out daily with every S$0.01 earned. The daily interest accrual is a nice touch because it means that account holders can take advantage of compounding interest right from the start.
Account holders can also earn higher interest rates of up to 1.58 per cent through Saving Pockets (up to eight different pockets), a personalised, goal-setting feature within the Savings Account that is designed to incentivise savings.
Additionally, the GXS savings account does not impose any lock-in periods, fall-below fees, or minimum balance requirements as typically seen in traditional banks. However, there is currently a maximum of S$5,000 that account holders can deposit, thus limiting the amount they can earn in interest.
The GXS Savings Account is also not currently available to the masses as it is being rolled out progressively, starting with selected employees and customers within the Grab and Singtel ecosystem. While the GXS app is already available for download since 5 September 2022, registration for an account is subject to approval.
Unlike GXS, Trust Bank had no need for a digital banking permit, given Standard Chartered’s full banking licence. This enables Trust to offer a wider range of products and services, which includes a savings account, a Visa card that doubles as a credit or debit card, and even a family personal accident insurance.
Similar to the GXS savings account, Trust’s savings account is a “fee-less” account that has no minimum balance requirement, lock-in period, account closure fee or foreign transaction fee.
There is no maximum cap as to how much you can deposit into the account, which gives it an advantage over GXS. Trust’s savings account currently offers a one per cent per annum that is accrued daily and credited at the end of every month for deposits up to S$50,000 and 0.05 per cent per annum for deposits above S$50,000.
Bonus interest rates of up to 1.4 per cent (1.2 per cent for non-NTUC Union Members) can be earned on deposits up to S$50,000 when account holders make five purchases with their Trust card within the month.
As mentioned, the Trust card is a single card that can easily be switched between debit and credit through the Trust app for an unlimited number of times. There is no annual fee for using the card or card replacement fee should you lose it.
To top it off, there is also the option to withdraw money from the savings account at Standard Chartered ATMs islandwide or the sole Trust ATM at VivoCity.
It might seem strange at first to think of Grab or Singtel as a bank. It starts to make sense when you consider the Group’s combined user base, which numbers around three million daily users.
They include existing e-wallet users on Grab’s GrabPay and Singtel’s DASH, as well as the numerous gig economy workers who frequently take up jobs via the Grab app. As of 2021, there are nearly 51,000 private-hire car drivers and delivery workers in Singapore.
This unique user demographic puts GXS in a good position to tap into these two ecosystems. The self-styled “Gen-Z digital bank” has stated that it aims to reach unbanked individuals — typically young people who have yet to start work or have just started employment — with “hyper-personalised” support.
On the other hand, Trust Bank aims to reach existing NTUC Union Members and frequent FairPrice shoppers.
The Trust NTUC Link Card in particular, allows for savings of up to 21 per cent (15 per cent for non-NTUC Union Members) at FairPrice Group businesses when you spend on credit, and up to 11 per cent (five per cent for non-NTUC Union Members) on debit.
However, do note that the savings rates for credit expenditure are an ongoing promotion that may be revised to 14 per cent (eight per cent for non-NTUC members) after 31 December 2022.
Unfortunately, GXS does not currently have any sign-up promotions to offer. It’s quite possible that the digital full bank licence that regulates its banking scope prevents it from engaging in any value-destructive competition to gain market share, hence the lack of such promotions.
In contrast, Trust is aggressively touting various sign-up promotions, including the aforementioned 21 per cent savings, a S$25 FairPrice e-voucher, S$10 FairPrice e-voucher for every referral made, and most impressively, three Tesla Model 3 lucky draw giveaways.
Signing up for the Trust credit card also qualifies you for a family personal accident insurance policy that covers death and permanent total disability.
The coverage goes up to S$8,000, and new sign-ups will receive complimentary coverage for the first two months, thereafter paying a premium of just S$0.50 per month. The insurance policies are underwritten and issued by Income.
Digital banks are perhaps most appealing to segments of the population who are unbanked or are unable to qualify for a traditional savings account. With little to almost no fees, digital banks can offer the perks of traditional savings accounts in addition to credit card services like the one Trust offers.
That being said, it is still worth considering a digital bank account, even if you already have a traditional one. Both GXS and Trust offer competitive interest rates compared to a typical savings account at a traditional bank, which would realistically earn around one per cent or less.
Furthermore, the daily interest accrual that both GXS and Trust offer would mean that interest is compounded at a faster rate than the monthly interest credited at traditional banks.
By harnessing the power of technology, digital banks are naturally more efficient and flexible than their traditional counterparts. By doing away with a physical branch, digital banks incur lower operating costs, which is then reflected in the fee-less banking services that they can offer.
On the flip side, those who still prefer to do their banking at a physical branch will not be able to do so with a digital bank. Existing as an online-only platform would also mean that digital banks are exposed to risks such as cyber-security threats or software failures and bugs. As such, it may be wise not to use it as a primary savings account.
For some assurance, GXS was awarded the Data Protection Trustmark by the Infocomm Media Development Authority (IMDA), a testament to their personal data protection capabilities. As for Trust, their security measures include intrusion detection systems (IDS) that monitor information flows for patterns of abnormal activity and data encryption algorithms that use unique encryption keys and encryption key management.
For the time being, both Trust and GXS are targeted toward specific segments of the population. GXS appears to be the obvious choice for gig economy workers and the unbanked.
However, if you are a frequent shopper at FairPrice or an NTUC Union Member, opening a Trust account might not be a bad idea at all, given the potential amount of savings and points that can be earned. Ultimately, the choice depends on your own needs and goals.
Featured Image Credit: GXS Bank / Trust Bank
Grab and Singtel to launch its “Gen Z digital bank” GXS on Sept 5 – here’s what to expect
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