Tough task: The view of Singapore’s central business district. Digital banks in the city-state face an uphill task to achieve profitability as they need to spend heavily to attract customers in a competitive market. — Bloomberg
SINGAPORE: Recent high-level management shuffles at Singapore’s two digital full banks – GXS Bank and MariBank – have raised questions about whether changes are afoot in the sector.
Zennon Kapron, an independent analyst who has been involved with financial technology (fintech) for more than 20 years, noted that the executive movements could reflect internal strategic shifts, operational challenges or differing visions for the future direction of the banks.
The changes have paved the way for new leadership to bring fresh perspectives and innovative strategies to the organisations, he said, noting that neither bank has yet to turn in a profit after being in business for more than a year.
The management shuffles included Charles Wong stepping down as chief executive (CEO) of GXS Singapore after four years at the digital bank. He will move to an advisory role.
Group CEO Muthukrishnan Ramaswami will take over from Wong and oversee GXS Group’s operations in Singapore, Malaysia and Indonesia.
Earlier in July, MariBank CEO Zheng Yu Dong stepped down, but he will also stay on as adviser.
MariBank has appointed Natalia Goh, the former chief operating officer at Trust Bank, as its new CEO.
Trust Bank is the third digital bank here and is 60% owned by Standard Chartered and 40% by the enterprise arm of NTUC.
Unlike GXS Bank and MariBank, Trust holds a full bank licence and can offer services similar to those found at DBS Bank, OCBC Bank and UOB as well as providing automated teller machines.
Essec Business School associate professor of information systems Jan Ondrus said the leadership changes at GXS and MariBank are “not necessarily cause for alarm”.
Ondrus noted that the digital banks are still young and are trying to find a niche in Singapore’s competitive banking market.
New leaders can bring fresh ideas, he added.
However, Ondrus also noted that the changes could point to bigger challenges in the industry. “It is a fine line between seeing these changes as normal growth pains and potential warning signs,” he said.
GXS Bank, which is backed by Grab Holdings and telecommunications group Singapore Telecommunications Ltd (Singtel), was the first digital bank to begin operations here when it opened for business in August 2022.
It has struggled with profitability. Losses widened for the year ended Dec 31, 2023, to S$152.1mil from S$113.7mil a year earlier.
Parent Grab has said that it expects GXS to break even by the end of 2026.
MariBank, which is wholly owned by gaming and eCommerce firm Sea Group, recorded losses of S$52.2mil in 2023, up from S$40.5mil a year earlier.
The bank started rolling out services to select members of the public in March 2023.
Ondrus said the two digital banks face an uphill task to achieve profitability, as they need to spend heavily to attract customers in a competitive market like Singapore.
He added that they are not just competing with each other but also with the local banks who have their own digital arms.
While running a digital bank is challenging in Singapore, Ondrus said the country has a high number of smartphone users and a tech-savvy population, which provides a good base for digital banking.
GXS Bank now offers savings accounts and personal loan products.
GXS retail head Jenn Ong said the bank can understand its clients better by leveraging on data about how customers transact on the Grab and Singtel ecosystems.
This gives it the confidence to extend loans to people who would not have secured one from a bank as they barely met the S$20,000 minimum income criteria.
This segment includes gig workers, entrepreneurs whose monthly incomes may fluctuate, and young people who just finished their education and are entering the workforce.
Ong noted that GXS can subsequently cross-sell other banking products to these customers once they have built up a credit record with the digital bank.
She added that borrowers are not penalised for paying down their loans early and there is added incentive to clear the debt as the loan is a revolving line of credit.
This means that once they pay off the loan, they can use the credit line again.
GXS intends to extend the personal loan facility to small businesses, as many need short-term financing help to pay suppliers or to buy equipment.
Most of these businesses have been either on the Grab or Singtel platforms for years, Ong said.
Meanwhile, MariBank is targeting investors, being the only digital bank with an investment offering, said a spokesperson.
The spokesperson added that Mari Invest is the first investment product offered by a bank in Singapore that allows an investor to withdraw his cash instantly with no strings attached.
The fund invests in Singapore government bonds and other high-quality bond funds and is managed by Lion Global Investors, a wholly owned subsidiary of OCBC.The spokesperson said that Mari Invest crossed S$500mil in assets under management in less than a year since it was launched in September 2023.
MariBank has a savings account and launched a credit card on July 24 with more consumer products to come.
It also introduced a business account and loan facility in June 2023 for customers of small and medium-sized enterprises.
The spokesperson added that merchants on its Shopee ecosystem typically have difficulties getting financing elsewhere, so MariBank has made it easier for them to access funding based on their track record on the e-commerce site.
GXS Bank and MariBank are leveraging on the synergies within their respective ecosystems to grow their business.
But Kapron said they will need to expand beyond these ecosystems – Grab-Singtel for GXS and Shopee for MariBank – to expand their market share.
Kapron said Trust Bank had a head start in the digital banking space because it had the FairPrice user base to rely on.
Ondrus said that Trust has successfully integrated with the supermarket chain by giving grocery discounts and promotions to attract and retain customers.
A Trust Bank spokesperson said 16% of the adult Singapore population has an account with the bank. That would give it a customer base equivalent to around 800,000 people. — The Straits Times/ANN
