Singapore’s Digital Banks Expand into Higher-Margin Offerings

Singapore’s digital banks are starting to provide higher-margin offerings, including corporate loans and investment services.

Although there has been much interest in digital banks since their inception, many client accounts are still dormant, according to a recent analysis. The report claims that people frequently open accounts out of curiosity, aided by quick onboarding using Singpass and other tools, but they never deposit money or use banking services.

Challenges with Dormant Accounts

MariBank was the first digital bank in Singapore to launch investment options to increase user activity; by 2025, Trust Bank and GXS are anticipated to follow suit. The goal is to integrate investment goods into a larger, customer-focused platform that promotes regular interaction.

Digital banks also provide services to sole proprietors and micro businesses, which traditional banks generally underserve because of their higher perceived risk and expense. To bridge the lending gap in the MSME and SME markets, GXS and MariBank have started focusing on these areas by providing simpler access to finance.

Serving Underserved Businesses

By utilizing their own liquidity, digital banks can provide more competitive rates than traditional lenders, who depend on outside investors. Their real-time payment activity tracking capabilities also enable better risk assessment during loan issuance.

Digital banks are also exploring ancillary services like payment terminals, invoicing software, and cybersecurity solutions to increase their appeal to small businesses.

Most of Singapore’s digital banks are supported by bigger ecosystems, such as GXS with Grab and Singtel and Trust Bank with NTUC. Still, the report cautions that expanding will increasingly rely on acquiring clients outside these networks.

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