Two years after their launch, the new digital-only banks continue to struggle to turn profitable. In their applications to the Monetary Authority of Singapore (MAS) in 2019, the aspiring digital banks had to provide a five-year financial projection, which must show a path towards profitability. The banks must also meet a minimum paid-up capital of $1.5 billion within three to five years from the commencement of business.
In 2022, The Edge Singapore did an overview of the digital banking players in Singapore. At the time, three of the digital full banks (DFBs) — GXS Bank, Anext Bank and Green Link Digital Bank — had formally launched, while MariBank was only open to the public in the following year. Although Trust Bank did not carry the same licence, the bank was also launched around the same time as the former three, with similar offerings to its peers.
Launched in August 2022, GXS Bank had widened its loss by 33.7% y-o-y to $152.1 million in its FY2023 ended December. Net interest income (NII) grew to $13 million from $2.2 million in the previous year, while non-interest income (non-II) contracted by almost 50% to $1.35 million. Total income for the full year stood at $14.3 million, surging 190% y-o-y.
The bank plans to turn a profit by March 2027, in part by doubling its loan book every six months. According to Bloomberg, the company’s goals include $3 billion in deposits and a $2 billion loan book over the next three years. Higher volumes and cost-effective digital channels will bolster profits and GXS shares.
GXS is banking on its loans. The bank says it has disbursed over 100,000 loans in under a year after launching its FlexiLoan product, saving its customers a cumulative $4 million in interest. GXS head of retail Jenn Ong tells The Edge Singapore that most of its loan holders are of the mass affluent category, who needed the loans mainly for house renovations, emergency medical bills and to supplement travel-related expenses.
In terms of loan sizes, those who are first-to-credit have a typical loan size of less than $3,000, while the mass affluent’s typical loan size is slightly larger at $7,000. “One of our strategies is not to give them too much — we always start low, given that the product is only a year old. If they build a good credit profile with us, then we may offer them more,” says Ong.
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Ong attributes its low non-performing loan (NPL) ratio to the bank’s proprietary risk scoring for its customers.
Network synergy
Despite already having a fully operational SeaBank in both Indonesia and the Philippines, it took a while for New York Stock Exchange-listed Sea to launch its MariBank — first to employees in the third quarter of 2022 and to the public on an invite-only basis in March 2023. MariBank was opened to all members of the public in August 2023.
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In response to queries from The Edge Singapore, a MariBank spokesperson says it is the only digital bank in Singapore that has rolled out products to both consumer and SME segments, catering to the underserved mass-market consumers and micro-business owners.
MariBank says it has crossed $500 million in assets under administration for Mari Invest in less than a year of launch.
One differentiator for MariBank is the integration of its payment features into the Sea’s e-commerce platform, Shopee. Users can top up their ShopeePay accounts directly from the MariBank app. The bank has also allowed Shopee sellers to access financing based on their platform track record, bridging the small business owners’ financing gap.
MariBank has yet to be profitable. For FY2023 ended December, MariBank widened its loss to $52.2 million, 28.9% higher y-o-y. The bank posted NII of $9.8 million for the period, compared to net interest expense of $440,000 in the preceding year. Non-II contracted 88% y-o-y to $231,000. Total income for the year stood at $10 million, growing from the $1.6 million recorded in FY2022.
The different licence carried by Trust Bank — which is backed by Standard Chartered Bank (60%) and FairPrice Group (40%) — may imply that the bank is not facing any profit pressures. However, The Edge Singapore understands that, like its peers, Trust Bank must also provide MAS with a financial projection showing its path towards profitability.
Trust CEO Dwaipayan Sadhu says the company has seen strong take-up rates across many of its products. The bank fully taps into the network of its backer, FairPrice, he adds. “Trust is embedded in one of Singapore’s most extensive consumer ecosystems, giving customers an easy way to accelerate their Linkpoint earnings. We also offer our customers a wide range of rewards and coupons from other merchants. By the end of last year, customers had redeemed over three million digital coupons through the Trust App.”
A year after its launch in September 2022, Trust counts 12% of the adult population in Singapore as its customers. Today, its customer base has grown to over 700,000. In FY2023, Trust’s customer deposit balance reached $1.86 billion, with customer loans and credit card balances exceeding $300 million.
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But the bank is also yet to be profitable. Trust posted a loss of $128.4 million for FY2023, widening by 3% y-o-y. Its NII stood at $32.4 million, growing from the $4.9 million reported in FY2022. The bank’s net fee and commission income for FY2023 was $6.8 million, growing from the expense of $1.9 million in the preceding year. Income before operating expenses was $39.1 million compared to $3.0 million in FY2022.
Wholesale banks make their move
Singapore also has two digital wholesale banks: Greenland Group and Linklogis-backed Green Link Digital Bank (GLDB), which launched on June 3, 2022; and Ant International’s Anext Bank, which launched on June 6, 2022.
The former targets micro, small and medium enterprises (MSMEs), seeking to cover supply-chain financing products to cater to business demands from various areas, including high-growth potential industries.
At its one-year anniversary last year, GLDB said it had grown its loan book to $50 million. The bank is also planning to break even by 2025 and aim for an IPO on the Singapore Exchange S68 .
For its FY2023, GLDB widened its loss by 20.6% y-o-y to $29.7 million. Net operating income grew to $7.6 million up from $1.44 million in the previous year. Total operating income stood at $8.7 million, compared to $1.3 million.
Similarly, Anext is also targeting MSMEs. Through its embedded finance partners, Anext Bank is serving an increasing number of regional MSMEs, including foreign-incorporated businesses. Unlike GLDB, however, Anext has been more vocal in its operations.
On June 6, the bank said it has seen growth of more than twofold in its total customer base over the past 12 months. It also saw a sixfold y-o-y increase in cross-border transactions facilitated by its increasing customer base in the region and beyond.
The bank reveals that as of May 31, 69% of Anext’s customers are micro-businesses. In FY2023, Anext’s loans to customers surged by 434%, reaching $222.2 million, while the deposits balance increased by approximately 368%, totalling $295 million.
In FY2023, Anext’s loss widened by 9.7% to $29.8 million. This is despite the growth in its NII, which grew to $22.2 million from $3.2 million previously. Income before operating expenses grew to $24.5 million, up from $3.3 million reported in the preceding year.
It is unclear whether any of these Singapore digital banks will achieve profitability based on the projections shared with MAS. However, they are striving to capture a larger market share by continually rolling out new products and initiatives to differentiate themselves from traditional banks.
