SINGAPORE - Singapore’s digital retail banking scene is set to sizzle as players fight to roll out their offerings with GXS Bank firing the first salvo.

Backed by Grab and Singtel, the digital bank, which is allowed to serve retail and corporate clients, on Wednesday unveiled its first financial product - the GXS Savings Account.

To encourage users to save, it will not require a minimum sum as traditional lenders do and will offer an interest to be earned daily.

Interest will be credited to the account with every one cent earned.

For a start, GXS Bank customers can deposit up to only $5,000 into the savings account and earn daily interest of 0.08 per cent per annum. 

Traditional lenders’ savings accounts typically give out interest on a monthly or quarterly basis, usually only at the end of the month.

If a customer wants to save up for specific purposes such as for studies or a vacation, they can create up to eight savings pockets under the GXS account. Each pocket fund can earn daily interest of 1.58 per cent per annum. 

In recent months, local banks have raised interests rates to woo customers on the back of a rising rate environment, with OCBC Bank the latest lender to do so.

“There are high headline rates for a lot of banking accounts but to achieve that, you need to spend on credit cards, buy their insurance products, you need to have a payroll account. We do not have such conditions,” said GXS chief executive Charles Wong.

Speaking at a briefing, he added that the digital bank will calibrate the conditions, including the cap on deposits, based on customers’ behaviour and demand.

Mr Wong said the bank aims to support the needs of entrepreneurs, gig economy workers and first jobbers.

“Over the coming months, we will also tackle other obstacles that hinder consumers and small businesses from reaching their goals sooner, such as growing their wealth or accessing credit,” he said.

While local lenders can offer high interest rates, “if I cannot withdraw my money, my pain point is cashflow”, Mr Wong said. “So, solving customers’ pain points and making sense to them is critical.”

Self-employed driver Ng Wah Onn, 45, said people underestimate how helpful this account is to those like him, who live from hand to mouth. 

“By the end of the month, I will be struggling,” he said. “Even if they (traditional banks) offer monthly interest, it won’t add up to a dollar because my takings are daily.”

With GXS, Mr Ng, who has a wife and three children, said he is at least able to set aside some money and still get some interest.

GXS is one of two players to grab a digital full bank licence granted by the Monetary Authority of Singapore in December 2020. The other licensed player is tech giant Sea, whose digital bank is MariBank. 

But Trust Bank, backed by Standard Chartered Bank and NTUC and with a full banking licence, is expected to unveil its digital banking offerings on Thursday.

When it was pointed out that Hong Kong’s experience with digital banks has somewhat fizzled after the initial fanfare, Mr Wong told The Straits Times he has “high hopes” for GXS and that there are a number of elements that make a successful digital bank.

A key factor is its ability to acquire customers at a relatively low cost compared to other banks.

This is an area where having backers like Grab and Singtel will help, Mr Wong said, adding that collectively, GXS has access to more than three million customers.

“The ability to reach out to customers, the frequency that we have is huge, versus an app that you use once a week or once every two weeks,” he said. Other elements include pricing and products. 

DBS’ head of telecom, media and technology research analyst Sachin Mittal is of the view that GXS Bank “could be less successful than Kakao Bank in Korea” as the latter provides apps that are more entrenched in daily lives.

“Singapore is also a more mature market with its population being almost one-tenth of that of South Korea. As such, Grab-Singtel consortium could take five years to achieve what Kakao Bank achieved in 2.5 to three years,” added Mr Mittal.

He estimated that a successful digital full bank will be able to grab a market share of 2 per cent to 4 per cent in five years, while it may break even in four to five years.

With a digital full bank licence, digital banks can provide retail customers with services like accounts, deposits and credit and debit cards. They can also serve corporate clients.

But digital banks will not have a physical presence and all banking services are to be done online.

GXS Bank is the first digital bank in Singapore to be awarded the Data Protection Trustmark by the Infocomm Media Development Authority, a certification awarded when an entity has demonstrated accountable data protection practices. 

From Sept 5, the savings account, which is now in use by employees, will be available in Apple’s App Store and Google Play Store. It will subsequently be rolled out to underbanked customers with GXS, Grab and Singtel, as well as other consumers.