GXS digital bank launches flexible loans that let customers borrow as little as $200

SINGAPORE – GXS Bank, the digital lender backed by Grab and Singtel, is offering personal loans of as low as $200 to cater to what it sees as underserved segments of the population.

The tenure or duration to pay back the loans starts from just two months, while customers also have the option to pay off their loans early, partially or in full, without incurring any fees.

Interest rates on the GXS FlexiLoan start from 3.8 per cent a year and depend on an individual’s credit risk scoring assessment, said the bank on Tuesday.

Customers who pay off their loans earlier save on their interest payments since interest is calculated daily, on a non-compounded basis, meaning interest is charged only on the outstanding loan balance on a given day.

However, customers will be charged interest at a default rate of 18 per cent a year for late payments.

Incumbent banks generally charge an early repayment fee of $150 or 3 per cent of the outstanding amount on personal loans.

The Straits Times understands that GXS’ loan amount is capped at twice a borrower’s monthly income if the person earns less than $120,000 a year, under the bank’s regulatory obligations in its initial phase of operations.

Customers can borrow a maximum of $100,000 with tenures of up to five years.

The bank said flexibility on its loan tenure will especially benefit people such as gig workers, entrepreneurs and those who have just started their careers. It cited a survey of 1,000 people done in March which found that half of respondents prefer to take up loans with a tenure of under 12 months. 

Alongside bigger-ticket items such as home renovation and education, survey respondents said they have taken up short-term loans for smaller expenses such as daily household necessities.

“These may not necessarily require a large credit line, and that is why GXS has designed the FlexiLoan with the flexibility for consumers to take up just the loan amount that they need, from as low as $200,” added the bank.

Ms Jenn Ong, GXS head of credit products, said there are still individuals who feel restricted by the requirements of existing loan products and the way these are structured, even with the extensive options available.

“When faced with such hurdles, they may look for quick fixes that may not be financially prudent for them, such as taking on alternative loans with high interest rates or hidden fees that may snowball,” said Ms Ong.

She added that GXS loans bring together features of a personal instalment loan and credit line. This means borrowers can draw multiple loans up to their credit limit without having to go through underwriting and approval each time.

Asked about the attractiveness of the loan’s interest rates, which are similar to others in the market, GXS chief executive Charles Wong acknowledged that pricing is one part of the equation but is not the only factor customers consider.

“The ability for you to have access to the loan, the speed (for you to receive) it and its ease of understanding are not so straightforward,” he said, adding that his bank hopes to simplify the process for customers.

Its loan also allows borrowers to customise their monthly repayment date – for example, by choosing one that is aligned with when their salary is credited.

It is available to all eligible individuals in Singapore – citizens or permanent residents aged between 21 and 65, and with a minimum annual income of $20,000.

Customers can apply for the loan on the GXS app and view details like their monthly repayment amounts and interest incurred. They can also set up prompts and reminders in the GXS app to keep track of their repayment schedules.

Ms Ong added that the bank assesses customers’ risk profiles through their existing credit history and by looking at “ecosystem data” from Grab and Singtel.

Other measures to protect customers from chalking up too much debt include an app feature that allows them to reduce their credit limit, and the bank stepping in to prevent further drawdowns if customers miss their payments.

The FlexiLoan is the second product that GXS has launched since it made its debut last August with a savings account, which is currently still by invitation only. This is because digital full banks like GXS must cap their aggregate retail deposits at $50 million and restrict their retail depositor base in their first one to two years of operation.

Mr Wong told a media briefing that the bank has almost hit the $50 million limit and is working with the financial regulator to review the cap.

He added that when GXS launched its savings account, it wanted to help customers stretch their savings and not feel penalised for having different cash flow needs. 

GXS has since raised its interest rate to 3.48 per cent a year on “savings pockets” that customers can use to squirrel away cash for specific purposes. This is up from 1.58 per cent a year when the account was launched.

Deposits are a cheap source of funds for banks, supporting their lending activities from which they earn interest income.

Mr Wong said the bank will unveil more products in the coming months.

GXS was one of four players that bagged digital bank licences from the Monetary Authority of Singapore in late 2020. The company and technology giant Sea’s MariBank hold digital full bank licences, and can serve retail and corporate customers.

There is also Trust Bank, which also operates online but holds a full bank licence that allows it to function in a similar way to traditional lenders. It is backed by heavyweights Standard Chartered Bank and FairPrice Group.