Singapore’s digital banks trim deposit rates, mirroring moves by incumbent players

SINGAPORE – Digital banks serving retail customers here have been trimming deposit interest rates in line with traditional lenders.

The cuts reflect the ongoing decline of interest rates globally and could push customers to explore alternative investment options offering more attractive yields.

Trust Bank, which is backed by Standard Chartered and the FairPrice Group, will reduce rates on its savings account from a maximum of 2 per cent a year on a cap of $1.2 million to 1.3 per cent from Sept 1, making its third cut so far in 2025.

A Trust Bank spokesperson said: “As market rates have gone down, banks have also lowered their deposit interest rates, and at Trust, we’ve done the same.”

Savings account rates at Sea Limited’s MariBank will drop from 1.88 per cent to 1.28 per cent from Sept 1 – also its third cut in 2025.

MariBank chief executive Natalia Goh said that the move was to manage funding costs and support net interest margins, adding: “We regularly review our pricing to reflect these broader market shifts.”

GXS Bank, which is owned by a Grab-Singtel consortium, lowered rates on Aug 6 for its main account savings product and “savings pockets” – a feature that lets a customer split his money into up to eight mini-accounts.

The declining yields on its primary savings account rate over the year illustrate the overall market trend of falling interest rates.

The account was paying 2.38 per cent earlier in 2025 but that has steadily fallen, dipping first to 2.08 per cent, then 1.68 per cent and now 1.08 per cent.

There have been similar moves from the major banks.

UOB is cutting rates on its flagship UOB One account from Sept 1 – the third such reduction in the past two years. It follows OCBC Bank, which reduced rates on its 360 account from Aug 1 for the second time in 2025.

Rates on the DBS Multiplier account remain unchanged at between 1.8 per cent and 4.1 per cent.

Digital retail banks rolled out their services between 2022 and 2023, appealing to customers who seek competitive returns on their savings with fewer criteria, such as an initial deposit or having to maintain a minimum balance.

Fintech industry analyst Zennon Kapron said digital banks must ensure customers are happy with the user experience in the face of declining deposit rates.

“If those rates drop and the user experience isn’t compelling enough to retain customers, you could see deposit flight, especially from rate-sensitive savers who treat these accounts more like short-term parking than a primary relationship,” he noted.

Mr Tamma Febrian, director of the financial institutions group at Fitch Ratings Singapore, said digital banks can offer appealing options. “Some customers bank with them for their niche offerings, made possible by business synergy with their parents’ ecosystems.”

MariBank, for example, offers unlimited 3 per cent Shopee coins on the e-commerce platform with the Mari credit card, while GXS account holders can accrue GrabRewards points when they use their account to pay for Grab transactions and Trust Bank’s customers can earn Linkpoints through the FairPrice ecosystem.

“These propositions will likely continue to appeal to certain segments of new and existing customers,” said Mr Febrian.

Ms Goh of MariBank said the bank’s customer base continues to grow despite falling interest rates.

“While rate-sensitive users may react to changes, our analysis suggests that most consumers are aware of the prevailing market conditions and the broader interest rate outlook,” she noted.

Trust Bank said customer numbers and loan and deposit balances continue to grow strongly. Deposit balances as at June 30, 2025, were 41 per cent higher than at the same point in 2024, while customer loans were up 95 per cent.

Mr Kapron said squeezed net interest margins (NIMs) – the difference between what banks earn on loans and what they pay on deposits – could put more pressure on the digital banks as they move towards profitability, although their losses have narrowed in 2024.

A GXS spokesperson said the bank is on track to break even by 2026 while Trust Bank and MariBank did not comment.

Trust Bank is offering customers a choice among three plans to earn up to 2.5 per cent a year from September. It also encourages customers to consider other options like investment products to grow their money and offset inflation.

Meanwhile, MariBank is seeing “good interest” in investment products as customers look elsewhere for higher returns.

Ms Goh said the bank has already seen demand from customers for simple, low-risk investment options such as those that allow investments from as little as $1.

MariBank launched an income fund earlier in 2025 that pays a monthly dividend to customers who want steady payouts.

GXS has rolled out a digital investment platform for account holders looking to extract more yield on their spare cash.

It also plans to add new funds to the investment platform to cater to different customer needs, said Ms Jenn Ong, its group head of retail.

Mr Febrian said that digital banks need compelling products to stop customers drifting back to the traditional lenders, which continue to fight for market share.

He noted: “The challenge that these digital banks face is to come up with investment products that are more attractive than those offered by large incumbents, as the conventional banks are also making a serious push in wealth management as interest rates decline.”