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How Will Singaporeans Benefit from Digital Banks this 2024?

digital bank singapore
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With today’s thriving digital landscape, almost everything is done online, including banking. Digital banking is time efficient and allows you to manage your finances from anywhere. As such, Singapore presents one of the most thriving and competitive digital banking markets.

Over 70% of Singapore consumers are open to switching to digital banks, according to a recent survey. On top of that, one in three Singaporeans is estimated to have digital-only bank accounts by 2025. The recent pandemic has accelerated the digitalization of banking. Plus, digital banks in Singapore are boosting their promotions and services to increase interest.

Here we will look at how digital banks are different from traditional banks, how they work, and their benefits. Plus, a comparison guide of the top 5 digital banks in Singapore.

Read Also: Financial Planning Tips and Effective vs Annual Interest Rate

What Is a Digital Bank and How Does It Work

Unlike traditional banks, digital banks process all transactions online. Some digital banks offer lower fees, better deposit rates, grocery rebates, and other promotions to entice sign-ups. Among the banking transactions that you can do online include:

  • Online direct deposits
  • Checking your balance through mobile apps
  • Transferring money between accounts online

One of the key characteristics of new digital banks is that it has no brick-and-mortar branches. They do not have automated teller machines (ATM) or physical branches. A digital bank also differs from traditional banks in terms of the range of services, customer base, and minimum balance requirements.

Digital Banks vs Traditional Banks

Both digital banks and traditional banks offer unique services. Digital banks provide customers the ability to perform banking processes on their own through various electronic channels offered.

Traditional banks, on the other hand, offer a do-it-yourself approach, but they also offer customers face-to-face interaction and services. This is helpful when it comes to complicated financial transactions. However, it is offset by additional costs and fees.

 

Digital Banks

Traditional Banks

Scope of Services

Mainly retail banking

Handles a full range of banking services

Service Channels

Online channels, such as websites and mobile apps

  • Brick-and-mortar branches
  • Electronic channels

Minimum Account Balance Requirements / Fall-Below Fees

N/A

Depending on the bank; other fees include:

  • Account balances
  • Overdraft Fees
  • Other payments

Interest Rates On Savings

Higher interest rates as an incentive to opening a virtual savings and deposit account

Lower interest rates due to the cost of maintenance

Customer Support

24/7 chat support; ability to address critical issues

24/7 chat support; complex issues may take longer to resolve

Target Customer Audience

Mainly retail clients, including SMEs

All types of clients

 

The Benefits of Using a Digital Bank

Digital banking provides customers a seamless banking experience. It provides digital banking services using cutting-edge technologies and user-friendly interfaces. Here are some of the main benefits of digital banking:

  • Better Online Experience: Speed, accuracy, and ease are the top benefits of digital banking. Plus, with a digital bank, you can access your account at any time without worrying about the branch’s operating hours.
  • Relatively Lower Transaction Fees: Since all transactions are done online, digital banks have lower overhead costs and no costs to support physical branches. This reduction is passed onto the customers, lowering transaction fees.
  • Better Interest Rates: Digital banks are offering higher interest rates compared to traditional banks. This is mostly to entice sign-ups in a financial market dominated by traditional banks. They are also boosting promotions to offset higher inflation.
  • Less Paperwork and More Flexible with Transactions: Since all transactions are done online, most digital banks require less paperwork. Plus, customers can perform a myriad of transactions online without requiring face-to-face services.

How To Open a Digital Bank Account

The sign-up process may differ from one digital bank to another. But here are the most basic steps:

  1. Simply download the digital banking app of your choice, such as GXS or Trust Bank
  2. Open the app and fill in all the necessary fields.
  3. You can apply with MyInfo for a hassle-free experience.
  4. Use your Singpass to continue your application
  5. You will then be directed to the digital banking app’s home page.

Make sure that your personal information is correct. In some digital banking apps, you may change your preferred name and will need to enter a 6-digit passcode.

Basic Requirements:

  • Be at least 16 years old (may vary depending on the digital bank)
  • Have a residential address in Singapore
  • Have a valid Employment Pass, Work Permit, or Dependant’s Pass
  • Have a Singpass MyInfo account
hand paying using phone credit card

The Different Types of Digital Banks Available in Singapore

There are currently two types of digital bank licenses in Singapore:

  • A digital full bank license (DFB)
  • A digital wholesale bank license (DWB)

The key difference between the two types of digital banks is the types of services they can provide, as well as their target customers.

Here is a simple breakdown of the differences between the two digital banking licenses:

Digital Full Bank (DFB) Digital Wholesale Bank (DWB)
  • Starts as a Restricted Digital Full Bank in Singapore; offers simple credit and investment products
  • Opens and maintains deposit accounts for businesses
  • Conducts all banking businesses
  • Conduct the proposed businesses outlined in their application
  • For the first 1-2 years, a restricted DFB can only take deposits from its shareholders, employees, and related entities.
  • After the restricted period, DFBs can take deposits from the public
  • Can take deposits from and provide banking services to SMEs and other corporate customers
  • Serves retail customers with a deposit cap of S$75,000 for each individual
  • No deposit cap for full-functioning DFBs
  • No deposit cap

The Monetary Authority of Singapore (MAS) awarded 4 new digital banking licenses in 2020 – (2) Digital Full Bank licenses and (2) Digital Wholesale Bank licenses.

The new digital banks include:

  • Digital Full Bank Licensed
    • Singtel & Grab
    • Sea Limited
  • Digital Wholesale Bank Licensed
    • Ant Financial
    • Green Link Digital Bank (GLDB)

Comparison of the Top 5 Digital Banks in Singapore

Digital Bank Name

Annual Savings Interest Rate Offered

Fees

Best For

Grab and Singtel’s GXS Bank

  • 0.08% p.a. (main account)
  • 1.58% p.a. (savings pocket)
  • No opening, monthly, and maintenance fees
  • No minimum balance requirements

Everyday consumers, self-employed entrepreneurs, and small businesses

Neteller

1.50%

  • S$0.66 monthly fee
  • Inactivity fee if you don’t use your NETELLER account for 12 months and keep a balance in it.

Consumers who want to link an existing bank account or debit card for quick and easy payments

Wise Multicurrency Account

0.50%

S$0 monthly fee

Consumers who transact using more than one currency; lets you hold up to 50+ currencies in their account and transfer money to more than 70 countries

Trust Bank

  • 1.5% p.a. (Base interest)
  • Bonus interest rates of 1% p.a. (for union members) or 0.5% p.a. (for non-union members)

S$0 monthly fee

For NTUC Union members who will gain from higher bonus interest and larger savings

Aspire

Unlimited 1% cashback on qualified SaaS and digital marketing purchases (no minimum spend required)

S$0 monthly fee

Small and medium enterprises

 

Which Bank Is Best To Open a Digital Account?

Digital banks can offer similar types of bank services as traditional banks, without the accompanying high transaction fees. As such, the best digital bank will depend on your needs and preferences.

For instance, if you have an account with Standard Chartered Bank or you are an NTUC Union member, you will benefit more from Trust Bank since you’ll be earning bonus interest rates on top of the 1.5% p.a. base interest rate. Additionally, you don’t have to worry about high transaction fees and monthly fees.

If you need a digital bank for your small business, you might want to look into opening an account with Aspire. They offer unlimited 1% cashback on qualified digital marketing purchases. They also have attractive features, including virtual debit cards and interest-free credit lines.

FAQs

1. How Can Digital Banks Help SMEs in Singapore?

SMEs can avail the wide variety of financial services offered by digital banks. First, digital banks are fast and convenient to set up. Secondly, they offer multiple account options at low to zero monthly costs. Thirdly, most digital banks offer low-cost foreign currency exchange, making it ideal for SMEs that process international transactions.

2. What Are the Challenges Faced by Digital Banks?

Digital banks face fierce competition against established traditional banks, as well as customers’ resistance to change. As such, these new digital banks are offering high interest rates on savings accounts, grocery rebates, and other promotions to entice more sign-ups.

It is also worth noting that consumer trends are shifting. There is a greater demand for mobile and digital banking alternatives. Plus, consumers are looking for relevant online solutions. Digital banks can use these trends to boost sign-ups.

Closing

Digital banks are highly adaptive and operate on the newest digital technologies. With no brick-and-mortar branches and lower overhead costs, digital banks can provide services at low transaction fees. Best of all, consumers can sign-up for a digital banking account in minutes, get their card quickly, and enjoy the features anytime, anywhere.

Key Takeaways:

  • With digital banks, all transactions are done entirely online.
  • Some digital banks offer lower fees, better deposit rates, grocery rebates, and other promotions to entice sign-ups.
  • There are currently two types of digital bank licenses in Singapore- a digital full bank (DFB) license and a digital wholesale bank (DWB) license

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