First Community Credit Union Loan Rates – MariBank’s promotion of 2.88% APR on savings accounts ends on December 31. Photo: MARIBANK
SINGAPORE – The digital gaming and e-commerce banking group now has the highest interest rate on savings accounts among Singapore’s big three banks, following a rate hike on Monday.
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MariBank’s 2.88% offer is also higher than what DBS Multiplier customers can get when making card payments and purchases, but lower than what UOB One and OCBC 360 customers can get.
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Marybank’s offer will end on December 31, at which point it will return to the 2.5% that customers have enjoyed since the launch of the digital bank in March.
Digital challenger bank GXS cut interest on savings accounts to 2.68% a year in August, while Trust Bank, backed by Standard Chartered and FairPrice Group, offered up to 2.5% to members of the National Congress of Trade Unions for 2%, and 2% for non-union.
Jan Ondros, an associate professor at Essec’s Asia-Pacific Business School, said all banks, including digital banks, use interest rates to find new customers.
Shaun Yap, a 46-year-old financial consulting manager, has accounts with GXS and Trust and is considering opening a MariBank account soon, “just to try and the 2.88% interest rate is good.”
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Professor Ondrus said digital banks hope that when customers like Yap open an account, they won’t have a chance to leave after closing, especially if they have a good experience and won’t have to pay fees to stay.
However, Willy Tanuto, who is Fitch’s head of financial institutions in Asia Pacific, said that competing on price alone is difficult and unsustainable because the existing banks have “very advanced businesses”.
Local banks DBS Bank (DBS), Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB) accounted for 65% of all Singapore dollar deposits by the end of 2022, totaling about $500 billion, Fitch said.
UOB and OCBC may also offer higher interest rates on their savings accounts, while DBS Bank often offers lower rates due to its large POSB facilities.
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UOB One pays 3.85% interest on the first $30,000 in the account, as long as the account holder makes regular payments and spends at least $500 a month on the UOB card.
The OCBC 360 account offers a total interest rate of 3.85% on the first $75,000 if the customer deposits their salary in the bank and saves and spends $500 a month.
The DBS multiplier will pay between 1.8% and 2.2% on the first $50,000 in the account if the customer has a salary and money in the account.
Fitch said that investors can park their money in any bank they want, so during market crises the big three banks benefit from switching to good banks.
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Zenon Capron, director of research and consulting at fintech Capronsia, said that Singapore’s PayNow infrastructure makes it easier for customers who are already switching to transfer money.
Chen Jianghe said digital banks should first find ways to increase their customer base, increase deposit stability and build loyalty.
He added that he was still stuck in a “Catch-22”: He had to “spend more money in taking deposits to create profitable products,” but had no “recurring earnings” to finance growth.
GXS Bank and MariBank announced in July that they would open their savings accounts to the public and increase the deposit limit to $75,000.
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Like most banks, the Singapore Deposit Insurance Corporation will provide deposit insurance of up to $75,000 per person.
As they grow, digital banks can offer additional services such as insurance or purchasing options, Professor Andrews said.
“In the short term, the digital banks will not make much money from loans. They must have enough deposits, which will serve as protection against risk,” he added.
A Maribank spokesperson told The Straits Times that the bank is expanding its banking services to include financial solutions.
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The spokesperson added: “This will improve our savings strategy and give our customers a simple and easy way to increase their wealth.”
GXS Bank offers personal loans where customers can borrow between $200 and $100,000 at an annual interest rate of 2.99% and terms ranging from two months to five years.
The company said it will launch a credit card in the coming months that will offer rewards and cash back when customers spend money using their savings accounts.
Bank Trust already has credit cards, personal loan solutions and insurance products underwritten and issued by Income Insurance Company.
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Mr Capron said the trust used the full FairPrice ecosystem to expand the trend, adding: “Everyone needs to buy groceries regularly.”
The bank has attracted funding of more than a billion dollars since the beginning of May and aims to break even by 2025.
The bank added that more than 600,000 customers, or 12% of the Singapore market, have signed up for the account since it was launched a year ago.
“In the coming months, customers can expect more payment options between Shopee and MariBank,” he added.
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Professor Ondrus said many people would not replace their first bank with a traditional bank in the short term, but he noted that digital players had the opportunity to make banking more accessible through low fees and easy-to-use technology.
“Now they need to take advantage of the opportunities to be as strategic as possible and manage the risks.”
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