StanChart, FairPrice tie up to launch digital bank, with firsts such as 'more secure' numberless credit card

SINGAPORE — A digital bank called Trust Bank, a tie-up between Standard Chartered Bank (StanChart) and the FairPrice Group, was launched on Thursday (Sept 1), touting itself as Singapore's first bank to allow customers to nominate the date of the month they intend to repay their credit card bills.

It is the second digital bank for retail customers to launch in Singapore in two days, and is the first to have a numberless credit card — to prevent the theft of card details. It will also allow customers to use the card as a debit card should they so wish.

The Government announced in 2019 that Singapore would issue up to five digital bank licences, including wholesale licences for digital banks serving business and other non-retail customers.

Digital banks offer the same type of banking services as traditional banks except that they operate entirely online without physical infrastructure such as bank branches.

A day before, ride-hailing firm Grab and telecommunications firm Singtel launched Singapore's first digital bank for retail customers with their joint venture, GXS Bank.

Another firm, Sea Ltd, has obtained a full digital banking licence but has yet to announce its launch.

In June this year, two wholesale digital banks were reportedly launched in Singapore: One run by China's Ant Group called Anext Bank, and the other run by a consortium with links to Hong Kong called Green Link Digital Bank.

Speaking at the launch of Trust Bank at the VivoCity shopping centre on Thursday, Mr Dwaipayan Sadhu, its chief executive officer, said that the features such as nominating the date to pay credit cards were among those that were wanted by more than 2,500 people. This group was involved in testing the digital offerings.

Banking will be done only through Trust Bank’s mobile application.

However, Mr Sadhu — who spent more than 14 years heading various departments at StanChart — said that customers may withdraw money from any of StanChart’s automated teller machines (ATM), or a dedicated ATM located at VivoCity.

StanChart owns 60 per cent of Trust Bank while a holding company made up of FairPrice Group and NTUC Enterprise owns the remaining 40 per cent.

Trust Bank, which obtained a full bank licence in December 2020, said in a press release that Singaporeans hoping to open an account with the bank may do so "within a matter of minutes" using a digital identity account, which will allow them to "generate significant savings" immediately.

To offer more convenience, the bank's credit card will let customers nominate which date of the month they wish to make their monthly credit repayment, rather than being given a date that may not suit them.

In terms of interest, the bank’s savings account offers a rate of up to 1.4 per cent for deposits of up to S$50,000.

Of this, the base rate is 1 per cent, Mr Sadhu said, while the remainder can be accrued through transactions with the bank’s credit or debit card.

He added that Trust Bank has a “transparent system”, which will allow customers to easily see what they need to do in order to earn the bonus interest.

Beyond that, the digital bank will also be offering a promotional launch rate of up to 21 per cent on LinkPoint rebates for spending across NTUC FairPrice supermarkets, Kopitiam food courts, Cheers convenience stores and Unity pharmacies.

The promotional rate for the rebates on LinkPoint  — a FairPrice reward system — will be valid until December this year.

Included as well within Trust Bank's launch offerings is a family personal accident insurance plan, with coverage of up to S$8,000 for death and permanent total disability, by the NTUC Income insurance company.

Trust Bank said that it will have no premium for the first two months, upon sign-up of the bank’s credit card, but a S$0.50 monthly premium will be charged thereafter.

TAPPING FAIRPRICE'S WIDE REACH

Speaking to the media at the event launch, Mr Sadhu said that one of the advantages of tying up with the FairPrice Group is its “extremely rich ecosystem”.

He explained that the group serves about a million customers every day and one of Trust Bank’s objectives is to “tap that ecosystem” to build its customer base.

He added that this should also allow the bank to thrive where other digital banks, such as those in Hong Kong and South Korea, have floundered.

When asked by TODAY how the bank hopes to reach out to older customers who might be less comfortable with digital technology, Mr Sadhu said there are a couple of ways that the bank hopes to bring this segment of Singaporeans onboard.

One way, he said, is an intuitive user interface that the bank developed according to feedback from older clients over the past few months.

“But at the same time, we understand there might always be a small set of customers who may not be very digitally comfortable yet,” he added.

“They might have some concerns on their mind, or they may not find it easy to make that jump.”

To help address this, the bank will have a booth — which Mr Sadhu described as a “customer experience centre” — within VivoCity to guide customers through the registration process, how to use digital banking, and to answer any questions potential customers might have.

However, he stressed that the booth is not a bank branch and it will not perform any banking transactions.

Officiating Trust Bank’s launch was Mr Lawrence Wong, Deputy Prime Minister and Finance Minister, who said in a speech that the addition of Trust Bank to Singapore’s banking system is “very timely” because the pandemic has accelerated Singapore’s “embrace of digital services”.

The market is small and relatively well served though, Mr Wong noted.

Moreover, existing banks are launching their own digital platforms, and more digital banks are expected to enter the market.

“But I say to you, 'Embrace the competition, embrace the challenge',” Mr Wong said while addressing Trust Bank. “Hopefully, this healthy competition will motivate you and all the other players to keep on innovating and keep on improving your products.”

As for GXS Bank by Grab and Singtel, media reports showed that it is positioning itself as a digital bank that encourages customers — particularly under-served segments such as gig workers, entrepreneurs and those new to the workforce — to save more.

To do so, customers may deposit up to S$5,000 into a savings account and earn daily interest of 0.08 per cent a year, with no minimum balance requirement.

Customers of GXS Bank may also work towards different financial goals through up to eight "Savings Pockets". Money may be transferred from their main savings account to these pockets to earn daily interest of up to 1.58 per cent a year.

The process to introduce digital banks started in June 2019 with the announcement by the authorities that Singapore would be offering up to five digital bank licences.

Financial experts previously told TODAY that since digital banks do not typically need physical branches, they have lower overheads and are able to offer better interest rates to customers, in addition to cheaper and more personalised services.

They also said that digital banks may benefit niche segments of the market that are under-served by traditional banks such as foreign workers, small- and medium-sized enterprises and the mobile-savvy millennial population.

Mr Cheng Chye Hsern, the head of investments at financial consultant firm Providend, said in response to TODAY's queries on Thursday that younger consumers who are more tech-savvy might also find digital banks appealing because they may not need the entire suite of traditional banking services

Moreover, because of these banks' digital nature, he said that some customers might also be attracted by the convenience it offers to meet their banking needs.

Aside from credit cards, which are typical banking products from traditional banks, Mr Cheng said that it is possible to see digital banks offering loans in the future as well.