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THE high interest rate environment has been a boon for digital banks in Singapore, enabling them to sustain higher promotional rates for customers although all three have yet to turn profitable.

While costs have led all three digital banks – GXS, MariBank and Trust – to remain in the red, the relatively high promotional rates were sustained for longer than digital bank counterparts in other countries.

For instance, MariBank has kept its interest rates at 2.7 per cent through 2024, cutting it to 2.5 per cent on Jan 1 this year. In comparison, digital banks in Hong Kong only offered the higher promotional rates to a small group of customers for six months, whereas all three digital banks here have offered the higher promotional rate to all customers without a time limit.

All three digital banks saw improvements in net interest income. Sea’s MariBank generated net interest income in 2023 compared with an expense in 2022, while GXS (backed by Grab and Singtel) and Trust (backed by Standard Chartered and FairPrice Group) saw net interest income increase by about six times.

“This was the first time in history in which digital banks can attract customers and still have healthy net interest margins,” Alexander Pariyskiy, associate partner at consultancy McKinsey, told The Business Times.