What is Digital Banking in Singapore? The Pros & Cons

By 2028, the digital banks market is expected to reach a volume of USD 2.74 trillion globally and USD 5.12 billion in Singapore, following a forecast annual growth rate of 9.20% from 2024 to 2028.

It is estimated that in 2025, Singapore alone will have around 1.7 million users using digital banking services. At this point, it is clear that digital banking has become a well-received option. But what exactly is digital banking? Should businesses in Singapore use it? 

This article covers everything about digital banking, including its definition, range of services, advantages, factors to consider, and the licenced providers of digital banking services in Singapore.

Digital banking is the process of banking using digital technology instead of visiting a physical branch. It can include managing accounts, making payments, or transferring money online.

Typically, digital banks will offer services similar to traditional banks, such as checking and savings accounts, credit and debit cards, loans, bank statements, etc. However, unlike traditional banks, digital banks have moved most of their processes and services online, mainly through new platforms and mobile apps that can be accessed on most mobile devices.

In other words, digital banks have digitised banking products and services, transitioning from physical to digital.

Digital banking and online banking often get mixed up, but they aren't the same. Simply put, online banking is a part of the larger concept of digital banking.

Online banking refers to performing everyday tasks, such as checking your balance, transferring money, viewing statements, and using internet-enabled devices.

Digital banking, on the other hand, is a broader term that refers to a more complete and flexible range of services made possible by advanced technology. This includes everything from setting up accounts and remote KYC to mobile banking apps and virtual assistants. It offers a fully digital experience that covers both online and mobile banking. 

Digital banking serves as an alternative to traditional banking, with its primary distinction being its predominantly digital nature. 

Here's a breakdown of other common differences:

Digital banking provides nearly all the same products and services as brick-and-mortar banks but is accessible online through mobile apps and websites. The specifics differ from one provider to another.
Here are some common services offered by digital banks. 

• Checking, savings, and fixed deposit accounts for individual and business
• Electronic transactions, including the ability to deposit, send, and receive money digitally. 
• Debit or credit cards for purchases and online transactions.
• Personal and business loans.
• Investment products. 
• Other online financial services, such as payment APIs. 

Digital banks do not offer in-person services. They may offer online substitutes for some banking activities, such as mobile check deposits instead of over-the-counter check deposits. However, they often lack cash withdrawal facilities, and only a few ATM networks are available.

In Singapore, the banking framework, which includes digital banks, is under the Banking Act of 1970. The Monetary Authority of Singapore (MAS) is the regulatory government body that issues both banking licences and digital banking licences to institutions.

With digital bank licences, various entities, including non-banks, will be able to offer digital banking services in Singapore. Nevertheless, there is a transition period from the time the entities are granted the licence to the time they become fully operating. This means an institution may start operating under some restrictions until 3 to 5 years pass before the MAS assesses whether to remove the restriction.

Currently, there are 2 types of digital banking licences in Singapore:

This licence allows an institution to provide deposit-taking services and other banking-related services, just as any other certified full bank Institution. These services include savings accounts, investment products, and credits aimed at individuals, also known as retail services, as well as other entities such as businesses or corporate clients.

• During its first years of operations, the amount of the deposit that it can receive will be capped at a total of SGD 75,000 per individual. 
• After the restriction period, which could be from 1 to 2 years, these caps can be lifted by the Monetary Authority of Singapore (MAS). 

This licence allows an institution to focus on providing services to Small and Medium Enterprises (SMEs) in Singapore. A digital bank with a DWB licence can provide the same services as a wholesale bank, namely lending services, deposit-taking, and other financial services, specifically to companies. If an entity wishes to provide retail banking services, a permit or an approval process should be done with the regulating authority.

• There is no deposit cap for this kind of digital banking licence since their customer base is corporations and other large entities. 
• A digital wholesale bank is limited to the business scope that was registered in the application process for its licence. If there is an intention to provide further services, a business expansion scope process needs to be done with the regulating authority.

Now that we have a better understanding of what a digital bank licence allows an institution to operate in Singapore, we can move into the next section, in which we will show a list of the current digital bank operations in the country. 

• GXS Bank: GXS bank is backed by the Grab Holdings Group, a Singapore-based super app and Singtel, a Singapore Telecommunications company. The bank was one of the first participants to be granted a digital bank licence in 2020. GXS bank is currently offering savings accounts, debit cards, and lines of credit. GXS bank caters to individuals and small businesses. Its most unique feature is that it's accessible from both Grab and Singtel apps. 
• Maribank: established by the Singaporean group of companies Sea Limited, Maribank offers savings accounts, personal investment products, business accounts, and business loans. The digital bank account can be linked to Shopee, a shopping app, to facilitate easy purchases.
• Trust Bank: backed by Standard Chartered Bank and FairPrice group, Trust Bank is the only Singaporean digital bank in this list that is owned by international entities. The bank offers savings accounts, loans, split purchases, credit cards, insurance, and access to the Standard Chartered ATM system.

• ANEXT Bank: created by the Chinese group Ant, which is the financial branch of the conglomerate Alibaba Group, this digital bank is focused on cross-border transactions and solutions for SMEs in this area. The digital bank offers business accounts, business loans, fixed deposits, and APIs.
• Green Link Digital Bank: Green Link Digital Bank was established by two Hong Kong-based companies, Greenland Financial Holdings and the logistic company Linklogis, in partnership with Cooperative Equity Investment Fund Management Co. Ltd in Beijing. The digital bank focuses on providing solutions in the fields of supply chain management and logistics to SMEs. It offers current accounts, loans, trade, and supply chain finance. 

As we have seen in this section, companies other than banks that have a record or an already established online presence are coming up into the digital banking arena, creating an interesting environment that compliments itself with other non-banking services

• Accessibility: Digital banking operates 24/7, allowing customers to access a wide range of services anytime and from anywhere.
• Better rates and lower fees: By leveraging automation to minimise manual processes and operating without the expenses associated with physical branches, digital banks can pass on these savings to customers in the form of lower fees and better interest rates.
• Time savings: Digital banking replaces the need for waiting in queues with online setups and remote KYC processes, enabling customers to open accounts swiftly from any internet-enabled device.
• More personalised experiences: Many digital banks use technology such as AI to personalise services, providing customers with the most relevant financial options, as well as comprehensive spending analytics that further enhance the banking experience.

• Technical issues: Digital banking relies heavily on electronic communication. This means you might struggle to access your accounts during website or mobile app outages, technical errors, downtime, or simply a lack of internet, especially since there's no physical branch to visit as an alternative. 
• Security concerns: Hackers and scammers frequently target digital banks, putting the bank and its customers at risk of data breaches, financial fraud, and cyberattacks. However, digital banks do work hard to minimise these risks by implementing various security measures such as multi-factor authentication, biometric verification, data encryption, and more.
• Learning curve: Adapting to fully online banking and mobile apps can be challenging and overwhelming for some, requiring patience and guidance to become proficient.

Banking solutions are just starting to diversify, and it is certain that in the years to come, more features and more benefits will be translated into the users, either individuals or businesses. 

For startups and small businesses, digital banks are alternatives to traditional banking that may require higher prerequisites to engage with them. Therefore, digital banks and other payment solutions are starting to pick up a faster phase due to the benefits and almost instant processes that are different from traditional banking institutions. 

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