Digital versus traditional banking what's the difference?

IN THE first month of Trust Bank's launch, I was amongst the 200,000 customers who opened a savings account with the digital bank, enticed by the S$35 FairPrice vouchers and free bag of rice that the bank offered.

But when I signed up for an account, I did not really know what a "digital bank" meant, or how different it was from the usual digital banking services offered by incumbent banks which I am familiar with.

What I did know was that Trust offered a great deposit base rate, with no fees and without the need to maintain a minimum balance. As I already have multiple bank accounts, this encouraged me to take the first step by putting a small sum into the savings account by Trust.

I wondered how a bank could be profitable if everyone did the same as me: Putting in small amounts of money to receive a competitive base interest rate without paying the usual fees. The answer, as it seems, lies in the cost advantage that digital banks like Trust enjoy.

Digital bank vs traditional bank

Perhaps one of the biggest differences between a digital and traditional bank is the way in which they are built. Digital banks, as Dwaipayan Sadhu, Chief Executive Officer of Trust Bank tells me, are built from scratch specifically to be digital - also known as being "digitally-native".

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"A modern digitally-native bank hosts its infrastructure on the cloud and uses the very latest and best technologies to create a cutting-edge platform," says Sadhu.

This creates some major benefits from a customer perspective, he adds, one of which comes in the form of cost savings which can be passed on to customers.

Sadhu says that Trust adopts a lower cost model as it does away with expensive legacy technology to maintain and has no physical branch network to support.

The lower cost in turn allows a digitally-native bank like Trust to pass on more benefits to its customers.

With Trust, these benefits come in the form of a fee-free proposition and on deposit balances, its market-leading base rate and no minimum balance requirement.

The myriad of discounts and the added advantage of being able to accumulate points as I spend at FairPrice is also a particularly huge pluspoint for someone like me, who is tasked as being my family's "chief grocery shopper".

I also like that the Bank's app allows me to see all the coupons I've accumulated, particularly on merchants that I frequent, such as food court chain Kopitiam in just two clicks.

While I assumed such a function to be a given, Sadhu tells me that this is actually part of the Bank's effort to design its user experience around its customers by providing greater transparency on rewards from the use of realtime data and through rapid response to customer feedback.

"At Trust, we set ourselves the goal of being transparent with our customers and communicating with them in ways that we hope will be very relatable, and maybe not how they are used to from their traditional banking interactions," Sadhu says.

Indeed, a digital bank is quite unlike traditional banks which the world is used to. There are no physical branches, no inperson interactions with a bank officer, and everything is taken care of digitally, whether through a phone call or via the app.

For the less technologically savvy, this might take some getting used to and Trust says it has set out to be accessible and inclusive to all demographics of society. It is the reason the bank recently opened a Trust Experience Centre at VivoCity, to serve as a physical touchpoint where customers who need help navigating the Trust app can seek assistance and become more digitally savvy.

Trust has some interesting innovations to make things easier and safer for its customers. One of these is its numberless credit card. Touted as a "first-in-market", the idea was first conceived as a measure to enhance safety and security for its customers and to protect them from scams and frauds.

The card numbers do not appear on the physical card and can only be accessed via the Trust app, making it safer in the event that physical cards are misplaced or lost.

Additionally, users can also lock and unlock their card with just one tap on the Trust app, eschewing the usual practice of calling one's bank to report a lost card and void it, which can take up to several minutes or more.

Another innovation I found interesting about the Trust card is that it works both as a debit and credit card. Within the app, customers can pair their physical card to either their credit card or their savings account and toggle between using it as a credit or debit card as and when they wish to.

This function saves me the hassle of having to carry multiple bank cards for different purposes.

Reducing the number of items I carry doesn't stop at the credit and debit card. The Trust app includes coupons from many widely-used retailers such as FairPrice and Kopitiam, as well as Burger King, KFC, Starbucks, Viu and Caltex. These have been turned into digital coupons, meaning I can leave behind many well-worn paper versions. Trust's offerings do not end here.

Sadhu tells me that this is just the start for the digital bank, which launched less two months ago through a unique partnership between Standard Chartered Bank and FairPrice Group.

Trust is able to offer a full suite of banking products having acquired a Full Bank licence.

Beginning its journey with three offerings, namely a credit card, a savings account and family personal accident insurance, Trust says it has plans to expand its products and services in the coming months, and this will be closely guided by customer feedback, based on what is important to them, says Sadhu.

"Our goal is to be the digital bank that caters to the everyday people, finding ways to help them enjoy significant savings in their everyday spending to maximise value for them," he says.

"We are confident that our unique value proposition will benefit consumers, and support our long-term journey in growing Trust."