Eased restrictions on GXS, MariBank indicate maturing digibank sector: observers

THE moves by GXS Bank and MariBank to open up their savings accounts to the public – with a higher deposit limit of S$75,000 per account – reflects greater trust from the regulator and a maturing digital banking sector, observers told The Business Times (BT).

On Wednesday (Jul 19), GXS announced that it is accepting new customers for its savings account, after having offered it on an invite-only basis. All slots for the GXS Savings Account were snapped up within a few months after its August 2022 launch.

The bank is also raising the limit for deposits from S$5,000 per account to the new S$75,000 threshold. It will launch a debit card in the coming months.

Separately, Sea-owned MariBank told BT on Wednesday that it too will open up its savings account to the public in the “next few weeks”. Its products have thus far been limited to users of Sea’s e-commerce arm Shopee on an invite-only basis.

MariBank will also raise its deposit limit for individual users to S$75,000 with effect from Thursday. Business account users will continue to have no maximum cap.

GXS’s and MariBank’s moves indicate that the Monetary Authority of Singapore (MAS) has eased the S$50 million deposit cap imposed on the companies, which hold digital full bank (DFB) licences.

Both banks were subject to the cap for the initial two years of operations, but lobbied the central bank to review its stance, citing the need to scale up rapidly.

It is not clear if there is now a higher cap in place for GXS and MariBank. An MAS spokesperson said the central bank does not comment on supervisory dealings, adding that the ”progressive easing” of safeguards depends on the DFB’s ability to meet commitments and expectations.

Unlike GXS and MariBank, Trust Bank, which is backed by Standard Chartered and FairPrice Group, has not been subjected to the S$50 million deposit cap. Its deposits crossed S$1 billion in May, just months after its launch in September 2022.

More trusting

MAS’ lifting of the deposit caps signals that it “is happy with the development of the digital banks so far”, said Zennon Kapron, director of strategic consulting firm Kapronasia.

“The idea of capping deposits was always to control risk and ensure that the digital banks didn’t grow too quickly and cause unnecessary risks,” he said.

The regulator may have wanted to be prudent at the start, but decided to be more trusting following reviews, said Su Lian Jye, chief analyst for applied intelligence at Omdia.

Professor Lawrence Loh of the National University of Singapore (NUS) takes it as a sign that the initial batch of digital banks are “fundamentally sound”.

“They have reached levels of maturity to allow them to enlarge their market offerings and clientele bases… The liberalisation in advance will lay the conditions for these banks to become viable in a challenging economic environment,” said Prof Loh, who is the director of the Centre for Governance and Sustainability at NUS Business School

This could also level the playing field between Trust Bank, GXS and MariBank, now that the latter two are no longer constrained by the S$50 million deposit cap.

GXS’ account in particular has been popular, as funds held under a “savings pocket” feature can earn 3.48 per cent per annum in interest. Between March and Jul 10, the registration waitlist for slots grew by more than 2.5 times, GXS said.

That said, the jury is still out on the long-term success of digital banking.

“Despite the limits being lifted, Singapore’s digital banks still face an uphill battle as they compete for deposits and, more importantly, profitability,” said Kapron, adding that metrics such as return on assets remain to be seen.

Su of Omdia is optimistic, but also keeping a lookout for any complaints on the user experience, alongside service convenience.

Prof Loh noted that there ultimately is a balance to be struck between allowing digital banks to expand and safeguarding consumers.

“It’s probably a chicken-and-egg problem. The digital banks cannot grow unless there are less restrictions. Yet we need to be sure that they have the capacity to maintain customer confidence,” he said.

Yorlin Ng, chief operating officer of Momentum Works, reckons that the digital banks are set to become “frenemies” of their traditional counterparts. “It will not be a winner-takes-all market – at least the regulator will not let it happen,” she said.