Trust Bank expects to become No. 4 retail bank in Singapore
How is it that a digital bank startup expects to become the No. 4 retail lender in Singapore before long? After all, digital banks are, with the occasional exception, better known for losing money than making a profit. Of the four online lenders who received licenses in December 2020, not one is currently profitable. However, Trust Bank, which launched in September 2022, is a different story. Trust Bank is not a traditional digital banking venture but rather an entity created by large incumbent lender Standard Chartered and supermarket chain Fair Price Group.
Because Trust Bank is essentially an offshoot of these two large companies, it does not face the same pressure as typical digital banking startups. It also has superior resources at its disposal than most of its competitors.
While Trust Bank lost about S$128 million in 2023, slightly more than in the previous year, it has been established for barely two years and expects to be profitable by 2025. “Profitability is a factor of both the number of clients and also how the clients are engaging with you. On both of these metrics, we are very encouraged by the trajectory,” CEO Dwaipayan Sadhu told The Straits Times.
While many online lenders say they are on the path to profitability, there is reason to believe Trust’s forecast will be accurate. Unlike many digital banking startups, Trust is not seeing costs rise sharply due to excessive marketing spend. According to the bank’s management, its costs increased just 1% in 2023. The cost of acquiring customers is one-seventh of that in the industry, he said, as many clients joined the bank “almost organically” from the FairPrice ecosystem and 70% of new customers are referred by existing ones.
At the same time, Trust is benefiting from Standard Chartered’s deep banking experience. It does not have to deal with the same learning curve as tech giants Grab and Sea, which are platform companies expanding into financial services rather than a large incumbent lender launching a new digital subsidiary. While the tech giants had to go through an extended vetting process to receive digital full bank licenses in Singapore, and continue to face certain restrictions, Trust set up shop faster and faces fewer constraints.
“It’s really in the middle between a traditional bank and a digital bank,” Phillip Securities Research senior research analyst Glenn Thum said of Trust Bank to The Straits Times.