Digital banks have recently sprung up in Singapore with the likes of GXS and Trust bank which offer no minimum balance and attractive interest rates that accrue daily.
Talk about compound interest!
But what exactly are digital banks? Should you open an account with one?
Read on to find out!
TL;DR: Best Digital Bank Accounts (2022)
|Account||GXS Savings Account||Trust Bank Savings Account|
|Base interest rate (p.a., accrued daily)||0.08%||1.50% (for deposits up to $75k)
0.05% (for deposits above $75k)
|Card Spend||-||Additional 0.5% (with 5 eligible purchases on the Trust Link card on deposits up to $75k)
Additional 1% (with 5 eligible purchases on the NTUC Link card on deposits up to $75k)
|Bonus||Additional 1.5% for saving money into pockets (up to 8)||-|
- What is a digital bank?
- Trust Bank
- GXS Bank
- Should You Consider Opening an Account with a Digital Bank?
Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised financial advice. Readers should always do their own due diligence and consider their financial goals before committing to any financial product.
What is a Digital Bank?
You might be wondering…
What exactly is a digital bank? Don’t traditional banks like DBS already offer digital banking?
Simply put, digital banks offer the same kind of banking services as traditional banks except that they operate entirely online. This means that there are no physical bank branches and all your regular bank services will only be available through your smartphone or smart device.
Are Digital Banks Safe?
Digital banks also have the same deposit protection as traditional banks as they are part of the Singapore Deposit Insurance Corporation’s (SDIC) Deposit Insurance (DI) Scheme.
All full banks and finance companies in Singapore are members of the DI Scheme, except those exempted by the MAS.
Under the DI Scheme, if any member bank or finance company fails, all of your insured deposits with that member are aggregated and insured up to S$75,000 by the SDIC.
As your insured deposits are covered under the DI Scheme, SDIC will pay you the insured amounts in the event that a digital bank fails.
The digital banks listed in this article have met all relevant prudential requirements and licensing preconditions before MAS grants them their respective banking licences.
The applications were assessed based on the following:
- The value proposition of the business model, incorporating innovative use of technology to serve customer needs and reach under-served segments;
- Capacity to run a responsible and long-lasting digital banking business;
- Reviews of the business plans and assumptions underpinning their financial projections arising from the impact of COVID-19;
- Expected to establish that they will be profitable based on a five-year financial projection, according to criteria from MAS;
- Growth prospects and other contributions to Singapore’s financial centre.
In other words, your deposits are safe with digital banks as they are meant to be long-term businesses.
- Best Savings Accounts Singapore (2022): Which Bank Has The Best Interest Rate?
- Best Fixed Deposit Rates in Singapore (2022): UOB, OCBC, DBS, Maybank & More
First, let’s talk about Trust Bank, a digital bank backed by Standard Chartered and FairPrice Group.
On top of a savings account, Trust Bank has also launched two other financial products, a family personal accident insurance, and a new NTUC Linkpoints card that is set to replace the old OCBC NTUC Plus! Visa Credit Card.
Everything related to Trust Bank is managed in the “Trust App” which can be downloaded from the Google Play Store and Apple App Store.
Trust Bank Savings Account Interest Rates
|Trust Bank Savings Account|
|Base interest rate (p.a., accrued daily)||1.50% (for deposits up to $75k)
0.05% (for deposits above $75k)
|Card Spend||Additional 0.5% (with 5 eligible purchases on the Trust card as a non-NTUC Union Member on deposits up to $75k)
Additional 1% (with 5 eligible purchases on the Trust card as an NTUC Union Member on deposits up to $75k)
The interest in your Trust Savings Account is accrued daily and credited at the end of the month.
Trust Bank Savings Account Key Information
Eligibility: Singapore citizen, Singapore permanent resident or foreigner; and 18 years old and above
Minimum initial deposit: None
Minimum monthly balance: None
Account Closure Fee: None
Monthly Fee: None
Maximum deposit amount: N.A.
Ability to use FAST and Paynow: Yes
Ability to withdraw cash: Yes at one ATM located in Fairprice at Vivocity or any of the 19 Standard Chartered ATMs.
Link to Google Pay/Apple Pay: Yes
Trust Bank Cards
Trust bank offers two cards: the Trust Link card (for everyone) and the NTUC Link card (exclusively for NTUC Union members).
The cards are VISA Signature cards that offer dual functionality as credit and debit cards. They come with no annual fees or foreign transaction fees.
Aside from that, the main selling point of these cards is that they are used to earn NTUC Linkpoints which grants you up to 21% savings so long as you hit the required minimum spending.
For the uninitiated, these cards are essentially the replacement for the OCBC NTUC Plus! Visa Credit Card which is slated to be phased out from 1 Feb 2023.
Trust Bank Family Personal Accident Insurance
For Trust Bank account holders, you may also opt-in for the Trust Bank Family Personal Accident Insurance at just $0.50 per month with a complimentary first 2 months of coverage.
You can apply for this policy within the app and get up to S$8,000 coverage for Death and Permanent Total Disability due to accidents.
Trust Bank Promotions
With the new launch, Trust Bank is running a sign-up promotion where you can stand a chance to win one of three Tesla cars (till 31 December 2022).
There is also a referral promo where both referrer and referee will get a $10 Fairprice E-voucher (till 31 December 2022).
Disclaimer: Terms and conditions apply. Click on the relevant links above to find out more.
Founded by Grab and Singtel, GXS Bank is one of the first two digital banks to be serving retail customers.
While you can download the GXS digital bank app now, you won’t be able to use it just yet as the service is currently by invite only. The Bank’s services will be rolled out progressively to consumers starting with selected employees and underbanked customers within the GXS, Grab and Singtel ecosystem.
As of the time of writing, GXS Banks offers a savings account as its sole product. However, they offer some pretty attractive interest rates with future benefits when you spend on Grab and Singtel Dash.
GXS Savings Account Interest Rates
GXS Savings Account has a simple 0.08 per cent p.a. base interest rate accrued daily on deposits up to $5,000.
To encourage users to save more, you can also transfer money from your main account into one of eight pockets to earn 1.58 per cent p.a.!
The best part is that these returns are credited to your account daily so you can take advantage of compound interest.
GXS Savings Account Key Information
Minimum initial deposit: None
Maximum deposit amount: $5,000
GXS Saving Pockets
Aside from the main savings account, you can set your money aside in one of eight pockets to help you get into the habit of saving.
These pockets are great as you can personalise them to help you visualise your goals better, all while earning an additional 1.5 per cent p.a. on top of the 0.08 per cent p.a. base interest.
For a more in-depth look at GXS Bank, check out this article:
Should You Consider Opening an Account with a Digital Bank?
If you own a savings account with a traditional bank
The first thing most of us would look at are the interest rates offered. GXS offers interest rates of up to 1.58 per cent p.a. while Trust Bank offers interest rates of up to 2.5 per cent p.a. For comparison, here are the realistic interest rates that banks are offering based on our criteria:
Realistic interest rates are based on a minimum account balance of $10,000, $2,000 in salary credited into the savings account, a minimum of $500 card spend a month and pays at least three bills.
Both GXS Bank and Trust Bank offer pretty competitive interest rates compared to the realistic interest rates that Seedly has set out.
Personally, I believe that digital banks are great secondary savings accounts that you can take advantage of.
Firstly, digital banks are completely online and that is a double-edged sword.
While you can enjoy lower or no fees for using their services, it also means that they are more susceptible to technological issues or cyber-attacks.
There are also other pros and cons that you need to take note of:
|Interest accrued daily (i.e. interest compounds faster than traditional banks that credits interest monthly)||No physical bank branches.|
|Little to no fees compared to traditional banks||Limited number of ATMs and CDMs.|
|No minimum monthly balance!||Services are maintained online and hence more susceptible to technological issues.|
|24/7 helplines and support services|
|More efficient and flexible than traditional banks due to use of technology|
After all, it’s not a good idea to put all your eggs into one basket.
If you do not own a savings account with a traditional bank
For those of us who are unbanked or are unable to qualify for traditional savings accounts, digital banks are a life-saver as you can now enjoy the perks of banking to grow your savings, maximise your spending with credit cards (responsibly) and take advantage of other financial products available!
If you are an NTUC Union member or shop at Fairprice frequently
For NTUC Union members who have been using the OCBC NTUC Plus! Visa Credit Card, applying for the NTUC Link Card is a no-brainer if you want to continue earning Linkpoints and saving when you shop at FairPrice Group (aka NTUC grocery stores and Cheers).
For non-union members who shop at Fairprice, applying for the Trust Link Card is a great option to help you save too.