Dwaipayan Sadhu, CEO of Trust Bank, says the Singapore virtual bank is likely to break even by the end of 2025, maybe in time for its third anniversary.
If achieved, that landmark would continue a business story that has been galloping out of the starting gate. Launched in the third quarter of 2022, Trust Bank says it became the world’s fastest-growing virtual bank in customer terms, amassing 577,000 users within its first 12 months.
Today it has 806,000 customers and is on track to rank as Singapore’s fourth-largest bank by that metric by the end of this year.
This past year it has seen its deposit base increase to about SG$3 billion, while its loan book has grown to S$486 million. Trust is reporting its revenue has more than tripled in the first half of 2024 compared to the same six months in 2023. But its cost base remains flat, thanks to its technology infrastructure (imported from sibling virtual bank, Mox, in Hong Kong).
Ecosystem play
The reason for this success is simple: Trust Bank is embedded in a powerful ecosystem. It is a joint venture between Standard Chartered Bank (where Sadhu retains his title as CEO, digital bank) and NTUC.
Citing the virtual bank’s fast growth, Sadhu likens it to the KakaoBank, which also burst to life thanks to its relationship with South Korea’s leading messenger app, Kakao.
The comparison is apt, because NTUC has a similar ubiquity with Singaporeans. Perhaps more so, because NTUC is a core part of “Singapore Inc.”
The National Trades Union Congress was established in 1961 to support the rise of the People’s Action Party, led by Lee Kuan Yew, by heading off a rival union group that was leaning communist. As the PAP consolidated power, NTUC came to represent unions across all industries. It was a team player from the start, vowing to cooperate with big business rather than confront employers.
Today it retains its monopoly on labor groups, while also operating a range of social enterprises that were designed to provide services to affiliated workers, but have used that market power to become leading private enterprises. One is Income Insurance, and another is FairPrice.
FairPrice is a critical part of daily life in Singapore. It operates the country’s largest supermarket chain, including upscale outlets, as well as food centers (hawker courts).
Both Income and FairPrice have experience with rewards. Income has a loyalty program called LinkPoints, with 2.4 million members (Singapore’s citizen population is 3.6 million, with foreigners adding another 1.7 million). FairPrice has a long history of providing cashback rebates to workers in the NTUC unions. At a time of inflation and pressures on the cost of living, these rebates are even more popular.
Keeping a lid on costs
Trust Bank, by inserting itself into these day-to-day activities, can plug in a variety of financial services. It is the exclusive bank partner for LinkPoints, for example.
“Trust is an ecosystem bank,” Sadhu told DigFin. “For FairPrice customers, using Trust is almost a no-brainer.”
Although the Mox-built tech stack plays a role in keeping costs flat, it’s really this ecosystem that enables Trust Bank to avoid heavy marketing.
“This massively reduces our customer acquisition cost,” Sadhu said, noting that 70 percent of customers come via referral.
Another factor: it didn’t have to build its tech stack from scratch. Standard Chartered could simply port the architecture created by Mox, and let the Trust Bank team focus on product development and integrations with NTUC.
Multi-product drive
This helped Trust Bank launch with a diverse set of products. Unlike many virtual banks, which go live with just one or two core products, Trust was able to offer credit cards and unsecured loans from the start – and fueled its ascent.
The bank now has offerings that cater to all segments and age groups, from daily food spend for young people to lavish steamboat restaurants for older, wealthier people.
Of course, as a digital bank, Trust didn’t just rely on the ecosystem: it had to build a lot of innovative stuff. That has included rapid call-center responses, instant loans for existing customers, autopay features for credit cards, general insurance, and fast approval of supplemental cards for a customer’s family member.
Its latest offering, to mark the bank’s second anniversary, is a dedicated cashback card. This is a competitive area so Trust Bank has eliminated annual and FX fees. Users can select a category of spend (groceries, travel, gas, etc) and receive a 15 percent cashback from partners, while enjoying up to 1.5 percent cashback on many other categories. Sadhu says the card’s best feature is it allows people to track their rewards in real time on the bank app.
The bank experimented with baking this into a single debit or credit card, but it became too complex as it required users to fiddle around with accounts on the app. So now customers have a card for payments and another for spending.
Asset expansion
All the better, from Trust Bank’s perspective, to give users more excuses to use a card. Sadhu says one in three customers do track their rewards, and while these prizes can be modest – a cup of coffee, say – what matters is that it keeps people engaged. He says the average bank customer does something with the app or the card 21 times a month.
That usage builds up the deposit base, which in turn allows Trust Bank to offer more lending products. It now has three: an unsecured installment loan that requires interest; a balanced transfer (a short term loan) with no interest rate but an up-front fee; and a split purchase, a variant of buy-now pay-later with tenors out to 12 months, again involving a fee instead of paying interest.
This is what generates the most revenue, and Sadhu says the bank’s asset side of its balance sheet is up 3.1 times year on year. That’s why Trust Bank, if it maintains this pace, should break even by the time it turns three.
