In order to further drive growth, digital banks in Singapore need to address the issue of trust amongst users, or lack thereof, Silverlake Axis group managing director Andrew Tan told finews.asia.

Singapore’s five licensed digital banks have been gradually making their market debuts and announcing ambitious goals. For example, Trust Bank, which is backed by Standard Chartered, said it aims to be the city-state’s fourth largest retail bank by 2024, behind DBS, OCBC and UOB.

Despite the optimism, the nascent industry needs to build more confidence amongst its prospective users. According to Andrew Tan, group managing director at Malaysian banking software firm Silverlake Axis, one in three Singaporeans today still do not trust digital banks.

«Trust is the paramount consideration digital banks need to address,» Tan said in an interview with finews.asia. «It comes down to two main factors: security and human interaction.»

Cybersecurity Investments

On security, Tan underlined the importance of taking proactive measures to protect systems and data as security flaws invite scammers. To this end, he highlighted the need for more cybersecurity investments, particularly in emerging technologies.

«Accelerating machine intelligence and the expansion of big data will drastically improve the capabilities of cybersecurity systems», Tan said, adding that such efforts need to be coupled with constant user education.

Human Interaction

And on human interaction, the availability of customer services around the clock is imperative for digital banks to gain meaningful market share.

Without being reachable 24 hours a day and seven days a week, digital players will remain only as users' second or third choice of bank, Tan said.

Regulatory Loosening

Apart from internal improvements at digital banks, Tan also noted that rules and regulations, such as strict capital requirements and expectations of lower costs, may have the purpose of protecting customers but could also hinder industry growth.

«Relaxing these regulations would allow more players to come into the picture, and competition means improvement,» Tan said.

Traditional Banking

Despite the scale and some legacy-related advantages that traditional banks have, there is a well-documented market of unbanked or under-banked individuals.

Commonly cited examples include those residents of remote areas with no physical banking access or a new generation of tech-savvy users with more demanding digital needs, such as better user experience.

«There will always be market niches and digital banks are well suited to address them,» Tan said. «No single bank can cover the entire market.»