In this instalment of Payments Powerhouses, we chat with Fredy Aga, CFO at Trust Bank, on his experiences at Singapore's first digital bank, the importance of focusing on customer experience, and how digital and traditional banks can complement one another.
Fredy Aga has more than 25 years of experience in financial services, mainly at Standard Chartered Bank. Since 2020, he has been the Chief Financial Officer at Trust Bank, Singapore's first digital bank, backed by Standard Chartered Bank and FairPrice Group.
Fredy: Well, if there's one industry that dramatically changed in the last two decades or so, it’s surely financial services, particularly banking. Having been in the banking industry for 25 years, it’s intriguing to witness the kinds of changes that have taken place over this time – I've seen a number of business cycles, the Global Financial Crisis, 9/11 attacks that brought about new regulations around financial crime, and of course, the recent COVID-19 pandemic. And what I find fascinating about banking is that it has survived all these crises. I believe banking itself will remain, albeit the way that banks operate will change. And that’s where digital banks come in.
Before joining Trust Bank, I had been engaged in areas like acquisitions and due diligence, and focused on raising capital and setting up companies. I’ve worked in various functions across the bank, but I actually spent a large part of my career in retail consumer banking. That's one of the reasons I was inspired to join Trust as well, as it has a strong retail focus.
Throughout my career, one thing that has always excited me is people. At StanChart, I have been fortunate to get to work with a very diverse set of people, and the same goes for Trust. We have a fantastic team with a unique culture.
It's certainly the latter! By nature, I don't stick around in a role for a long time, and that's the beauty of working in an MNC like StanChart – you get many opportunities, and there's so much to learn in the various parts of the organisation. I’ve been across functions and in roles overseeing countries, regions, and global. So each has its own flavour. Country roles have been much more operational, much more on the spur of the moment. Global roles are more strategic.
Basically, it brings together two household names – Standard Chartered Bank and FairPrice Group – and carries the heritage of both organisations. They have their own expertise and complement each other’s capabilities; Trust taps into Standard Chartered’s banking capabilities and FairPrice Group’s vast ecosystem. There's a depth of experience and, of course, a common vision in serving the banking needs of the Singapore community.
What's been really clear to us is the benefit of being closely integrated with the strong and highly engaged consumer ecosystem of FairPrice Group, which delivers more than 1 million customer experiences daily nationwide This allows us to bring tangible value to customers across the nation.
When it comes to digital banks, one of their key success factors is cost – client acquisition costs tend to be much lower compared to traditional banks. We’re able to enjoy low client acquisition costs by tapping into our huge ecosystem. Case in point, when we launched on 1 September 2022, we were humbled by the kind of customer response we received; we managed to acquire 100,000 customers in 10 days, and our customer base grew to over 300,000 over two months.
That's what we’re aiming for: making banking accessible. Of course, it has to be transparent, simple, easy, and rewarding as well. Singpass account holders can sign up for a Trust bank account within a couple of minutes; there are no annual fees, replacement fees, or FX transaction fees. Through the collective strength of Standard Chartered’s banking expertise and FairPrice’s strong ecosystem, Trust is able to offer Singapore customers an experience that’s uniquely transparent, easy, and rewarding.
A modern, digitally-native bank like Trust is built from scratch, hosts its infrastructure on the cloud, and uses the latest and best technologies to create a cutting-edge platform.
From a customer perspective, this creates two major benefits:
Firstly, as digital banks don’t have branch networks, they operate at a lower cost, which enables the digital bank to pass on those lower-cost benefits to customers. For Trust, we have a fee-free proposition; we offer our customers the market-leading base rate on deposit balances with no minimum balance requirement.
Secondly, digital banks can raise market standards by creating customer-focused experiences. For example, when customers were requesting a way to adjust their credit limit on their own, we were able to provide that option to them within a span of two weeks. That’s an edge digital banks have over traditional banks, being able to affect changes rapidly.
While Trust may not have physical branches, we’re taking steps to make banking accessible for all, even those that might need extra help becoming comfortable with digital services. For example, we have a dedicated customer service team ready to support and assist our customers via our app on any of their Trust-related queries or requests 24/7. We receive many calls and have a live chat function on our mobile app, which enables us to respond quickly to our customers. On top of that, we recently set up a Customer Experience Centre at FairPrice Vivocity, where our friendly and dedicated digital ambassadors can assist less digitally-savvy customers on their journey. You can even come down to enjoy a cuppa prepared by a robotic coffee machine!
That's something that’s keeping us busy! On top of integrating with the FairPrice Group ecosystem, we’re also working with a range of partners to offer coupons to our customers. These partners include Starbucks, KFC, Caltex, and Viu, and over 120,000 digital coupons were redeemed by our customers within the first month.
Trust launched as a consumer-focused digital bank built for Singapore. But our launch was just the starting point. Our goal is to be the bank that caters to everyday people and finds ways to help them enjoy significant savings in their everyday spending. We’re confident that our unique value proposition will benefit customers, and with FairPrice Group being a household name in Singapore, it will support our long-term journey in growing Trust.
I guess one has to look at it in two ways. Trust is the first digital bank, and we are extremely proud of that; at the same time, we also are conscious of the fact that competition will continue to improve. I know it’s a clichébut Trust’s culture is to keep our customers at the centre of everything. Whether we are the first or second digital bank in Singapore, this is the ethos that drives us, and we are confident that we will be able to offer innovative solutions that will make our customers’ lives better.
Digital banks will bring innovative, easy-to-use solutions for customers in Singapore and the rest of the world, and we believe this will help drive higher standards in the market. In many markets, digital banks complement the traditional banks and push them to up their game as well. At the end of the day, the consumers are the ones who stand to benefit tremendously.
One thing we find exciting is how comfortable people have become with using digital services, and that doesn’t just apply to banking. COVID-19 has been a catalyst in accelerating this trend. For Trust, it’s given us the opportunity to support more customers, many of whom may have been sceptical about digital services previously but have now become more open.
There will be winners and losers – we’re still learning, and digital banks are less than a decade old. But we believe that the future belongs to those who are not just brave and adopting new business models, but also those considering and thinking of long-term sustainable business models.
Yes, it is true that very few digital banks are profitable, perhaps less than 10%. I believe there could be many factors which could either lead to their success or their failure, but I would narrow it down to three key success factors:
Firstly, a digital bank needs to have a sustainable business model that can withstand economic cycles and downturns. That implies having a very diverse and well-distributed product and client segment. So if you have a single product model, which is what many digital banks start with, it will be difficult to be profitable. You’d need a diverse, well-distributed product and client segment, and included in this, you need both deposits and loans.
The second success factor is keeping a low acquisition cost. Access to an ecosystem helps create value propositions for customer acquisition instead of simply offering expensive benefits to customers.
Finally, to succeed, digital banks will need to focus on customer activation. You need to monitor the number of monthly active and daily active users because frequent engagement with customers matters.
The space is still quite nascent, but there are plenty of opportunities and that’s what makes it so exciting.
Well, I have a 19-year-old, and he often asks me about my thoughts on what he should be doing in the future. Banking is no longer boring, for sure – with the evolution of technology, banks have become very exciting places to work in.
My first piece of advice would be to familiarise yourself with the digital world. That doesn’t mean that you need to become a programmer or a coder; though if you are one, that's great. Be interested in ABCD – analytics, blockchain, cloud computing, data – make sure you are no stranger to these.
My second piece of advice would be to remember the basics. The customer is definitely the king or the queen, so make sure you keep customers in the front of everything you do.
I've noticed, for youngsters in particular, that culture plays a big role. A lot of organisations are tweaking their cultures to cater to the younger generation, who are becoming very choosy in terms of where they want to join. It’s good because it's important that people make sure they are the right fit for a company and its culture.
My last bit of advice is about leadership. At Trust, I've seen folks of all ages take the lead without a leadership position or title, which is great and the way it should be. It's not the position or title you should be after; it's about having the right mindset as you work and progress in your career journey.
Frankly, I've been learning more about digital banks and digital banking. Setting up a bank is no easy feat, you know, but it's been a fantastic learning experience. This year's target is to do more trekking and climb to Everest Base Camp!
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Payments Powerhouses is a monthly editorial series interviewing the movers and shakers of the payments and wider fintech industry in Southeast Asia and beyond. If you’d like to be featured on Payments Powerhouses, reach out to us here.