Singlife has told its customers via SMS that it is discontinuing its debit card.
Walter de Oude wasn’t happy.
“I loved that card,” Walter de Oude wrote on LinkedIn. “I loved what it represented. To me it was proof than an insurance company could be more than just an insurance company. It could take on banking and win. It was more than a transaction card. It was a symbol of innovation and evolution. It was a differentiator.”
De Oude is the company’s founder. As its former CEO, the debit card was his baby. But he hasn’t been part of Singlife since May 2022, when he relinquished his final advisory roles. He had already given up the group CEO role in January 2022, following the 2021 the business’s merger with Aviva Singapore.
What was the big deal about the card, why did Singlife (under Aviva) decide to bin it, and what does that say about the possibilities of innovation by an incumbent insurance company?
De Oude founded Singlife in 2014 (it was originally called Singapore Life) and launched it three years later as a tech-savvy insurgent, although the bulk of its business came from a portfolio of life and annuity policies bought from Zurich. It wasn’t a virtual insurer but it operated on a cloud-based stack of microservices.
In 2019, Singlife introduced a Visa debit card, blending banking and payments with the traditional insurance business. Singlife was now competing with money market funds, bank deposit accounts, and fintechs such as Revolut.
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The card worked by allowing users to withdraw money from their Singlife account policies for everyday spending or to transfer it to their bank account, with most holders receiving a 2.5 percent annual yield for balances on the card.
By making insurance policies liquid, the idea was to position Singlife as customer-friendly and edgy. The liquidity aspect meant that the insurer was trying to embed itself in people’s daily lives – a challenge for an industry that usually has no contact with its policyholders until someone makes a claim. Over time, that engagement was meant to open doors for Singlife and vault it into becoming a regional powerhouse.
The card made a splash: within three months, it had 100,000 downloads who had moved S$500 million of their money onto their debit accounts.
Aviva takes over
A year later, De Oude sold the business to Aviva Singapore. He stayed on as group CEO, as well as deputy chairman, but soon transitioned out of those roles. In July 2022 he announced he was starting up a new fintech, Chocolate Finance.
DigFin spoke with several people familiar with the business. Some believe the new management has been more cautious, and more focused on short-term financial results.
De Oude was succeeded as group CEO by Pearlyn Phau, a former DBS consumer banking executive. DigFin doesn’t know who made the decision to end the debit card: Phau, or the executives at Aviva, although sources point the finger at the latter.
Regardless of who pulled the trigger, dumping the debit card begs the question of whether it was the right idea.
Was the card worth it?
On the one hand, it was great for Singlife’s branding, and for making itself more pervasive in the lives of policyholders. No one else in insurance has done anything like this, in part because legacy mainframe-based systems probably can’t handle the data management required. If Singlife was willing to play a longer game, the card could be the thin edge of a fat wedge.
But the debit card didn’t generate enough revenues, as even its backers acknowledge. Some observers tell DigFin that the customer-acquisition cost was too high: the card was innovative, but it was meant to lure richer customers, which didn’t happen. (A Singlife spokesperson disputes this account and says the debit card was aimed at all customers, not just wealthy ones.)
Meanwhile operating the card was expensive. A bank can afford to offer depositors a debit card because those deposits are going to fund the bank’s lending business. But an insurance company doesn’t manage deposits. The debit card required Singlife to take money off its own balance sheet: assets it needs to invest to match its long-term liabilities.
Singlife had launched the card by promising 2.5 percent yields on the first S$10,000, and 1.0 percent for amounts above that, up to S$100,000. That held true as global interest rates have risen (the yield was raised to a maximum 3 percent). While that could mean the insurer could enjoy a fatter spread, the product was losing attractiveness as users could earn a lot more in, say, a money-market fund.
The product was always going to be limited in terms of yields it could offer cardholders. When the product made its debut, Singlife could earn 3.5 percent on the money held on the card by investing in short-term fixed income; it gave back 2.5 percent, pocketing a 1 percent spread.
But it also had to assign a higher risk factor to those assets, which meant incurring a capital-reserves charge, squeezing its spread. Yes, today it could offer cardholders a higher yield, but it would have to give up more of the spread for compliance purposes. So the insurer couldn’t keep pace with rising interest rates to maintain the debit card’s competitiveness.
On top of this, the debit card was probably a pain for Singlife to manage. Because it was a payments product, it required extra governance for risk management and compliance, and industry know-how that insurance people wouldn’t possess. A Singlife spokesperson disputes this view, noting the firm’s “diverse, strong and highly experienced risk management and compliance and management teams.”
Singlife still innovating?
Despite these realities, Singlife says the card was not discontinued because of financial reasons.
“We are ceasing the card program as we are transiting to a new platform with better payment solutions,” said Rick Vargo, group head of products, propositions and transformation at Singlife, in an email to DigFin.
The company is eager to maintain its reputation for innovation. “We have been consistent about capturing white space in the insurtech and digital space,” Vargo wrote.
A spokesperson added, “The Singlife card was launched in a low-interest rate environment. As the external environment changes, we evolve to better suit the needs of our customers.”
That includes this new platform in the works, as is “evolving the Singlife app and Singlife account to serve our customers better in more ways than one.”
That’s vague, so it’s impossible to tell what the insurer is actually working on. People familiar with the company say it is unlikely to take a punt on a product that loses money, even if it is great for customer engagement or branding.
Maybe Aviva might have tolerated the debit card while interest rates were low and capital was quasi-free. It was a play for attention and new customers, bankrolled by the P&L rather than venture-capital money. But now the cost of funding such things has risen, and Aviva lost its appetite for an uncertain, long-run gambit. That also means, though, that it has given up a product that made it relevant to its policyholders on a regular basis, an engagement that insurers all say they crave.
De Oude has money in his pocket, having raised a $19 million Series A round for Chocolate, led by Sequoia India (now called Peak XV Partners). Sources speculate that Chocolate will start with a wallet, and then use insurance products to win traction, turning the debit-card idea on its head – but now he’ll need to differentiate himself against a slew of fintechs and digital banks.
Whatever he comes up with, de Oude might need a quicker win, or some means of generating stable revenues. His funding is no longer internal or as patient as life-insurance assets, and VCs have exited the business of subsidizing growth at all costs.