Over the past decade, digital banks have transformed how consumers save, borrow and transact, yet turning scale into sustainable profits remains challenging. According to Smriti Gupta, chief financial officer of Singapore-based digital-banking platform audax, embedded finance offers a structural advantage — changing how banks distribute products and manage economics across ecosystems. According to TAB Global’s World’s Best Digital Banks 2025 ranking, around 61% of leading players are now profitable, up from 48% the previous year. Yet, most take six to seven years to break even, while newer, platform-based entrants achieve profitability in as little as three to four years. For Gupta, this divergence highlights how business models — not technology alone — determine success. “The real transformation isn’t just about technology — it’s about the operating model behind it,” she said. “Embedded finance is changing how banks think about capital and distribution. It’s a structural shift in how financial services are delivered.” Her reflections draw from audax’s own journey. Founded in 2022 as a spin-out from Standard Chartered’s SC Ventures, the Singapore-based firm — previously known as SC Nexus — builds modular, cloud-agnostic platforms that enable banks to launch compliant digital offerings without replacing their core systems. The company operates across Asia and the Middle East. Gupta, a former investment banker and private-equity professional, noted that digital-bank profitability hinges as much on cost-to-serve and capital intensity as on technology — a point underscored by the region’s diverse regulatory environments, including Singapore’s own digital-banking market, where prudence and profitability remain under close watch. She observed that digital banks typically achieve return on equity (ROE) in the range of 20%, roughly double the 10% often seen among incumbents — consistent with the global leaders identified in TAB Global’s ranking. Singapore’s digital banks face a test of prudence and profitability Singapore’s digital banks remain under scrutiny as licensees post losses despite rapid customer growth. Gupta described this as reflecting regulatory prudence rather than weakness. “For the Monetary Authority of Singapore (MAS), the focus is on systemic stability, consumer safety, trust and reputation. There is a balance between financial stability and consumer interest. MAS has to do a fine balancing act, and in doing so has put in place safeguards — capital requirements, deposit volumes and relatively high risk-management standards — to avoid any systemic spillover or consumer fallout.” She stressed that Singapore’s framework prioritises maturity and stability, while markets such as Indonesia and India use digital banking to drive inclusion and access. “Singapore is very different from markets like Indonesia or India where regulators are using digital banking to solve inclusion gaps; MAS, on the other hand, is more focused on maintaining a resilient banking environment.” For new entrants, this means profitability is delayed, not impossible. Competition in Singapore is intense: digital entrants face not only incumbents but also digitally advanced players like DBS. Gupta called it “healthy competition” that lifts the market—if newcomers keep tech and acquisition costs lean. In financial year 2024, the three retail digital banks (GXS, MariBank, Trust) posted a combined net loss of SGD 289.7 million ($216.1 million), but all narrowed losses. Among wholesale players, Green Link is still scaling SME lending, while ANEXT, which is MSME-focused, reported a wider SGD 37.2 million ($27.7 million) loss, up 25% year-on-year, despite 83.5% revenue growth to SGD 44.9 million ($33.5 million). “Everyone has come in with a unique angle,” Gupta said, citing Trust’s NTUC distribution and GXS’ ecosystem play as examples. But acquisition is just the start, she noted: “Digital banks still have to monetise the base… product depth is limited.” Profitability, she added, requires deeper relationships, not just scale. Embedded finance as the new distribution model Gupta pointed to audax’s early work with Indonesian marketplace Bukalapak. “From a SC Nexus to audax time frame, we enabled a new business model for Standard Chartered Bank — tying up with partners that have huge ecosystems like Bukalapak with 110 million users.” Standard Chartered’s Indonesia business expanded its reach beyond its established client base; embedded distribution opened a new mass-market segment. “Initially, the bank was present on two islands, and after Bukalapak we were in 200-plus islands in Indonesia.” The result: reach “at a fraction of the cost." This embedded finance approach underpins much of audax’s strategy, enabling banks to embed financial services directly within partner ecosystems. Gupta said the model rests on straightforward economics: lower infrastructure cost, faster market entry and built-in compliance. Yet many banks fail to capture these efficiencies because they “go small, test, and then build” — a path that’s slow, costly and too limited to yield meaningful returns. Others attempt in-house builds: “You have very high integration risk… it takes two to three years and $100 million-plus to put together.” audax offers a different path. “We sort of have a speedboat that doesn’t touch your existing stack but acts as a speedboat for digital-first products,” Gupta said. The platform’s processing capability supports high-volume, digital-first transactions and “allows banks to be agile, leverage data and AI, and drive better customer engagement.” Public data indicates that cost-to-serve, typically $100–300 per customer, is materially lower on a digital-first stack, helping push cost-to-income ratios toward the 30–40% range common among digital banks rather than the 40–70% often seen at incumbents. Gupta added that a build-it-yourself approach today could cost $100–200 million and take three to five years, whereas deploying audax can put something live in about six months. Critically, compliance is “built into the architecture”. “We believe in compliance as a code — our origins in Standard Chartered mean the platform is resilient, and compliance is a given,” Gupta said. The stack, she added, is core-agnostic and cloud-agnostic; local connectors handle bureau integrations and onboarding. Orchestration, not replacement — and an ecosystem of partners Gupta is clear that audax does not replace the bank’s core. It acts as a digital orchestration and experience layer, connecting front-end ecosystems with cores from providers including Mambu or Thought Machine. “We don’t see [them] as competitors but as partners. There’s no point just changing the engine of the car — you need to change all the parts.” Where a core is already selected, audax will use that core’s product engine and supply channels, origination, payments, customer operations and the data layer. The result, Gupta said, is a unified architecture with transparent reconciliation across modules and end-to-end visibility. audax distinguishes between partners and customers: partners are technology allies (e.g., card networks, payment-decisioning providers) integrated into the stack, while customers are banks and fintechs. audax itself doesn’t hold a banking licence; when an ecosystem player wants to launch regulated products, audax matches them with a licensed bank and supplies the technology. The commercial model is software-as-a-service, which lowers entry cost and strategic risk. Contracts are time-limited, according to Gupta, allowing banks to test markets without heavy sunk costs — and pivot quickly, Gupta noted. “If a client pivots, it’s just that much more efficient and agile,” Gupta said, citing the ability to reconfigure product lines (for instance, adding SME lending after starting with CASA or retail). In production, some clients have tripled their customer base in six months through faster digital onboarding and the ability to process millions of concurrent transactions — something legacy infrastructure struggles to handle. Financial inclusion and trust as growth engines Gupta sees financial inclusion and profitability as reinforcing objectives. “audax acts as the financial infrastructure layer — providing the rails that automate decisioning, reduce onboarding cost and expand access. You need to go digital to scale… you don’t have to set up multiple branches, and you stay compliant, which regulators require.” She noted that traditional inclusion models often suffer from high onboarding costs, limited customer data, and manual reconciliation. According to Gupta, automation and modular integration help alleviate those pain points. Meanwhile, governments’ investments in national digital ID, interoperable payments and cloud infrastructure further reduce the marginal cost of serving underbanked markets. Gupta also highlighted that digital adoption is rising beyond cities: “A McKinsey report said 75% of all interactions are now digital. There’s a lot of acceptability in rural markets — many are young populations that are digital-first.” Still, “You can’t just give them tech. They’ll use it once. You have to build digital trust.” She pushed back on a persistent myth. “The misunderstood metric is that financial inclusion means making a loss. That’s not true. If you offer a superior product at a better price, people will use it.” She pointed to experience across Asia: “Some of the banks I mentioned, like Jago Bank or SeaBank in Indonesia, have repayment rates among the best in the world. Repayment rates in inclusive portfolios are actually better than in urban consumer lending.” The same logic applies to SMEs. “In Indonesia, MSMEs employ 90% of the workforce. If you’re able to unblock that credit potential, it will have 1–2% of GDP growth impact.” Agility and coexistence in digital banking Gupta argued that segments once considered “niche” are becoming mainstream growth engines for financial firms. SME ecosystems, cross-border trade corridors, and Sharia-compliant finance “aren’t really niche anymore,” she said. “They’re large, resilient and can be served profitably when banks go digital-first.” audax is investing to be first-to-market in these areas, offering modular, compliant stacks that help institutions scale quickly and capture new revenue. On Sharia, Gupta noted: “We have several clients who are Sharia-compliant — Maybank Islamic and Riyad Bank’s Jeel — all requiring Sharia compliance across services." Ultimately, Gupta said, banks should weigh ROE, profitability and scalability holistically before deciding whether to build, buy or partner. The winners will be those that compress time-to-market without compromising compliance or customer trust. “Why should banks be in the business of building technology? Banks should be in the business of serving customers.” Looking ahead, Gupta said both incumbents and digital entrants will continue to coexist as the industry transforms. “There’s space for everybody — different models, different strengths,” Gupta concluded. “We need these digital entrants to come in and keep the legacy banks on their toes.” In the end, she added, the real beneficiary is the customer: “Ultimately, the end consumer stands to benefit most.”
