OCBC is dangling interest rates of up to 3.05 per cent to customers frustrated by the meagre returns for deposits.
The bank has revamped its OCBC 360 account to boost the rewards for customers who conduct more of their financial transactions with the lender.
It is aimed mainly at cash-poor young professionals starting out in the workforce but anyone who meets the criteria can benefit.
The bank is offering what it touts as "market-beating" interest rates of up to 3.05 per cent for customers who conduct more of their financial transactions with the lender.
The base rate is 0.05 per cent for balances of up to $200,000 but more interest will be paid for each condition that is met.
If a bank customer credits a salary of at least $2,000 a month to his account, he will earn an additional 1 per cent interest.
Paying at least three bills a month from the account will earn an additional 1 per cent.
And credit card holders who spend at least $400 per month get higher interest rates.
So if the customer can meet the three conditions and has, for example, $50,000 in the account, he will get the maximum 3.05 per cent interest, which works out to $1,525.
The average interest rate offered by banks on saving deposits stayed unchanged in the first three months at 0.12 per cent, based on figures compiled by the Monetary Authority of Singapore. That would earn $60 for a $50,000 deposit.
The OCBC account was launched last July and attracted 16,000 customers. It offered an interest rate of 1.28 per cent if account holders performed two Internet banking transactions a month and kept the balance between $25,000 and $50,000.
The new version was unveiled last Wednesday. OCBC said a further 5,000 people have signed up, with about 30 per cent of them new customers.
The battle is heating up among local lenders to attract new customers and reward those who deepen their engagement with higher interest rates.
DBS launched its version of such loyalty programmes last month. Customers can earn interest rates of up to 2.08 per cent if they use the bank to conduct transactions like salary credits and mortgages.
Mr Lim Wyson, OCBC's head of group wealth management, said at a briefing yesterday that banks want to strengthen their deposit base and build up their pool of consumers.
He said the account is targeted at young professionals starting out on their career who are not always cash-rich.
"It's part and parcel of how we want to continuously engage more with the younger segment."
Tertiary student Chelsea Alahakone, 21, who will graduate at the end of the year, felt the new account meets her needs.
"It's a good move, if they are going to pay me for paying my bills through them, why not?"
But student Shehan Jude Wanigasakar, 23, who will graduate in the middle of the year, noted: "All my bills and transactions are with another bank. It's too troublesome to change."