In March 2025, Chocfin Pte Ltd (Chocolate Finance), a Singapore-based fintech platform, experienced a significant increase in customer withdrawals following a promotional campaign. This led to operational challenges, including the temporary suspension of instant withdrawal. 

 

Background of Chocolate Finance 

Chocolate Finance offers financial services that allow users to deposit funds, which are allocated to short-term bond funds. The platform aims to provide users with enhanced returns while maintaining liquidity. Chocolate Finance operates under a Capital Markets License in fund management, a different regulatory framework compared to traditional banks, thereby emphasizing the importance of robust governance and risk management practices to promote trust in customers. 

 

The Issue: Surge in Withdrawals and Its Impact on Liquidity 
To attract customers, Chocolate Finance launched a highly competitive rewards program, offering two air miles per dollar spent on their debit card expenses. This promotion was available even for transactions usually excluded from rewards, such as AXS bill payments.  

The popularity of this promotion led to a surge in high-value transactions via AXS bill payments as customers sought to game the system and maximize their air miles rewards. 

In response, Chocolate Finance abruptly discontinued rewards for AXS transactions without prior notice, which led to heightened withdrawal requests. The situation was further aggravated when the company suspended instant withdrawals, introducing a new three-to-six-business-day redemption period. These actions by the company further frustrated customers and raised concerns about the firm’s financial stability. 

The Monetary Authority of Singapore (MAS) engaged with Chocolate Finance to ensure that customer withdrawals were processed in an orderly manner. Chocolate Finance later confirmed that the majority of pending redemptions had been completed, with new withdrawals proceeding under the revised timeframe. 

 

Lessons for FIs and Fund Managers  
This incident highlights the importance of liquidity risk management, especially for fintech platforms that rely on time-sensitive investments. While promotional campaigns can drive business growth, they must be supported by robust liquidity planning, stress testing, and contingency frameworks to ensure customer withdrawals can be met under all plausible conditions. 

MAS has outlined liquidity risk management expectations under regulatory frameworks such as MAS Guidelines requiring financial institutions to: 

• establish stress testing and contingency funding plans. 

• fund managers to assess investment liquidity, align redemption policies with risk appetite, policies regarding suspension of redemptions, and conduct liquidity stress tests based on reasonable market conditions. 

Additionally, MAS requires financial institutions to provide clear, timely, and transparent disclosures. The abrupt discontinuation of AXS rewards without prior notice raised concerns under these guidelines, as customers lacked sufficient time to adjust their financial plans.  

 

What’s Next? 

Management of financial institutions should: 

• Evaluate governance structures to ensure business strategies align with long-term financial sustainability. 

• Enhance liquidity risk management by conducting stress testing and scenario planning. 

• Manage public relations professionally especially in the event of any significant inconvenience to customers. 

And more… 

 

How Can We Help? 

Our team provides risk and compliance advisory solutions to help financial institutions navigate governance, liquidity, and regulatory challenges. 

 

Contact us today to discuss how we can support your risk management strategy. Find out more here