By Jessica Tan
DBS Bank may not be a technology company, but the Singapore mainstay aims to behave like one in order to transition into digital banking. Late last year the bank launched a mobile application called Home Connect that allows a house hunter in Singapore to simply hold a smartphone up to scan a street and call up the latest transacted prices of nearby properties on a map. The app also lets the user check out nearby amenities, calculate mortgage repayments or connect to a loan officer right then and there.
Home Connect, one of the 19 mobile apps the bank has to date, is just a start on what DBS plans to offer over the next couple of years to meet the shifting demands of younger customers. The bank, which is 29%-owned by Singapore state investment company Temasek Holdings, wants to be along with customers even as they think about buying a property and not after they’ve identified one. The bank also launched a mobile wallet app in May, which allows customers to use their smartphones to pay for purchases and send and receive funds.
Such a reinvention is a tall order for a bank that, from its days as the Development Bank of Singapore, has long been known as staid. CEO Piyush Gupta, however, believes that the bank’s digital strategy will be key to its fate. “That is actually going to make the difference between the banks that will survive and the banks that will not survive,” he says.
Since Gupta came aboard in November 2009, he has instituted a sweeping overhaul, and the bank has logged 18 quarters of consistent growth, culminating in its recent record quarterly earnings of S$1.03 billion ($820 million), up 9% from the year before. It’s the first time its quarterly net profit has breached the billion-Singapore-dollar mark and comes in the face of headwinds from a slowing economy in China and a cooling property market in Singapore.
The 54-year-old Citibank veteran has also impressed the market with how he’s executed on priorities like wealth management, expanding in North Asia and lending to small and medium-size enterprises. Lucky for Gupta, the past couple of years have also been generally favorable to Asian banks like DBS, which have benefited from an inflow of foreign funds, including business from multinational clients, to Asia following the 2008 financial crisis in U.S. and Europe.
That Gupta has delivered has likely brought on a collective sigh of relief for shareholders, who have seen five CEOs before him in the preceding decade. Says Carmen Lee, head of research at rival bank OCBC: “For the first year it was pretty challenging. Many people were wondering: ‘Okay, is he one of those come-and-go CEOs?’ But he has stayed, and he has done well, and to me that is one really good signal.”
Two months ago DBS announced it will spend an additional S$200 million on its digital push over the next three years. This is on top of the S$600 million it already spends on technology every year.
“What we have been doing so far is an inside-out view. Basically, digitizing the bank. We take the bank’s services, and we put them online or on mobile. And we’ve been very successful,” Gupta says. “So the notion of making an incremental investment is to see how we can think outside-in. We have to think: ‘How can we behave like a tech company?’ ”
Frankly, the [banking] industry has not been where it needs to be,” he says, noting that banks that have done well digitally, thus far, include Commonwealth in New Zealand, Hana in South Korea and mBank in Poland.
DBS has been making strides. It was ranked No. 1 in the world in 2013 by Swiss research firm MyPrivateBanking for its mobile banking apps strategy. Also, in its bid to go deeper in data analytics, DBS recently tied up with IBM and A*STAR, Singapore’s tech research agency, which offers it product-development and other resources.
Last month the bank hired Neal Cross, formerly of MasterCard Labs, as its chief innovation officer to spearhead its digital push. “Our agenda is to hire a range of different types of people. Design people, innovation people, people from industry–to weave them into the fabric of creating this new model of banking,” Gupta says. “We have the capacity to put more money into this.”
However, competition is intensifying. Just last month OCBC, already known to be a leader in data analytics, revealed a mobile app that allows money transfers to friends on Facebook. OCBC has also created an offshore team for data analytics, a move that has “slowed the attrition rate of its analytics team and prevented employees from getting poached by its direct [Singapore] competitors, UOB and DBS,” notes a recent Asian Banker report.
Gupta and his team are most concerned with what they are seeing in China, where there have been dramatic shifts to digital banking (see chart, p. 80) with nontraditional players. “We’ve been making good progress compared to other banks, but how are we doing compared to Alibaba? The reality is Alibaba is putting daylight between them and the rest of the banks, or even Facebook or Google Wallet or Apple wallet,” he says, noting that all the while, legacy banks the world over have been “struggling with scandals.”
Piyush Gupta Demands A Shift to Digital Banking In Singapore