The bank embarked on three strategic shifts to make this change: firstly, it decided that if it was going to be digital, it had to be digital to the core; secondly, it was going to embed itself in the customer journey; and, thirdly, to make the changes happen, it had to change the culture of the entire organization.
A key impetus for this transformation was realizing that consumer behaviour was changing rapidly and that if DBS didn’t change with it, it would lose market share, customers and revenue. “Our growth strategy had to be turned on its head,” says David Gledhill, group chief information officer and head of group technology and operations. “At the time, we had tried acquisitions but that did not yield the results we had expected. Then we saw large digital platforms reinventing themselves to meet their customers’ changing lifestyle and business needs and we knew that we had to change our mindset and drive the digital agenda and investments. We felt that that was going to be the only way to survive and grow.”
To achieve this transformation, the bank focused on the following: to automate everything; to shift from project to platform; to develop high-performing and agile teams; to design for no ops; and to organize for success. In late 2017, DBS was also the first bank to develop a measurement methodology to quantify the impact of digital transformation on its financial bottom-line. Through this, it found that digital customers deliver a 27% return on equity against 18% for a traditional customer. They do 16 times as many self-led transactions, cost 57% less to acquire than traditional customers, and bring in twice the income, with 1.5, 2 and 3.6 times higher deposit, loan and investment balances, respectively.
“We never imagined we would end up here back in 2009,” says Gledhill. “Each year we have taken what we have learned and then iterated and changed. And, crucially, we did not try to over-reach. This meant we could course-correct when we got things wrong.”
‘Gandalf’ thinking that lead to culture change
The prototype for DBS’s digital transformation has not been any other bank or financial institution. Rather, the bank has looked to global technology giants for inspiration and guidance. “We spent a lot of time deep in Silicon Valley looking at how Google, Amazon and Netflix operate,” says Gledhill. He notes that when he explained to the group that this is where they aspired to be – and in the process becoming the D in a GANDALF acronym of technology firms – “it set the place alight”.
Changing culture is perhaps the most challenging aspect of any corporate transformation. DBS spent a lot of energy on internal training, especially into concepts such as journey thinking. It set up an innovation team, whose job was not to innovate, but rather to inculcate a culture of innovation in the wider team. It incentivized change by setting KPIs around experimentation and innovation targets. It celebrated success and released its staff from the shackles of legacy thinking and behaviour, transforming the bank into what it terms “a 26,000-person startup”. Perhaps most importantly, throughout the process, the senior leadership team pushing for change has been constant. This meant it was not perceived as a fad.
DBS’s digital journey was helped by the behavioural shift of its own customers. They not only accepted but expected that banking, like so much else in their lives, should be digital. But when it came to banking, there was a residual level of trust in banks, which gave DBS an advantage over the purely digital platforms.
Taken together, these two tailwinds have radically changed what customers now expect from their bank. “Customers want faster and easier service from their banks and for them to be a trusted business partner, not just a lender or a facilitator of payments and collections,” says Joyce Tee, group head of SME banking. How this works in practice can be seen by an initiative undertaken by DBS in 2016. At that time, the economy was slowing in Singapore, and some of DBS’s SME customers were finding it difficult to maintain their minimum account balances. DBS took the initiative and created a digital-only account that had no minimum balance requirements, for both its Singapore dollar accounts and its multi-currency accounts. In this way, it helped its customers through a rough patch, helped them on their own digital journey and strengthened its relationship with them. “Whatever we do has to be relevant to the customer,” says Tee.
This customer focus – both in terms of understanding how they interact with the bank and how they run their own businesses – is crucial to understanding DBS’s digital transformation. Now, some 96% of its addressable account opening is done online and in one day or less. Existing customers are doing 30% more transactions on its platforms in terms of both volume and value.
“Digital is an enabler,” says Tee. “It helps you take customers from strength to strength.” This focus on helping customers grow has been explicitly sectoral. Recognizing that customers in different sectors might have different digital needs has been a crucial aspect of DBS’s digital transformation. For SMEs, for example, DBS has platforms for its customers in similar sectors to meet, discuss and share information, and for buyer and supplier to do business. DBS charges no fee for this.
Since a 2017 change in regulations, DBS has also been pioneering marketplaces in a number of different sectors in Singapore, including automotive, real estate and electricity. Collaborating with ecosystem partners to embed themselves in the customer journey not only brings the bank closer to the underlying transaction, but also delivers customer insights and data.
In truth, the number of digital initiatives under way at DBS are too numerous to mention in this article. But everywhere you look at the bank – from HR, to wealth management, to treasury, to corporate banking – everything is going digital. “It really is remarkable,” says John Laurens, group head of global transaction banking. “I’ve been in the industry a long time, but now I think we are at the beginning of something very special.”
It is not just smaller customers that DBS is helping with their digital journeys. When global shipping giant Maersk decided to set up a digital trade business, it needed a banking partner to undertake the financing. It chose DBS, rather than its house cash management bank. DBS has 90 corporate banking APIs in a suite called IDEAL RAPID. This is unique among its peers. Now all of its cash management business is on cloud-based infrastructure, which Laurens says, “turns the entire industry on its head.” The results of these kinds of transformations are coming through.
MSIG Insurance, part of the Mitsui Sumitomo Insurance Group, wanted to improve its own product, especially the claims payment process for its travel insurance. It turned to DBS and used APIs from DBS’s IDEAL RAPID suite. This allowed customers of MSIG to make a claim, and receive immediate payment, 24/7. “This shows that we can really help our customers give their own customers the very best experience,” says Laurens.
The transformation of DBS has not stopped, and the bank is looking everywhere it can to make further changes. Using its PRISM platform, DBS is looking to upend the archaic RFP process for cash management and trade finance mandates. In the SME sector, the bank is looking at rolling out a predictive lending product in Singapore and Hong Kong, while also moving to establish instant account opening.
From a strategic point of view, the bank is still iterating. It is looking to replicate what the tech giants of Silicon Valley do with experimentation at scale and then using this data to see how customers behave in real time. This customer science will be fundamental to further iterations and further digital transformation.
DBS’s transformation journey has been uniquely successful among its peers. It has reimagined entirely what a bank can be in the 21st century.