Banks need to reimagine banking if they are to succeed in the digital age rather than just putting existing products on a desktop, claims the chief executive of DBS Bank, Piyush Gupta.
In a wide-ranging interview with GTNews at a recent Foreign Correspondents Association lunch in Singapore, its CEO outlined how DBS – which changed its name from the Development Bank of Singapore in 2003 to reflect its expansion beyond its home base – is going digital as it expands its footprint across Asia.
Reimagining the bank
Rather than simply moving existing processes to digital, DBS is reimagining the entire process and figuring out how to go totally electronic, says Gupta. “We are trying to kill paper,” he confirms.
From a technology perspective, that means having a flexible infrastructure, thinking processes, and designing a bank that no longer relies on operations in the back office of its branches. “We spent a lot of money on technology, infrastructure, payments, and core systems – S$5bn [£2.3bn; US$3.55bn; €3.14bn],” Gupta adds. “We also spent money on an application programming interface [API] architecture that allows us to connect into partners,” and which is also robust and flexible enough to allow DBS to do things differently.
Transaction banking is one area where Gupta sees immense opportunities from re-imagining banking and going digital.
In trade finance he believes the biggest challenge is in establishing ownership of goods throughout the process, from shipping companies issuing bills of lading to the documentation of goods in the warehouse when they’re delivered. “Much of the fraud occurs because people fabricate and tracking the movement of goods is primitive.”
Using block chain technology and a distributed ledger makes it far easier to track ownership, so the shipper, importer, bank, and exporter all have information available in real time. “You can change the construct. You use block chain to change trade logistics,” explains Gupta.
Another opportunity is in payments, where said transfers are difficult because funds go from spoke to hub then hub to spoke. It would be far easier to go digital and use a netting ledger rather than gross settlement. DBS Remit payments operate on this principle, using pipes the Bank set up for Indonesia, Singapore, and the Philippines. “I used to have to send money,” explains Gupta, and it could be taken out one day later. “Now, we instantly debit Singapore and credit India – in three seconds you get paid. The opportunity to rethink is immense.”
He also sees opportunities to offer supply chain financing (SCF) in electronic commerce (e-commerce) marketplaces, similar to how China’s Alibaba offers financing on the Taobao website. The key is to reimagine the financing of trade.
Gupta says that DBS is following in the footsteps of his former employer, Citi, which supported companies such as Dell and Compaq when they moved manufacturing to Asia in the 1980s and then set up regional treasury centres there in the following decade.
Over the past three years “you’re beginning to see Chinese companies do that – the [development strategy] ‘one belt, one road’. Chinese internationalisation is doing the same thing, building out regional treasury centres [RTCs]. Indian companies are doing that too, as are Asian multinationals. What American companies did is being replicated by Asian companies in accounts payable, accounts receivable [AP/AR] and liquidity management.
Learning from start-ups and changing attitudes
Along with re-imagining and changing its own technology, DBS has set up a tech incubator and is running ‘hackathons’- one-day events that bring together graphic designers, interface designers and project managers to collaborate on software projects. For Gupta, when it comes to engagement with start-ups “Ninety per cent is not because we hope to find the next big thing. It is to help create a culture change.”
DBS has a three-step agenda for learning from these start-ups. The first is to make sure the bank’s infrastructure allows it to use the innovations, the second is to get ideas from start-ups that it can use when it builds applications, and the third is to help change the mind-set and culture – especially for people who have been in the industry for 30 or 40 years. “How do you change them? You can’t do a presentation. You have to get platforms that give people a chance to engage.”
The biggest challenge in going digital, according to Gupta, is how to reorient and retrain people. “It’s changing the mind-set that is the bigger challenge.”
To shift attitudes “we don’t need smart techies. You need smart people, willing to think.” The bank’s response is to bring in young talent in technology and design, as well as using a human-centred design lab and its accelerator to help make the change.
Leading innovators and fintech in Singapore
Asked which banks globally he regards as leading innovators, Gupta responds with the names Ping An and Minsheng in China, Hana Bank in Korea, Commonwealth Bank in Australia and BBVA. “Ten banks in the world are credible compared to where we are and not necessarily the biggest banks.”
Looking at financial technology (fintech) innovation more specifically in Singapore, he suggests that the Asian financial hub has lagged and failed to attract fintechs properly. While he agrees it is good that the Monetary Authority of Singapore (MAS) has been conservative and focused on being the region’s safest, the consequence has been that “the flexibility to take some risk at the margin is compromised. We have some work to do.”
Now, he sees change underway. “Singapore has begun to lift. You feel the energy in the finance space. Earlier this year we had conversations with MAS saying we need to change the nature of the game.” The Authority is indeed starting to make changes, triggered by a realisation that “we need to up our game. You will see a different outcome over the next year.”
DBS’s notion of trying to digitise, as Gupta summarises it, focuses on how to embed digital into everyday life while “the bank should be invisible.” It seems well on its way towards that goal, with an experience that may finally make transaction banking as easy as Googling.
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