Going Digital In Banking — DBS, Citi, BBVA, ING Lead The Way

DBS, the Asian bank headquartered in Singapore, was the first to be named the world’s best digital bank by Euromoney in 2016. When just about every money center, regional, community bank and credit union promotes itself as a digital leader, Euromoney looked for more than talk.

“Leaders in digital banking talk about the difference between digitising aspects of a bank and creating a truly digital financial institution,” said Clive Horwood, editor of Euromoney magazine. “DBS is doing this better than any other bank. It is demonstrably the case that digital innovation pervades every part of DBS, from consumer to corporate, SMEs to transaction banking and even the DBS Foundation.”

Photo by Tom Groenfeldt

DBS headquarters in Singapore

In accepting the award, Piyush Gupta, CEO of DBS Bank, said “At DBS, we believe that banks tomorrow will look fundamentally different from banks today. That’s why we have spent the past three years deeply immersed in the digital agenda. This has been an all-encompassing journey, whether it is changing the culture and mindsets of our people, re-architecting our technology infrastructure, or leveraging Big Data, biometrics and AI to make banking simple and seamless for customers.”

The competition was fierce with BBVA, Citi and ING named as strong competitors.

Francisco González, CEO of BBVA, was named Banker of the Year in 2016. He has published commentary saying Amazon and Google are the competition of the future.

In 2017 Citi claimed the honor as the top digital bank for its global consumer bank.

A leading financial services group in Asia, with over 280 branches across 18 markets, DBS has a growing presence in Greater China, Southeast Asia and South Asia. But sheer size and even market penetration are not enough in today’s world. Indeed, this could be the last year a bank receives top digital banking honors, given some of the financial competition from China.

Photo by Tom Groenfeldt

Sameer Gupta, Chief Analytics Officer at DBS

DBS was facing some serious competition from Chinese financial platforms such as Ant Financial’s Alipay and Tencent’s WeChat, said Sameer Gupta, the bank’s chief analytics officer.

“Startups were taking some of the profitable products out of the banks, so we had to disrupt ourselves. We set up a focus around digital.”

What has made DBS successful at digital?

“The CEO insists that digital pervades every part of the bank. A lot of banks focus on a digital front end so they have a fancy mobile interface but the rest of the bank’s operations are old technology.”

He described DBS as customer obsessed, data driven, willing to take risks and experiment, move from waterfall development to agile and become a learning organization. Customers don’t want a drill, they don’t want a perfect hole, they want a way to place a picture on the wall.

“We try to get under the skin of the customer and use ethnographic studies. For example, mortgage banks look at a mortgage as a product while customers want the perfect home, so they are interested in schools, amenities  and are very emotionally involved in the process. So how can a bank help a customer in buying a home?”

DBS, which counts a large percentage of Singapore residents as customers, used its customer data along with government data to create DBS Home Connect, a resource for home buyers,, in 2013. Anybody using the app, not just DBS customers, can point a smartphone camera at a building and see information about prices, affordability, amenities and schools. It offers an augmented reality view of nearby properties and amenities. In addition, they can also save previous searches and viewed transactions for subsequent comparisons. The bank’s share of Singapore mortgages grew from 24% when it started offering the house information to 32% now.

From bottom in customer experience in 2009 DBS rose to tops in 2013. The bank said it saved 250 million customer hours and 1 million employee hours, in part through an initiative known as RED for Respectful, Easy to deal with and Dependable.

DBS has 400 people in its analytics team and it is growing, Gupta said. It uses data and analytics throughout the bank.  In HR it has helped reduce employee attrition by spotting early indicators in time to address issues. Analytics has reduced cash-outs at ATMs from every three months to none in 2017.

Its greatest impact is in marketing where DBS is moving from sales to advice in its communications with customers.

To expand thinking, the bank has used hackathons, human centered design and customer journey thinking.  It has redesigned workspaces to be collaborative while also offering private work spaces for people who have projects they need to focus on alone.

Development labs have always-on video to connect researchers across geographies. One result is fewer emails, fewer group meetings and more face-to-face engagement.

To engage employees, the bank offers a startup-fusion of energy, incubators and accelerators, universities and research centers. By now 70 percent of staff have participated in at least one of these, he said.

Gupta advises banks making the transition to digital to find some use cases, like reducing attrition, that can demonstrate the power of data and analytics.

Data is a key to being successful digitally, said Gupta and that means moving beyond customer services to learning how the bank can help customers do what they want, like making it easy to research a house purchase.

“To win at digital you have to win at analytics, using data to design new products and improving forecasts to make them more scientific.” The bank uses data and analytics for day-to-day decision making and to improve personalization.

“We focus on what problems are we trying to solve and what is the most efficient way,” Gupta added. “It’s not enough to hire a few data scientists, you need people to change their mindset.”

Like many banks, DBS had ample data, but it was in silos and just organizing it could take years with nothing to show for the effort.

“We did use cases, like attrition, and see if it works.”

Rather that keep an innovation in development for years to achieve perfection, DBS pushes out minimally viable products and looks for feedback from the  market to refine them. Building digital capability has helped DBS expand. Building branches is a slow and expensive way to grow, he said, while digital has low customer acquisition costs and can scale quickly. DBS set out to eliminate paper and engage with customers through digital and data.

The bank launched Digibank India, the nation’s first all digital bank. Mobile usage was exploding in India, where landlines had reached only three percent penetration and took years to acquire,  and the country had invested in biometrics — Aadhaar, a 12-digit biometric identity number, and KYC (Know Your Customer) which helped make digital banking possible.

DBS had developed a traditional banking operation in India which after 15 years had 12 branches and 14,000 customers and was restricted in the number it could operate.

“It was profitable, but it wasn’t scalable,” Gupta said.

The digital bank was designed to help customers attain their goals while saving the time it takes to go to a branch for banking.

Mobile-only, Digibank India lets customers open an account in 90 seconds and authenticate their identity by stopping in at a popular coffee chain. It has 1.8 million users with a goal to reach five million in three years.

Going into new markets with Digibank presented lots of unknowns, so the bank needed to move fast and have the ability to do weekly releases, Gledhill said. Gupta said one surprise is that while mobile was widely used in India, the systems weren’t very stable and often dropped calls, so transactions had to be designed to survive transmission breaks. The bank also tried introducing voice authentication for security, but the take-up was zero. Users preferred biometrics or passwords.

When DBS expanded Digibank into Indonesia, it was able to re-use 70 percent of the code, which helped it launch in half the time, Gupta said.

The bank is moving off mainframe applications to x86, “because most of the compute power on the cloud is x86,” according to David Gledhill, the bank’s CIO. DBS hasn’t built a new mainframe application in years, Gledhill said, and it has reduced the number of apps on the mainframe from 120 to 60. The goal is to have 50 percent of compute on the cloud by 2018 he added in an excellent, detailed  presentation to investors.

DBS puts quotes from Alibaba’s Jack Ma and Gledhill side by side in the investor presentation.

Jack Ma (Alibaba) to Walmart:

“If you want 10,000 new customers, you have to build  a new warehouse, hire people … for me? 2 servers.”

Dave Gledhill to Jack Ma: “You need 2 servers for 10,000 new customers …For me 50,000 new customers need just 1 server.”

In an interview with London-Based efinancialcareers, Soh Siew Choo, managing director and head of core systems technology at DBS, said that “by leveraging cloud-native architecture. We’re pursuing straight-through automation and getting rid of all our manual processes.”

By moving development in-house, DBS has built the skills to become an agile tech organization.

It has flipped from a heavy reliance on IBM and Accenture and other suppliers for 85 percent of development to 85 percent in-house development. Tech suppliers include CA, Micro Focus, Fortify, SonarQube, Zephyr and Mockito. The bank has used SAS analytical tools for 32 years and values its model governance.

“A lot of newer companies don’t have experience with model governance and model life cycles,” Gupta said.

Twitter @tomgroenfeldt

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