Beyond applying digital “lipstick”, DBS focuses on complete digitisation and the customer journey

Headquartered and listed in Singapore, DBS is one of the leading financial-services groups in Asia, with aspirations to become the Asian Bank of Choice for the new Asia. One of the most important prongs of that ambition is DBS’ digital strategy – notably the determination to embrace technology, reimagine the customer journey, and make the bank’s culture more entrepreneurial.

McKinsey senior partner Joydeep Sengupta recently sat down with Piyush Gupta, who has been CEO of DBS since 2009, to discuss the future of banking, as well as the challenges and opportunities Gupta has encountered along the way.

Joydeep Sengupta: What led you to set out on a digital journey?

Piyush Gupta: The experience of telcos, transport, and retailing shows that we’re changing the way we communicate, the way we commute, and the way we consume. So why would banking be immune or be safeguarded from any of this? Banking is arguably the most digitisable industry of all, so in some ways it’s surprising that we haven’t been more disrupted. I think part of that has to do with psychology – people think about money a little bit differently than they do about other things – and it’s partly to do with regulatory barriers.

That said, with so much money going into fintechs, we have reached a tipping point in the last couple of years. Incumbent players are wrestling with the challenges of how to transform themselves. In Asia, and notably in China, the actions of new players, such as Alibaba and Tencent, and of established banks, like Minsheng, Ping An, and ICBC, have made this all the more visible.

In 2013, the DBS board therefore took the view that the future for us and for our industry would have to be digital. We felt that if we didn’t lead the charge, frankly, we might die.

Sengupta: When you started out, did you have a game plan for what DBS might look like in three to five years’ time?

Gupta: Not really, but we tried to embrace some of the main macrotrends, like cloud computing and big data and analytics. Our credit-card businesses, for example, may have been using data analytics for 25 years, but today, with off-us and on-us and online data, you can do a heck of a lot more. The shared economy – producers becoming consumers, consumers becoming producers – has been another opportunity, and we’ve been thinking hard about how we can collaborate with other partners in the ecosystem.

The most important driver of change in the banking industry, though, has been the smartphone. Instead of going to a branch, to an ATM, or even to a desktop, customers can now go around with the bank in their pockets.

In theory, the bank can become invisible and seamlessly embed banking services into day-to-day life.

Sengupta: To what extent were you inspired by new-economy companies?

Gupta: When we first started out along this road, we compared ourselves with emerging fintechs and the start-up world and concluded that we really had to digitise completely, not just by putting on digital “lipstick” We made killing paper a big mantra in the organisation, for instance, and were determined to go beyond just tacking on a bunch of digital apps at the front end – that’s the easy bit. We wanted to go all the way through to middleware and the back end.

Photo: Shutterstock

A company like Uber has reimagined its processes and digitised everything from end to end, and that’s what we have done. This has required rethinking our technology architecture – hard for banks or any company sitting on legacy applications that are 30, 40, or 50 years old - so as to make it API based and integratable with other applications, maybe open source.

A second big priority, to me more important than digitising per se, was to embed ourselves in the customer journey. This is about much more than automation. Hotel chains, after all, had been automating for the last two decades – most have a version of SAP, Oracle, or what have you – but when Airbnb came along, it fundamentally rethought the customer journey for people seeking accommodations. Doing this at DBS led to some very significant changes in what was offered and how it was offered.

The third—and perhaps most challenging—priority was around culture. Today, we are up against businesses that work out of a garage, take risks, operate in a nimble way, and have a different kind of energy and drive. Large incumbent companies that can’t create a similar kind of culture just won’t be able to compete. One of our rallying cries has been “how do you create a 22,000-person start-up?”