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Why banks need to think like startups to succeed

Banks have a major task on their hands: figuring out how to compete with financial technology (fintech) start-ups that know how to deliver the seamless digital experiences that millennials have now come to expect. Payments apps, wealth management platforms and peer-to-peer lenders have all been conceptualised by startups over the past decade. The trend continues. Eight of the 10 most innovative financial companies in Fast Company's list for 2017 started up after 2010, and the sector as a whole has raised over $30 billion in funding in 2016 alone.

Keeping pace with innovation

The amount raised may not be significant to the finance industry as a whole but nonetheless needs to be noted. Banks should reflect upon their readiness to address the threats that these companies pose. Banks today are shackled by legacy tech infrastructure built decades ago and are yet to completely shrug off their corporate mindset. Fintechs, meanwhile, are harnessing the latest technologies and are quicker to respond to new developments.

You can see this in the small tweaks that are made each time you update your apps. Consider digital wallets, which just a few years after their arrival, do much more than peer-to-peer transfers. For example, many wallets now have a social layer, which, among other features, allows the splitting of bills right after the occasion (say, a movie or a dinner).

Banks have not quite kept pace with innovation, though they have begun to make moves in the right direction. However, they still have time to respond to these changes. After all, banking is a huge industry and we're still a long way from complete digitisation.

The good ideas won't come easily. But for them to emerge at all, banks must first rewire themselves internally.

Creating a startup culture

The old way of doing things was suited to the old pace of innovation. The digital age requires a complete change. It has been four years since DBS Bank India started revamping its culture. The intent throughout has been to reimagine ourselves as a startup. Here are the basics of what we have been doing:

Reimagining customer journeys: The whole point of our transformation is to build products that delight our customers. Which is why we have incentivised our employees at all levels to reimagine customer journeys. This will enable us to build digital products that delight our customers. In a short span of time, we already have some results to show for it. digibank, for example, is a revolutionary offering, bringing together an entire suite of ground-breaking technology - from artificial intelligence to biometrics - to enable customers to enjoy a whole new way of banking. It now has 1.4 million users. We have also simplified banking for our SME customers, through an integration with Tally's ERP software that allows them to seamlessly manage their GST and supplier payments.

Hiring from outside banking: When we interview prospective employees, we don't restrict ourselves to the banking sector anymore. In fact, we seek out people with diverse experience. We recently ran a hackathon to hire developers at our tech centre, DAH-2, in Hyderabad. This isn't some quest to simply be different or cool. There is data to back the claim. A 2013 study by a team of European researchers, for example, found that people with experience in analogous fields are more likely to bring novel ideas to the table, as they are less constrained by existing solutions.

Digital curriculum: Indians now use their smartphones for 169 minutes a day, according to a 2016 report by mobile intelligence company Quettra. To help our people ideate in sync with this shift, we provide them with e-learning modules and classroom sessions on digital disruption, adopting agile methodologies and the use of technology within business.

Progressive work policies:Progressive policies have been instrumental in helping us roll out innovative products. We offer all our employees flexible work hours and the opportunity to work-from-home. Employees can, therefore, organise their workday based on their preferences. Performance is measured by their output, and not by the number of hours they spend at the office. This approach, common in startups, has been found to have a positive impact on employee motivation and engagement in the long run (survey by Chartered Institute of Personnel & Development, July 2017).

A new way of working

This year, we have embarked on a new phase of transformation. The new office, in Nariman Point, Mumbai, eschews cubicles, in favour of open spaces, offers many teams the benefit of flexible seating and features a host of formal and informal spaces where individuals can collaborate.

We believe that the extent to which we are able to transform ourselves will play a pivotal role in helping us achieve our goal of shaping the future of banking. Over the next few months, we will be assessing how much closer this brings us to operating and thinking like a startup. Stay tuned for updates!