Home ›› 26 Nov 2022 ›› Opinion
The changing landscape of the tech-driven world and a growing number of digital customers are leading to inevitable disruption of the banking industry. Conventional banking is already under pressure from Fintech and digital-only banks
In Bangladesh, Fintechs are doing serious business, and also, licensed digital-only banks will come soon. Existing traditional banks will eventually need to convert themselves to digital banks by digital transformation, because, in just few years, there will remain very few or no customer who would want to visit a bank, and most of the banks will leverage technology for better cost and operational efficiency and greater reach and inclusion and modern and frictionless customer engagement. So, to better compete with other banks and disruptive startups, and to stay relevant to customers, traditional banks must eventually transform them to a fully digital bank.
Although traditional banks have started moving towards offering online or digital services, they have still long way to go to become fully digital and it is really a challenging and difficult journey for them because of two important issues.
First is the management and mindset in a traditional bank. To bring the digital transformation in and out, banks need to be digital at core, and changes and acceptance must come from all levels and corners. With traditional mindset and processes, this transformation is really challenging. Second, the cost of legacy. Their internal process, people and even technology are all established keeping the traditional services in mind and the cost, time and effort required for the changes will be enormous.
Despite the challenges, all traditional banks must find a way to transform fully digitally for their survival – to stay relevant and competitive. There are instances globally where traditional banks have addressed the above issue smartly and set example for other banks to follow. One such bank is DBS. Traditional banks around the world can take huge inspiration from the DBS bank Singapore, which has recently announced to open its representative office in Bangladesh (DBS Dhaka) as its 19th market globally.
The Singapore-based DBS bank is widely cited as being in the vanguard in terms of embedding digitization across the full range of banking processes and services. For the fourth year in a row, DBS has been named the “world’s best bank” by Euromoney.
The threat from Fintechs was impressed upon the DBS CEO Piyush Gupta during a meeting he had earlier in 2014 with Jack Ma, then CEO of Alibaba and convinced him of the disruptive forces emerging from China that would revolutionize banking. And, an all-out digital transformation journey of DBS was launched in 2014 by Gupta and his leadership team.
So how DBS bank achieved it and keep the system on for its continuous digital transformation journey?
Think like big “techies”
First of all, DBS leaders wanted to make DBS digital to the core. DBS not just implemented modern and sophisticated technologies, but also created a culture to start solving problems by thinking like “techies” rather than bankers. It proclaim itself “a technology company delivering banking services” and benchmarking not against other banks but leading technology companies. To encourage employees to think like techies, and not just any techie but Jeff Bezos, Amazon’s famously customer-focused boss, DBS adopted the phrase, “What would Jeff do?
Technology adoption
To make DBS digital at the core, technology modernization as a continuous journey was on its top priority. Today the pace of technological development and adoption is staggering. So, DBS categorizes its views against what it needs to ‘exploit’ and what need to ‘explore’. Any new technology comes up is first explored with corresponding team before its goes to exploit stage – if proved viable.
For example technologies such as artificial intelligence (AI) and machine learning (ML), fueled by big data and data analytics are definitely in the exploit category with limitless use cases. Here the question is not what should we do but more what we should not do. Infrastructurally, cloud, containerization, micro-services, 5G, etc., are also already in exploit category that will provide the plumbing to bring more possibilities that were limited by legacy technologies and architectures. And transitioning from explore to exploit are technologies like blockchain and IoT, as the use cases become more evident.
Customer obsession
The other thing DBS did very well was thinking about the customer - how the customer would actually experience an app or a feature offered. At DBS, customers come first. DBS believes that putting the customer first provides a unifying purpose for employees. The bank adopted customer journey mapping – a method of visualizing the customer’s interaction with the bank from his or her perspective – and made it the default tool for solving customer issues.
Today banking needs to be integrated into the lifestyle of customers. People’s lives don’t revolve around banking, after all. If you’re making a major purchase like buying a refrigerator, the smaller and faster the banking piece, the better. To make banking joyful, make the banking part invisible. For example, getting out of an Uber. And that’s how Open Banking becomes a true disruptor. DBS has largest API platform for third-party developers of any bank in the world- of over 1000 API’s across various segments including loans, deposits, cards and investments. For instance, cars can now be bought and sold on the bank’s platform, with DBS car loans integrated seamlessly into the system. The bank becomes “invisible” to its customers while meeting their needs.
With new ways of serving customers better, including via our social media and live chat channels, Singapore customer center call volumes fell 8 per cent in 2019. DBS reskilled over 500 of our customer center employees to take on 13 new job roles including content creators, live chat agents and customer experience designers.
To reimagine banking, DBS re-wired the organization to have a startup culture and mindset. To develop a start-up culture, the leadership team cultivated five characteristics throughout the organization: new ways of working, redesigned office space, agility, data-driven experimentation and risk-taking for innovation. DBS recognized that innovation was all about culture and behavior of its people. Consider for example that digital transformation requires employees to experiment which means taking risk but in banks we have always been working to mitigate risk. when you get into this new digital space of experimenting with ecosystems, with start-ups, with launching a brand-new product that nobody’s ever tried in a new market, you get lots of things wrong. So this learning that it’s okay to experiment, that many of the experiments will fail, and for everybody to accept that and actually treasure it was a very difficult change to make. So in DBS, employees who typically want to protect their jobs and their bonuses have learned to play safe, DBS encourage employees to take risks—to behave like a start-up and experiment.
A question DBS’s leadership asked early in the bank’s digital transformation was: “What is the biggest roadblock to adopting a start-up culture?” For an example, the way meetings were conducted- there were too many meetings, and too many of them were ineffective or had no stated purpose. A campaign called MOJO, short for Meeting Owner Joyful Observer, was taken to do away with meetings that went nowhere. It had a simple rule: Meetings must start and finish on time and have a fixed agenda. MOJO produced serious benefits, saving the bank more than 500,000 employee hours.
Clearly, transformation is about the people. The management decided that the people of DBS will become the ultimate asset – the key differentiator – for the company. It was not a one-man or one team movement, but an entire organization moved in the same direction of digital transformation since day one. Hence, deliberate plans and efforts supervised by the Innovation Group of DBS helped ensure that both top-down and bottom-up were upskilled and reskilled where necessary and technology had infused and become part of every DBS staff’s DNA.
Learning how to learn was also a key component that helped DBS reinvent how they operate their technology. For example, the bank has put in place artificial intelligence-powered e-learning, experiential learning, mentoring programs, brown bag lunches and learning spaces that is targeted to upskill all bank employees. Besides, study trips were organized to learn the best practices, culture and operational procedures from the big technology companies such as Google and Amazon, which enables DBS to consider and adopt similar methods to operate its technology better and faster thus increasing its ability to compete effectively.
There is strong management participation in competency development programs. For example, they have a program named the Maker where they commit to lunch for one week where senior management will learn about emerging technology through hands-on practice. One of the examples of an innovation program saw C-suite leaders from the bank being mentored by young talents from the bank’s management associate program on social media and the channel’s business potential.
As the saying goes, if you want a thing done well, you have to do it yourself, and that is precisely what DBS is doing. DBS had strategically shifted a huge percentage - 85 per cent - of its tech infrastructure team from previously outsourcing to insourcing. It went on to be 85 per cent outsourced in 2014 to 90 per cent insourced in 2019, with an increase of 24 per cent or close to 6,000 technology professionals in 2019.
DBS also demonstrates diversity, which it believes is a source of strength. DBS is already a leader in gender diversity – about 30 per cent of its senior leadership team comprises women, with their CFO, Head of institutional banking and deputy head of consumer banking/ wealth management being women. They continue to recruit more female talent in technology – an area that is conventionally male-dominated – through targeted hackathons such as ‘Hacker in Her’.
DBS digital transformation is a success story on how any conventional bank can completely transform into a digital organization resolving the convolution of business and technology, driven by a customer-centric and innovation-centric approach to the core. Local banks in Bangladesh can take a huge inspiration and adopt few of its strategy to transform the bank digitally from all aspects. Because for traditional banks it is no more a question of “if”, it is a question of ‘when’ and Banks Need Digital Business Transformation not just to Thrive, but probably to survive.
The writer is a banker
