DBS Bank

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The case discusses DBS Bank's digital transformation strategies to 'rewire' the enterprise for digital innovation including revamping its technology organization, developing digital platforms, redesigning customer experience through technology, and incubating and partnering for new digital innovation.

DBS Bank invested heavily in technology and undertook radical changes. Key thrusts of its strategy involved revamping its Technology and Operations organization, developing scalable digital platforms, leveraging technology to redesign the customer experience, and incubating and partnering internally and externally for new digital innovation.

Questions remain whether DBS Bank has done enough to put digital at the heart of banking. The bank needs to assess opportunities and threats from digital disruption and devise strategic responses to stay at the forefront of digital innovation in banking.

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the Asian Business Case Centre

REWIRING THE ENTERPRISE FOR DIGITAL


INNOVATION:THE CASE OF DBS BANK

HBP No. NTU071


Publication No. : ABCC-2015-004
Print Copy Version: 2 Jun 2015

Sia Siew Kien, Christina Soh, Peter Weill & Yvonne Chong
This case chronicled the digital transformation of DBS Bank in seeking regional growth amidst a new
digital era in the Asian banking industry. Led by its CEO, DBS invested heavily in technology and
undertook radical changes to rewire the entire enterprise for digital innovation. Key thrusts of its
digital transformation strategy involved the revamp of its Technology and Operations organization,
the development of scalable digital platforms, the leverage on technology to redesign the customer
experience, and the internal incubation and external partnering in seeking new digital innovation.
However, questions remain whether DBS has done enough to put digital at the heart of banking? What
should be the next steps in their digital strategy? Where should the bank direct its technology investment
dollars? How can DBS systematically assess the opportunities and threats of digital disruption in the
banking industry and devise a set of possible strategic responses? How can DBS stay at the forefront
of digital innovation to become the Asian Bank of Choice for the New Asia?

Associate Professor Sia Siew Kien, Professor Christina Soh, Professor Peter Weill and Yvonne Chong prepared this case
based on public sources and interviews with key personnel of DBS Bank. As the case is not intended to illustrate either
effective or ineffective practices or policies, the information presented reflects the authors interpretation of events and
serves merely to provide opportunities for classroom discussions.
COPYRIGHT 2015 Nanyang Technological University, Singapore. All rights reserved. No part of this publication may be
copied, stored, transmitted, altered, reproduced or distributed in any form or medium whatsoever without the written consent
of Nanyang Technological University.
For copies, please write to The Asian Business Case Centre, Nanyang Business School, Nanyang Technological University,
Nanyang Avenue, Singapore 639798
Phone: +65-6790-4864/5706, Fax: +65-6791-6207, E-mail: [email protected]

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Banks need to shake themselves out of


institutional complacency and recognize
that merely navigating waves of regulation
and waiting for interest rates to rise wont
protect them from obsolescence.1
INTRODUCTION
Since its establishment by the government in 1968,
DBS Bank (DBS) had grown from a Singapore bank
to become the largest bank by assets in Southeast
Asia. In 2014, DBS network centred on three key
Asian axes of growth Greater China, Southeast Asia
and South Asia, with over 280 branches across 18
countries. (See Exhibit 1 Geographic and Business
Mix.) More than half of the banks 21,000 employees
were based outside of its home market.2 Its expansion
had continued to impress, with its pro!ts growing
consistently, and its net pro!t in 2014 had doubled
from its 2010 full-year earnings. (See Exhibit 2 Key
Financials).
DBS was recognized as one of the worlds strongest3
and well-capitalized banks, with AA- and Aa1 credit
ratings that were among the highest in the Asia-Paci!c.
It had received a range of accolades including being
named Safest Bank in Asia for six consecutive years
to 2014, the Best Bank in Asia Paci!c, the most
valuable bank brand in ASEAN4, and overtaking the
iconic Singapore Airlines to become the countrys
most valuable brand. In 2014, DBS was ranked Asias
third-largest trade !nance bank by market share, after
global banks HSBC and Citigroup.5 DBS was the only
Asian bank among the top 10 private banks in Asia,
in an industry dominated by global wealth managers
including UBS, Citigroup and Credit Suisse.6
A strategic enabler for this transformation was the
relentless drive by Piyush Gupta, who was appointed

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the Chief Executive Of!cer (CEO) of DBS in 2009, to


leverage digital technology not just as an infrastructure
platform for growth, but also to accelerate the pace
of banking innovation for the increasingly tech-savvy
Asian consumers. DBS spent S$600 million annually
on technology inclusive of its investment in Internet and
mobile banking platforms. In 2014, the CEO announced
an additional S$200 million investment over the next
three years, as DBS would continue to develop its
digital capabilities to chart the way forward:
Whether we know it or not, the digital
revolution has put banks under siege.
With Internet 2.0 and mobility, the game
has been re-defined. Banks in Asia are
on a burning platform of competition from
mobile and Internet companies. If we dont
embrace digital and quickly there is a
real danger that our lunch will be eaten.
After all, my firm belief is that in the future,
people wont need a bank, they need
banking.7
BACKGROUND
DBS provided a full range of !nancial services in Asia
with businesses in institutional banking, consumer
banking, and wealth management. In Singapore, it had
the largest network of over 2,500 touchpoints including
branches, ATMs, self-service kiosks and partnerships,
which served 4.5 million customers in the city-state.
Piyush Gupta joined DBS in 2009 as the new
CEO after 27 years with Citigroup. He saw
signi!cant growth opportunities in Asia, at a time of
weakening economic growth in the US and Europe.
The population of Asian middle class was expected to
grow to 1.7 billion by 2020, compared to 550 million
in Europe. Similarly, the High-Net-Worth-Individual

Accenture. The Future of FinTech and Banking. (2015, March). Retrieved May 4, 2015, from http://www.!ntechinnovationlablondon.
net/media/730274/Accenture-The-Future-of-Fintech-and-Banking-digitallydisrupted-or-reima-.pdf
Mortlock, S. (2015, April 15). Half of DBS jobs now outside Singapore as bank ramps up regional recruitment. eFinancialCareers.
DBS ranked 7th strongest bank globally in 2014 by Bloomberg.
Association of Southeast Asian Nations (ASEAN) is made up of 10 member countries; Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
DBS. (2014, March 27). Asia Transaction Banking. Delivering Sustainable Returns. Retrieved May 4, 2015, from https://www.dbs.com/
iwov-resources/pdf/investor/other-materials/2014/2014-0327_GTSpresentationupdate.pdf
Vallikappen, S. (2014, October 21). UBS retains top spot among wealth managers in Asia. Bloomberg.
Gupta, P. (2014). Banking Disrupted. DBS. Retrieved June 4, 2015, from https://www.dbs.com/newsroom/in"uencer/default.page

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(HNWI) wealth was expected to grow at a compounded


annual rate of 9.8% in Asia, compared to 7.1% in
Europe and 6.4% in North America.8
Piyush repositioned the growth strategy from one that
was lacking in boundaries9, to a new vision for DBS
to be the Asian Bank of Choice. The new strategy
was reinforced by !ve pillars Asian relationships,
Asian insights, Asian innovation, Asian connectivity,
and Asian service to cultivate a competitive edge
with deep understanding of Asian cultures, to
leverage technology in supporting customers across
Asia, and to provide a distinct brand of Asian service
characterized by being Respectful, Easy to deal with,
and Dependable.
However, DBS physical banking presence was much
smaller than that of its ASEAN counterparts, such as
Malaysias Maybank and Singapores OCBC Bank.
(See Exhibit 3 Major ASEAN Banks.) Singapores
United Overseas Bank, for example, had a stronger
regional footprint with signi!cant presence in Malaysia
and Indonesia. DBS successfully acquired Societe
Generales Asian private banking business in 2014 for
US$220 million, boosting its assets under management
to S$88 billion from S$39 billion, although the banks
attempt to expand regionally had also proved to be
frustrating. In 2013, DBS failed to gain regulatory
approval for a US$6.5 billion acquisition of Bank
Danamon Indonesia, the nations sixth-biggest bank
with 3,000 branches; in what would have been
Southeast Asias largest banking takeover. The
realization from these challenges was that DBS needed
an alternative way of extending its reach to the region:
After Danamon.. it became quite apparent
that everything wed been doing on digital
was still not enough and actually the penny
sort of dropped that if we really scaled
this up . . over the next couple of years, it

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might actually allow us to do in a different


way what wed been seeking to do with
an acquisition.10
Piyush Gupta
CEO, DBS
The need to leverage digital technology was also
becoming apparent with the changing face of the
Asian consumers. In Asia, there were over 700 million
digital banking users in 2014 and this was expected
to grow to 1.7 billion by 2020.11 Generally younger
and more mobile-centric, the new Asian consumers
were leading the adoption of smartphones and might
prefer to be engaged very differently. (See Exhibit
4 APAC Digital Adoption.) This could be seen in the
fast growth of digital banking in Asia. In 2011-2014,
digital banking penetration in the developed markets,
including Singapore, Hong Kong and Taiwan, rose
from 59% to 92% and smartphone access had grown
more than three times.12 In the emerging economies,
the penetration rate was 33% in 2014, up from 10%
in 2011, while mobile banking grew from 5% to 26%.
(See Exhibit 5 Digital Banking Asia.) Moreover,
82% of Asia-Paci!c HNWIs expected the relationship
with their private bank to be mainly conducted through
digital channels in the next !ve years, compared to
61% in the rest of the world.13
To stay relevant as DBS strengthened its presence and
reach across the Asian markets, a strategic thrust was
to put technology at the core of its banking business. It
was an imperative that demanded a radical rewiring
of the entire organization for the new digital era:
The point about moving to information and
mobile is that we need to re-think what our
business strategy is and how our business
model is going to change. It is not just
about developing mobile apps but about

Capgemini and RBC Wealth Management Asia-Paci!c Wealth Report 2014.


Bird-watching CEO Gupta Seeks Returns as DBS Expands in Asia. (2012, February 8). Bloomberg.
Grant, J. (2014, April 29). Singapores DBS Calls For Digitalisation of Nanking. Financial Times.
Digital banking in Asia: Winning Approaches in a New Generation of Financial Services. (2014). McKinsey & Co.
Digital banking in Asia: What Do Consumers Really Want? (2015, March). McKinsey & Co.
Capgemini and RBC Wealth Management Asia-Paci!c Wealth Report 2014.
IDA. (2014, April 3). Discussing the Evolution of Mobile Connectivity, [Blog post]. Retrieved May 4, 2015, from http://www.ida.gov.sg/
blog/insg/ict-enterprises/discussing-the-evolution-of-mobile-connectivity/

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re-thinking the organization. How do you


rewire an organization for mobility?14
David Gledhill
Head of Group Technology & Operations, DBS
REWIRING DBS FOR THE DIGITAL ERA
Reorganising Technology & Operations (T&O)
As part of the reorganisation, the Technology Division
and Operations Division were merged to form a new
Group T&O under David Gledhill, who reported directly
to the CEO. David was also included as a key member
on the central executive board, which steered the
banks business strategies.
As the Head of Group T&O, David was responsible
for the division comprising over 6,000 staff across
the region. The new T&O structure was carefully
aligned with the respective business lines and also
the geographical markets, as the T&O teams needed
to be very, very close to business, to add business
value through technology.15 The various T&O heads
of consumer banking, institutional banking, etc.,
reported to David. At the same time, the respective
country T&O heads also reported to him. (See Exhibit
6 T&O Structure.) These T&O teams typically
comprised project managers, business analysts and
system analysts dedicated to understanding the unique
business lines or local market requirements.
T&O started an operational excellence programme
to improve the banks key processes by applying
lean principles. In 2010, Piyush mandated process
improvements for all new T&O projects and through
such streamlining, S$60 million savings were achieved
in the !rst year. The early success prompted the
CEO-led improvement programme to be extended
organization-wide and all employees were encouraged
to contribute process improvement ideas. By 2013,

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DBS had eliminated over 240 million hours of customer


wait time. The T&O approach was to link the delivery
of every project solution to real measureable business
outcomes:
Make sure that you are defining projects
and initiatives in terms of solving a welldefined and clearly sponsored business
problem as opposed to implementing a
piece of technology, measured purely in
terms of on time, on budget. Failure to
do this will inevitably result in a division
(separation) forming between IT and
business teams, and the projects being
seen as career suicides.16
Paul Cobban
Chief Operating Of!cer, T&O, DBS
Investments into collaborative technology (e.g., uni!ed
communication infrastructure, video-telepresence
conferencing systems, and enterprise portals) were
made to facilitate enterprise coordination and to solicit
more feedback from different stakeholders. David
explained how he pushed his people to participate
in the new development, We encourage people to
speak up, to put their views on the table. We want
people with the change agenda. This is a big shift in
culture.17 The institutionalization of an internal portal
Tell Piyush in 2010 was for staff across the region to
provide feedback or make improvement suggestions
to the CEO. The portal was open for speci!c periods
tied to his quarterly town-hall meetings and proved to
be an effective channel in getting wider inputs from
the ground, cutting through the otherwise layers of
bureaucracy in a large !rm like DBS. As the CEO
shared, Whats important is that (Tell Piyush) has
allowed people to feel they were part of the process
of (making a) change.18

15 David Gledhill to Authors, 2012.


16 Forrester. (2013, August 23). Q&A with Paul Cobban, [Blog post]. Retrieved May 4, 2015, from http://blogs.forrester.com/dane_
anderson/13-08-23-qa_with_paul_cobban_managing_director_coo_technology_and_operations_dbs_bank
17 David Gledhill to Authors, 2012.
18 DBS Bank: A Force for Good in Asia. (2013, October 1). Gallup Business Journal.

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Building Scalable Technology Platforms


The first priority of the new T&O Division was to
rationalize and standardize the T&O platforms. To
Piyush, many of the business processes needed to
manage a regional bank were not yet in place:
Frankly if you go around the countries we
do things differently in every place. We
dont even have consistent technology
platforms across different countries. That
is a singular priority for us.19
DBS wanted to build a technology platform that
was not just scalable, but also flexible. Various
con!gurable options were necessary to meet speci!c
country requirements. Asian markets were diverse
(multicultural, multilingual) and at different stages
of development. Investments were made to acquire
con!gurable enterprise systems, to reverse-engineer
and modernize the legacy systems, and to adopt
service-oriented architecture and enterprise application
integration technologies.
Our belief is to get to the back end, to sort
out the pipes. This requires vast amount
of work in the back-end infrastructure,
integration layers, messaging and all the
associated innovations you need to make
your architecture nimble. Getting the core
right is where we really put our heavy
spend. It will speed up the front-end. We
build world-class systems on top of that.20
David Gledhill
Head of Group T & O, DBS
Until banks can completely change and
enable the back end to allow digital instant
fulfillment, you will not get through digital
banking. We are spending billions of
dollars in digitising the bank. Less than
10% of it is in the frontend apps. 90% of
it is in digitising the middle and the back.

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How do you digitise the back end, and


create middleware around it that allows
seamless connectors and connectivities
into front end?21
Piyush Gupta
CEO, DBS
Sorting out the back-end technology platforms
required a careful development of its enterprise
architecture as T&O worked closely with their business
counterparts to rationalize the range of banking
applications that best handled its various operations.
(See Exhibit 7 Technology Roadmap.) The proactive
engagement with business users included a disciplined
process of managing deviations. Every deviation had
to be justi!ed with plans to realign in the future, and
these deviations were logged, reviewed and re-justi!ed
not just once, but every year.
DBS new core banking system, Finacle, was deployed
across 12 countries in 28 months. The common
operating platform comprised a core banking suite of
standardised applications including trade, accounting
ledger, capital reporting, interfaces with Internet
banking and other channels. New functionalities
in customer management, liquidity management
were also introduced. In addition, the successful
modernization of the legacy core banking system in
Singapore and Hong Kong also enabled rapid rollout of new products, for example, RMB-denominated
investment or insurance plans. The new operating
platform allowed for greater "exibility in catering to
different country-specific preferences or different
product packaging features (tiered pricing, rebates,
loyalty points).
In 2011, DBS launched a new wealth management
platform with integrated consumer/retail banking and
private banking functionalities, !rst of its kind in Asia. It
developed a wealth continuum to better service each
customer segment, targeting speci!cally the transition
of customers from middle class to high-end segments.
The integrated banking platform facilitated a seamless

19 Wright, C. (2010, September 20). Piyush Guptas Plans for DBS. Euromoney.
20 David Gledhill to Authors, 2012.
21 Tan, N. (2015, May 6). Singapore Well-Poised to Build Vibrant FinTech Sector. Channel NewsAsia. Retrieved May 4, 2015, from http://
www.channelnewsasia.com/news/business/singapore/singapore-well-poised-to/1829460.html

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customer experience, as it enabled retail customers


with growing assets to access not just the retail banking
platform (e.g., to manage their checking accounts,
credit cards, funds transfer, mortgages) but also the
wealth management functionalities in private banking
to manage their growing assets (e.g., to manage
their trading accounts, multi-currency deposits,
investments in financial products, consolidated
portfolio management). Building on a strong mass
af"uent regional client base, DBS wealth management
income doubled from S$506 million in 2010 to S$1.1
billion in 2014.
IDEALTM 3.0DBS internet and mobile banking
platform for businesseswas launched in 2012 to
augment its transaction banking capabilities. IDEALTM
offered corporates a customizable dashboard
to manage cash and trade finance transactions
via straight-through processing, and access to
consolidated statements and forex functions. Designed
as a region-speci!c solution, IDEALTM could incorporate
each countrys language and be seamlessly integrated
with each markets core banking technology as well
as with the clients business processes and internal
ERP systems. In 2014, 53.8 million transactions
and enquiries were conducted on IDEALTM, which
was accessed by 137,700 companies across 120
countries.22
While these technology platforms were typically
best-of-breed systems provided by external vendors,
DBS was able to stay responsive to business
demands through the active development of its
strong competency in technology integration, a critical
competency necessary for devising sound business
solutions. As noted by David:
To be able to integrate technology is a
core (competency) in a firm. My option
to choose best-in-class technology is
probably right for a bank the size of DBS.
So, my real value proposition has been
to develop good technology integration
expertise! We need that in-house. We
cant be outsourcing our brain!23

the Asian Business Case Centre

Designing a New Customer Experience


In 2010, DBS set up a Customer Experience Council
chaired by the CEO to drive the strategic agenda of
Asian Service. In a move that was indicative of the
banks emphasis on technology in enhancing customer
engagement, Piyush aligned the reporting line of the
Head of Customer Experience to the Head of Group
T&O. The intention was to foster a mindset shift that
would go beyond just developing a culture of customer
service excellence but also a culture of digitally
enabling the new customer experience.
Digital banking goes beyond creating
mobile apps or enabling transactions. It is
about leveraging world-class technology to
create a first-class customer experience.
We have been very focused on executing
against our IT strategy that allows us to be
more nimble and innovative in the ways we
engage our customers, including changing
the way people bank.24
David Gledhill
Head of Group T&O, DBS
A !rst initiative was a strategic focus on data to drive
decisions or align priorities to better serve customers.
Made possible with the technology, statistics on
customer pain points were systematically collected and
analysed as DBS increased its use of data analytics.
For example, T&O analysed the transactional statistics
of its call centres and found that out of the 86,000
touchpoints in a month, only 20,000 touchpoints
captured information on why customers were
contacting the bank. T&O then started a programme
of tracking and analysing customer pain points in their
transactions with DBS.
Another application of analytics was DBS ATMs, which
had among the most features in the world (including
bill payments and purchase of insurance). The average
number of transactions for its 1,100 ATMs in Singapore
was 7-8 times higher than the global average,
processing over 25 million transactions a month.25 By

22 DBS Annual Report 2014.


23 David Gledhill to Authors, 2012.
24 Choudhury, A. (2015, March 16). Using IT to be nimble and innovative. The Business Times.

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using analytics and sensors embedded in the Machineto-Machine communication of its ATM network, DBS
was able to accurately predict usage and customer
withdrawal patterns for each machine and this helped
the bank optimise its cash reloading schedule at
non-peak times.26 The successful development and
diffusion of such analytics helped DBS to cut its ATM
cash-outs by over 90% and recover the project cost
in 18 months, while the number of customers affected
by the reloading was reduced by 350,000 in a year.
The number of trips required to reload the network
was reduced 10% while the amount of leftover cash
returned to the bank decreased by 30%.
Customer touchpoints such as ATMs merely output channels previously now
became a customer sensor point for us,
delivering real-time information that can be
used to form a bigger and better picture of
customers and their needs.27
Piyush Gupta
CEO, DBS
Moreover, DBS was the first bank in Singapore
to implement voice analytics technology in 2012.
Conversation streams were analysed to understand
customer issues and to help optimise the procedures
at its call centre, which handled over !ve million calls
a year. Key phrases commonly used by customers
to DBS operators were highlighted by the analytics
programme, which allowed the bank to identify calls
requiring longer handling times, repeated calls from the
same person, as well as speci!c patterns in customer
interactions, so as to better address their needs and
pre-empt their complaints. As a result, its customer
relationships bene!ted as compliments rose 45% from
the previous year while complaints were down 17%.
The technology also improved the centres operating
and work"ow ef!ciency. The time required to meet each
user request fell 5% since the system was adopted, or
16 seconds per call, which saved the bank about 107
staff hours a year.

Since speech analytics, DBS had continued to develop


new analytics capabilities through its uni!ed desktop
and data warehouse solution, enabling its customer
center to correlate richer transaction and customer
behavior data to predict call reasons and enable
customer service of!cers to address customer needs
more effectively.
In addition, DBS actively incorporated humancentred design thinking to reimagine the new
customer experience. A customer journey design
laboratory was established in 2013 to put DBS staff
in the customers shoes as they learned to map the
customer experiences and seek to understand issues
encountered by customers across multiple touchpoints.
What we do is we look at the journeys
our customers are taking and then we try
and get inside the mind of the customer,
feel like we are the customer. We actually
create a pretend customer that represents
our base. We give them a name and age
and occupation, and then we take them
through the journey as they apply for a
mortgage or applying for a credit card,
and we try to understand what they are
going through. We consider what they are
thinking, what are their emotions, what is
their experience, what they are concerned
about, and then try and improve that
process so their journey is more joyful.28
Neal Cross
Chief Innovation Of!cer (CIO), DBS
For example, after observing that its customers spent
15,000 hours a month at the ATMs to view account
balances, DBS launched SMS banking services in
2014 for customers to conduct basic transactions,
including check balances, pay card bills and do fund
transfers to their own accounts, outside of the online
environment. For the convenience of its customers,
DBS also added alternative banking touchpoints as
more transactions occurred outside of the traditional

25 An average ATM in the U.S. dispenses about 2,000 cycles a month. DBS average ATMs do 20,000 cycles a month. Fitzgerald, M.
(2014, January 6). DBS Pumps Up the Volume on its Technology. MIT Sloan Management Review.
26 DBS was awarded Most Innovative Use of IT in the Singapore National Infocomm Awards 2014.
27 Bankings Technology Challenge. (2013, May 29). The Business Times.
28 Paperny, D. (2015, February 18). An Interview with Neal Cross. FST Media. Retrieved May 4 2015, from http://fst.net.au/knowledgecentre/interview-neal-cross

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the Asian Business Case Centre

bank branches, e.g., through self-service kiosks


and CashPoint partnerships29 (e.g., with Guardian
Pharmacies, Sheng Siong supermarkets, 7-Eleven
stores and SingPost outlets).
Similarly, the design of DBS new branch model
also showcased the intuitive integration of digital
technologies as a new customer experience. In these
branches, customers were greeted by DBS branch
ambassadors at the entrance. The branch featured
digital services such as iPads in the waiting area,
virtual queuing, electronic forms, and a separate Quick
Serve Counter for non-cash transactions that could be
completed in 15 minutes. In particular, the specially
designed Consultation Pods (workstations) were able
to offer a wide range of banking services such that the
full personal attention could be paid to the customers:
What weve built into these pods is enough
technology, so 95% of the interaction can
be done without the person leaving their
seat. Thats where the technology comes
in, but we actually hide it away. Its kind of
hidden behind the teller, and its something
the customer doesnt see.30
David Gledhill
Head of Group T&O, DBS
Digital is all about making what can be
seen unseen making services so smooth
and seamless that it becomes invisible to
the customer.31
Neal Cross
CIO, DBS
In early 2015, DBS was the !rst bank in Singapore to
introduce a SMS Q service, where one could obtain
via SMS a queue number and the estimated wait time
prior to a branch visit. As this freed up customers
time, they became more amenable to speaking with

staff and this resulted in double-digit sales growth


for bancassurance and investment products at the
branches.32
Incubating Technology-driven Innovation
In parallel with the effort to enhance customer
experience through technology, DBS also established
a dedicated focus to leverage the digital edge in
reinventing itself to leapfrog the competition. An
Innovation Council chaired by the CEO was established
in 2010. Again, the CIO reported to the Head of Group
T&O, to ensure that the experimentation and incubation
of innovative ideas would align well with new digital
possibilities.
Speci!cally, some areas with high-impact potentials
(e.g., mobile banking and e-payment, big data
analytics, SME banking, wealth management) were
identi!ed by the Innovation Council for systematic
incubation. In addition, DBS conducted innovation
training workshops for staff, pro!led and recruited
people with strong innovation potential (for example,
based on ideation competence, future-orientation).
Innovation stories in DBS were compiled and circulated
to boost staff confidence. Being innovative and
catalysts for change also became key attributes that
DBS sought in its employees.
Mobile Banking and E-Payments
A key focus was on mobility innovation because (with
smartphones) we (DBS) see customers touching us
more frequently, and it eliminated one degree of friction
(for us to reach out to customers).33 DBS key markets
in Singapore and Hong Kong had high smartphone
penetration (87%) and were excellent test-beds for its
suite of 19 mobile apps, which included share trading,
insurance and shopping. Notably, DBS PayLah! a
mobile wallet for peer-to-peer (P2P) fund transfers
via a smartphone was launched in 2014 and it
attracted over 5,000 users within a week, making it

29 Part of POSB CashPoint an alternative cash withdrawal option for customers.


30 Fitzgerald, M. (2014, January 6). DBS Bank Pumps Up the Volume on its Technology. MIT Sloan Management Review.
31 Cross, N. (2014, July 22). Whats your de!nition of digital in banking? The Financial Brand. Retrieved June 4, 2015, from http://
the!nancialbrand.com/41151/de!ning-digital-in-banking-nextbank-facebook/
32 Boon, R. (2015, March 27). Need for banks to boost tech to engage clients. The Straits Times.
33 Seow, T.C. (2014, February 19). DBS David Gledhill discusses leadership in banking IT. CIO Asia. Retrieved May 4, 2015, from http://
www.cio-asia.com/tech/industries/dbs-david-gledhill-discusses-leadership-in-banking-it/

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the top !nance app in the Singapore iTunes store.


Users grew to 200,000 in six months. To complement
Paylah!, DBS piloted a point-of-sale app for retailers
to accept mobile payments. In 2012, DBS was also
the !rst bank in Singapore to offer customers a virtual
credit card using Near Field Communication (NFC)enabled mobile devices to make contactless payments
at 30,000 merchants.
Targeting a crop of younger and mobile customers,
a home-search mobile app, i.e., the HomeConnect
app was launched in 2013. Homebuyers could check
a propertys valuation by pointing their mobile at the
building to access transaction prices in the area and
the estimated monthly loan repayments. The DBS
Quick Credit app also allowed customers to apply
for unsecured loans on their mobiles and receive
instant updates on their applications. The apps optical
character recognition technology enabled customers
to submit the necessary information easily to the bank
by scanning their relevant documents directly.
Users of DBS mobile banking platform saw exponential
growth from 225,000 new users, when it was launched
in 2010, to 1 million users in 2014, and over 24 million
and 11 million transactions made via Internet and
mobile, respectively, each month.34 Swiss research
!rm, MyPrivateBanking, named DBS the worlds best
for mobile apps strategy in 2013-2014.
Advanced analytics
Another focal area of its technology-led innovation was
in advanced analytics. A new analytics competency
centre was set up to accelerate the drive of its
Business Analytics Master Plan as DBS sought to
deepen its understanding of customer footprints for
more personalized interactions. Two new advanced
data analytics partnerships were initiated. First, DBS
would harness big data through IBMs Watson cognitive
computing technology, which would be deployed to
wealth management and subsequently be rolled out to
other business lines. The Watson Engagement Advisor
solution involved the use of arti!cial intelligence to
glean insights on market research and transactional
behaviours in guiding relationship managers to offer
advice tailored to a clients risk appetite and desirable

investment portfolio. The second collaboration was with


Singapores A*Star Institute for Infocomm Research,
which had over 600 scientists and engineers, to further
develop the banks analytics capabilities.
Social media
Not all innovation projects were championed from
DBS corporate HQ in Singapore. The culture of
innovation was also actively fostered in its regional
of!ces. uGOiGO was an online time deposit groupbuy campaign started by DBS Hong Kong in 2013,
targeting affluent customers using social media.
More attractive tiered interest rates for time deposits
would be triggered once the deposit amounts hit
speci!c targets. The uGOiGO microsite generated
over 64,000 page views and acquisition of new DBS
Treasures customers grew 147 times compared with
the traditional means of customer acquisition. Total new
deposits exceeded the original goal by 80% and many
of these customers were new to DBS. The viral effect
of the group-buy campaign was so effective that the
idea was quickly trademarked and replicated across
the region. In Singapore, the campaign met its 100%
target in just !ve days.
Social media was also actively tapped as DBS made
an effort to connect with the communitys local culture
and social networks in its regional marketing initiatives.
In Taiwan, DBS launched a series of stickers featuring
its mascots, forex experts Xing and Jaan (the banks
name in Chinese), for LINE Taiwans most popular
social networking app, which drew over two million
downloads in three hours.35 DBS India produced a
series of online !lms Chilli Paneer uploaded on a
microsite and the banks YouTube channel, on Indias
favorite topics: food, love, cricket and Bollywood, and
how DBS integrated with customers daily lives. The
brand awareness campaign was well-received and
resulted in 600,000 engagements and a sequel.
Along with the development of these creative solutions
internally, DBS sought external partnerships (e.g.,
SAS, universities) to expand its innovation ecosystem.
Neal Cross, CIO of DBS, also cast the net wide
for innovative ideas. For example, DBS actively
engaged the tech startup community such as the

34 DBS Annual Report 2014.


35 Choudhury, A. (2015, March 16). Using IT to be Nimble and Innovative. The Business Times.

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Startupbootcamp FinTech36 accelerator programme


in Asia. As part of its talent development programme,
DBS organized a series of hackathons in 2014-2015.
Over 250 of its selected employees worked with 160
startup members and developed 50 prototypes to solve
future banking challenges. According to Neal, Weve
a very high ratio of idea to commercial product. For
normal hackathons, its 1 in 20-50. For crowdsourcing,
1 in 200. Were getting 1 in 4.37 Referring to DBS fail
fast, learn fast innovation approach, he elaborated:
We need to fundamentally educate the
bank in another way. We experiment
try things quickly so we start to
act a bit more like a startup, like an
e-commerce company. It is about taking
small, calculated risks that have no impact
if they fail. This year we are running 1,000
small experiments across the bank and
they will be exactly that, small things we
can test in safety that give us a huge
amount of insight to action.38
ASIAN BANK OF THE FUTURE
The substantial investment in technology as a
foundation for growth appeared to have paid off for
DBS. The bank delivered 22 consecutive quarters
of year-on-year growth and its income and earnings
in 2014 reached a record S$9.62 billion and S$4.05
billion respectively, as its net pro!t crossed the S$4
billion-dollar mark for the !rst time. DBS share price
had also risen from S$11.48 during the !nancial crisis
in 2009 to a high of S$20.60 in 2014.39
At the enterprise level, DBS had been successful
in transforming senior business executives from

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technology idiots to become digital warriors. Its


close alignment between business and IT alignment
was seen in the strong business ownership of its
technology roadmap, with the respective business
heads even internalizing the technology roadmap to
present their annual strategic IT plans themselves.
The role of IT was no longer functional but completely
fused with the banks business strategy.
But even with the impressive results and the growing
business enthusiasm on the digital agenda, Piyush
was candid on the rapid pace of change DBS had
to endure, We have to learn how to change our
clothes while running around the hall. 40 He was
acutely aware of the potential disruptions and threat
of disintermediation from new market entrants. In Asia,
non-traditional players were making inroads into the
banking space, including Paypal, WeBank (backed by
Chinese social media company Tencent), and Alipay
(Alibabas third-party online payment service). Alipays
online investment fund, Yuebao, attracted US$92
billion in deposits from about 150 million users, making
it the worlds fourth-largest money market fund in its
!rst year of operation. Such non-banking competitors
were projected to account for at least 30% of retail
bank revenues in 2020.41 Navigating this dynamic
digital banking terrain was certainly no easy path.
For example, although the uGOiGOTM campaign was
highly successful in North Asia, it was less successful
when the same idea was launched in some countries
in Southeast Asia.42
As DBS continued to grow in Asia, what should be the
next steps in its digitization strategy? Where should
the bank direct its technology investment dollars? How
can DBS stay at the forefront of banking innovation to
become the Asian Bank of Choice of the future?

36 Fintech refers to a new generation of !nancial technology startups that are revolutionalizing the !nancial industry, from payment to
wealth management, peer-to-peer lending and crowd-funding. Goldman Sachs estimates the market to be worth about US$4.7 trillion.
Retrieved May 4, 2014, from http://www.parksquare.com/uploads/insights/TheFutureofFinance_Part_3_03-13-15.pdf
37 Louisse, D. (2015, March 12). Insights into Singapores Startup Scene: DBS CIO Neal Cross. e27.
38 Wheatcroft, C. (2015, February 24). Digital is a Spectrum - At One End Its About Improving Presence But At the Other Its Reinvention.
The Asian Banker.
39 DBS Annual Report 2014.
40 Tan, J. (2014, June 16). Piyush Gupta Demands A Shift to Digital Banking In Singapore. Forbes Asia.
41 Accenture.The Everyday Bank: A New Vision for the Digital Age. (2014, June). Retrieved March 1, 2015, from http://www.accenture.
com/SiteCollectionDocuments/PDF/Accenture-The-Everyday-Bank-A-New-Vision-for-the-Digital-Age.pdf
42 Tan S.S. (2013, October). The Evolving Nature of Banking [Video]. Retrieved May 9, 2015, from https://www.ted.com/watch/ted-institute/
ted-bcg/tan-su-shan-the-evolving-nature-of-banking

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EXHIBIT 1
DBS BANK GEOGRAPHIC AND BUSINESS MIX
a) DBS Regional Network: Focus on six key markets

# SINGAPORE

# Our home market


# Extensive network of more
than 2,500 touchpoints
# Leader in consumer
banking, wealth
management, institutional
banking, treasury and
capital markets

# SOUTH AND SOUTHEAST ASIA

# GREATER CHINA

# India: 12 branches in 12 major cities,


# Hong Kong: Anchor of our
largest network for a Singapore bank
Greater China franchise with
#
Indonesia: 40 branches in 11 major
49 branches
cities
# China: Locally incorporated
# Presence in Malaysia, Philippines,
in 2007, !rst Singapore bank
Thailand and Vietnam
to do so; 31 branches and
one representative of!ce in
11 major cities today
# REST OF THE WORLD
# Taiwan: Locally incorporated
# Presence in Japan, Korea, UAE, UK
in 2012, !rst Singapore bank
and US to intermediate business and
to do so; 43 branches today
investment "ows into Asia

b) DBS Business Mix


2014

2013

2012

2011

2010

Total income (as % of Group)


By business unit
Consumer banking/Wealth management

30

28

29

29

29

Institutional banking

52

52

51

53

50

Treasury

11

12

14

15

17

Singapore

62

60

62

62

63

Hong Kong

20

21

19

19

21

Rest of Greater China

Others
By geography

10

South and Southeast Asia

Rest of World

Singapore

67

65

62

62

64

Hong Kong

Net pro!t (as % of Group)


By geography
23

24

21

19

22

Rest of Greater China

South and Southeast Asia

Rest of World

Figures may not add up due to rounding.


Source: Compiled from DBS !nancial data 2010-2014.

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EXHIBIT 2
Group

DBS BANK KEY FINANCIALS (S$)


2014
2013

2012

2011

2010

Selected income statement items ($millions)


Total income

9,618

8,927

8,064

7,631

7,066

Pro!t before allowances

5,288

5,009

4,450

4,328

4,141

667

770

417

722

911

Pro!t before tax

4,700

4,318

4,157

3,733

3,332

Net pro!t excluding one-time items and


goodwill charges

3,848

3,501

3,359

3,053

2,650

198

171

450

4,046

3,672

3,809

Allowances

One-time items
Goodwill charges
Net pro!t

1,018
3,035

1,632

Selected balance sheet items ($millions)


Total assets

440,666

402,008 353,033 340,847

283,710

Customer loans

275,588

248,654 210,519 194,720

152,094

Total Liabilities

400,460

364,322 317,035 307,778

250,608

Customer deposits

317,173

292,365 253,464 225,346

193,692

Total shareholders fund

37,708

34,233

31,737

28,794

26,599

Earnings excluding one-time items and goodwill


charges

1.55

1.43

1.39

1.3

1.15

Earnings

1.63

1.5

1.57

1.3

0.7

14.85

13.61

12.96

11.99

11.25

0.58

0.58

0.56

0.56

0.56

2.8

2.58

2.79

2.28

1.25

1.68

1.62

1.7

1.77

1.84

45

43.9

44.8

43.3

41.4

Return on assets

0.91

0.91

0.97

0.97

0.98

Return on equity

10.9

10.8

11.2

11

10.2

Loan/deposit ratio

Per ordinary share ($)

Net asset value


Dividends
Selected financial ratios (%)
Dividend cover for ordinary shares (number of times)
Net interest margin
Cost-to-income

86.9

85

83.1

86.4

78.5

Non-performing loan rate

0.9

1.1

1.2

1.3

1.9

Loss allowance coverage

163

135

142

126

100

Capital adequacy
Common Equity Tier 1 Transitional

13.1

13.7

Common Equity Tier 1 Final

11.9

11.9

Tier 1

13.1

13.7

14

12.9

15.1

Total

15.3

16.3

17.1

15.8

18.4

Source: DBS Annual Report 2014.

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EXHIBIT 3
MAJOR ASEAN BANKS - NUMBER OF BRANCHES
(AS OF JUNE 2014 UNLESS INDICATED)

OCBC inlcudes branches of Wing Hang Bank acquired in July 2014;


Data for three Indonesian banks , Maybank as of end of 2013, Public Bank as of October 2014

Source: Nikkei Asian Review. Banks Jostle for Position as ASEAN Integrates. (2014, November 6).

EXHIBIT 4
APAC DIGITAL ADOPTION
a) Smartphone Adoption Among Mobile Phone Users

Source: Nielsen Smartphone Insights 2013.

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EXHIBIT 4
(CONTINUED)
APAC DIGITAL ADOPTION
b) Internet Penetration

Source: We are Social and IAB Singapore. Digital, Social & Mobile in APAC 2015. Retrieved June 6, 2015, from
http://wearesocial.sg/blog/2015/03/digital-social-mobile-in-apac-in-2015/

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EXHIBIT 5
DIGITAL BANKING IN ASIA
i. Digital Banking Penetration in Asia (2014)

Note: Digital banking penetration is de!ned as the number of users of internet or smartphone banking divided by
total banking consumers in each country; only urban consumers included.

ii. Banking Channels Penetration1

Source: McKinsey Asia Personal Financial Services Survey 2014.

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EXHIBIT 5
(CONTINUED)
DIGITAL BANKING IN ASIA

iii. Asia-Paci!c HNWIs led the world in their preference for digital relationships rather than direct contact
with their wealth managers.

Source: CapGemini, RBC Wealth Management and Scorpio Partnership Global HNW Insights Survey 2014.

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EXHIBIT 6
DBS T&O STRUCTURE

Source: DBS to Authors.

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EXHIBIT 7
DBS TECHNLOGY ROAD MAP

Source: DBS to Authors.

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