Cash management: DBS reaps what it sows

With global growth increasingly generated in Asia, the continent has seen fierce competition among banks offering services to the region’s businesses. In such conditions, it is not always easy for banks to distinguish themselves. But DBS has done just that, propelling itself to fifth place in Euromoney’s cash management survey, from 17th in 2016. 

This builds on the momentum it generated in 2015, when it also made considerable progress up the rankings. While down among global banks, in 2016 it placed fourth among Asian banks, up from 15th the previous year. 

John Laurens, head of global transaction services at DBS Bank, says the bank has developed a number of areas of the business to improve its services to meet client needs: "Developing new cash management products has been a process of reengineering how operations are conducted, and the trend is now focused on how operations can be run on cloud-based and open source platforms. Clients are moving to open source software, thereby reducing the spend on traditionally licenced software.”

Its ascent in the Cash Management Survey comes as reward for at least S$60 million ($44 million) of investment in the global transaction services offering over two years, with more to follow. From that investment, and against a challenging economic backdrop characterized by low interest rates and growth, the bank’s GTS business delivered income of S$1.627 billion, with nearly 50% of that coming from the cash management operation. 

Laurens says: “DBS’s transaction banking business is one of the bank’s key strategic priorities. Over the years, we continue to be committed to driving agility, embracing digital, delivering the best in class products and services to our customers.”

This investment has been ploughed into new product launches designed to improve customer experience and make the payments offering more flexible.

Take PriorityPay. It provides clients in Singapore, Hong Kong, China, Taiwan, India and Indonesia with faster and cheaper fund transfers across the DBS network. The bank extended the cut-off time for telegraphic transfers to speed up processing – both outward and inward – for key customers, improving liquidity management.

Then there are Anytime Account Transfers, which allow customers to make domestic transfers to beneficiaries that maintain DBS accounts in the same location at any time, including evenings, weekends and public holidays. Launched in Singapore and India in December 2016, it was rolled out to Hong Kong, Indonesia, China and Taiwan in 2017, with the service attracting 2,700 transactions in its first week. 

Another initiative was a new liquidity management tool, providing clients with access to a pool of shared funds across multiple related parties, enabling them to fund payments beyond their own cash balances without incurring overdraft costs. 

Meanwhile, DBS’s digital channels have been given a thorough makeover, offering improvements to services such as seamless authentication and faster on-boarding. 

A digital token – the first of its kind from an Asian bank – was launched for Ideal, its online banking platform, eliminating physical tokens for corporate transactions, simplifying mobile payments for Apple and Android users in Singapore and India. 

In July 2016, it upgraded its online tax payment capability on Ideal in Indonesia, enabling customers there to make tax payments seamlessly, while also making processing more convenient.

“We have improved the usability of our online banking platform DBS Ideal based on customer feedback by offering features such as foreign exchange booking via DBS Ideal mobile app and improved security via M-challenge Plus, which sends a transaction challenge when creating payments via SMS,” says Laurens. “It is one of the most effective ways to counter threat of fraudulent payments while balancing customer convenience, and is particularly suitable for high risk payments such as cross-border payments.”

Its digital investments extend beyond Ideal. In 2016, trade finance clients enjoyed access to tradeAlerts, an analytics programme that data mines transaction trends in clients’ portfolios and external global maritime information to identify potentially fraudulent transactions.  

DBS also unveiled its Online Guarantee Application service, piloted in Singapore, streamlining the application process.

It was also one of the first banks to adopt Swift’s Global Payments Innovation (GPI), enabling corporates to track payments from end to end. GPI also allows faster crediting of funds and improved payments transparency. 

DBS has also developed its game-changing Prism platform. Developed as a transformational self-service digital solutioning and advisory platform to help corporate treasurers, it has been operational since October 4^th 2017. The online simulation tool allows CFOs and corporate treasurers to simulate banking scenarios and explore opportunities to boost business.

Further, DBS worked with the Monetary Authority of Singapore to develop its blockchain pilot to explore migrating the country’s payments infrastructure onto blockchain. 

Alongside these new launches came some reorganization within certain business lines and concerted efforts to grow the business across the board. DBS increased its engagement with clients by using proprietary data analytics to help clients optimize their working capital and identify areas of inefficiency in their operating model. 

In 2016, the bank won over 100 working capital solutions mandates and delivered over 500 benchmarks, more than double the mandates secured over 2015 and a 47% increase in benchmarks year on year. For this it was rewarded with more than $10 million in associated annualized revenues.

Navinder Duggal, group head of cash product management at DBS, says: “We are very pleased to have new mandates from across different markets in the region, and we have also strengthened existing client relationships. We continue to leverage our Asian networks and connectivity, and offer pan-Asian solutions to our customers. This has been key in helping corporate customers, as well as institutional investors, grow in Asia.” 

Laurens adds: “The repositioning and diversification of our trade business over the last 12 months has been effective, we have seen healthy growth over the last two quarters."

DBS trade volumes in Singapore grew by 5% year on year, while it outperformed the market in import and export revenue. The latter grew by 2% in the year to September, compared with a fall of 3.6% for Singapore’s overall imports and exports, according to International Enterprise Singapore. The bank says early indications suggest 2017-2018 will see a big step up in annual fee growth.

Meanwhile, its open account trade business grew 7% year on year, securing 80 new mandates. The account receivables purchase business grew 50% in terms of assets relative to the previous year, while supply chain finance assets were up more than 250%.