World's best digital bank 2018: DBS

In November, DBS did something small but revolutionary. Rather than just talking about digital strategy, it decided to quantify exactly what digitalization means for profitability.

The answer: compared with a traditional branch-visiting bank user, a digital customer brings in twice the income, keeps higher loan and deposit balances, costs 57% less to acquire, conducts 16 times as many self-led transactions and delivers 27% return on equity compared with 19% for traditional clients.

Providing that answer prompted a riot of analyst upgrades, with comments about “Jeff Bezos-esque” chief executive Piyush Gupta and a 4% jump on the share price that day.

This is the power of being articulate about digital. Gupta has long since mastered the digital sound bite.

“The best way to fight disruption is to pre-empt it and disrupt ourselves,” he says.

But that is nothing compared with being able to get into the nuts and bolts and explain how and why a digital path is one paved with profits. By the end of 2017, the bank’s market cap was up 44% for the year; it is starting to be revalued as a tech stock.

This is the second time in three years the Singaporean bank has lifted this global award. It is one of an elite group, whose other members include BBVA, ING and Capital One, that are increasingly being known first and foremost for their competence in tech.

Nobody who has followed DBS, Gupta or his team of fellow tech devotees – chief information officer David Gledhill, chief innovation officer Neal Cross and CFO Chng Sok Hui – for any length of time will be surprised by this award.

The journey dates from a 2013 senior staff offsite in Seoul, when Gupta told his lieutenants it was time to stop comparing the bank with other banks and instead to pit it against big data names like Amazon.

Since then DBS has approached everything through the filter of disruption and technology. When it launches a new product, it does so like a tech company, with beta versions it updates constantly as the bank learns from what the market is telling it. It takes every process it can and puts it on the public cloud.

But most of all, what it does is improve its banking performance. DBS is also the world’s best bank for SMEs and Asia’s best bank for transaction services in this year’s awards; neither would have happened without tech innovation.

Take a look at the Treasury Prism platform it launched in October, for example, that allows corporate treasures to perform online simulations of their cash and liquidity management structures. Or look at the speed with which it can get small businesses registered, banked and set up with the right partners, through data mining and streamlined processes.

DBS was also a strong candidate in wealth management, in large part because technological advances have helped it to deliver its one-bank solution idea – combining wealth management with corporate and investment banking – in a practical and efficient form. All relationship managers are digitally assisted through dashboards, review tools and analytics.

And retail is fully engaged. The bank has, like many players, launched numerous APIs to put themselves into the lifestyles of customers – the so-called individual ecosystem.

“You will change your way of paying if you find a more convenient way or are incentivized to do so,” says Gupta. “If your bank does not give you a credible alternative, you will go to someone who is more efficient.

“Three years ago I decided my mission was to dominate payments. If you’re the best payment game in town, why would you move from DBS? You wouldn’t, because it’s easier to pay with DBS.”

The bank is tied in with Apple Pay, Samsung Pay and has launched its own PayLah personal wallet with more than 800,00 users in Singapore.

Better still, DBS is deploying the skills it has developed in Singapore in emerging markets with far higher populations. Digibank, the branchless, heavily automated bank that DBS first launched in India two years ago, has now also been rolled out in Indonesia.

Making these businesses profitable will take a while, but in India the bank had already signed up 1.8 million customers by the end of March, 700,000 of them with full savings accounts.

Digital lending has just been launched in India and an algorithmic lending product in Indonesia; other banking and investment products will follow, at which point we will really find out if it is possible to run a profitable bank with almost no people.