DBS has consolidated its various online and digital touchpoints in Hong Kong to two apps: one is the launch of its digibank capability, and the other is a “lifestyle” app, called Card+, to pursue a strategy around embedded finance.
Its executives believe the new data-led model of banking works. Now the goal is to industrialize it, so the bank can scale fast.
DBS’s initial forays into pure digital banking were in markets like India and Indonesia, where the bricks-and-mortar bank had only a modest presence to begin with, and where there was a large financial-inclusion play. Digibank was the first pure digital bank in India, and it was quickly copied by others.
But the bank seemed reluctant to bring a disruptive, digital model to its core markets of Singapore and Hong Kong. This was a trend: UOB launched TRMW in Thailand, CIMB launched its digital bank in the Philippines – always in markets away from home.
It made an opening salvo last year by offering digibanking to SMEs in Hong Kong, but this was a stab at a new customer segment rather than a revamping of its brick-and-mortar businesses aimed at consumer loans and retail wealth management.
The launch of DBS digibank in Hong Kong therefore represents a maturing of the bank’s digital capabilities, as it is confident to offer a purely digital channel in combination with its physical branches and other means of meeting customers.
Aligning interests
“Our differentiator is being ‘phygital’,” said Maggie Chunmei Du, executive director and head of business analytics and planning for consumer banking and wealth management in Hong Kong.
This means identifying customer use cases, come up with solutions based on data and modelling, test what works and what doesn’t, and then go all-in on the best ideas.
DBS is not unique in this ambition, so its success will rely on execution, the coherence of its operating model, and the ability to integrate its various channels so a customer doesn’t feel a dislocation if she is approached via email, online, via an app, at a branch, or connected via a third party.
Getting to this point has required years of restructuring, to move the bank away from its traditional positioning around product silos, to a point where business heads are better aligned.
Du acknowledges this is still a work in progress. But she says the bank has learned to harmonize KPIs (key performance indicators). “We start from a desired outcome, like increasing customer stickiness,” she said. Then there is a centralized management process to ensure all the business heads are incentivized to meet that goal, rather than performance based on selling a particular product.
“For example, traditionally our KPIs for relationship managers were managed separately from those of our digital unit,” Du said. “Now there’s centralized goals. This has to be bank-wide, a cultural change, to make it work.”
Test and scale
Many banks harbor similar desires – to have a holistic view of the customer and serve them customizable offers based on data. Data analytics works best when it pulls information about a user from across the entire organization. But before the data can be integrated, the business KPIs need to be aligned.
The challenge now, with digibank launched, is to scale it. “The key elements are in place,” Du said. “We’ve found the data-led business model works. Now the question is scale.”
The bank has already spun out 50 use cases for its digibank app, and 100 use cases across all its channels. “But that’s not enough,” Du said. “We need to scale this exponentially if we want to have the best data modeling and platform coordination.”
We used to say we’re the pipes but we need to become the platform
Maggie Du, DBS
Of course, all businesses want to scale – the whole point of innovation is to deliver a better service at a lower price point. But what makes this more urgent now?
Du says digital banking is no longer about being online. “It’s AI-powered, which means technology will reshape financial services,” she said.
From pipe to platform
To stay relevant, a bank has to do two things. First, it has to capitalize on its brand value – which is where consistency in the user experience across different channels is so important. Second, it has to leverage technology and keep innovating.
Banks face a variety of competitors that didn’t exist a few years ago: virtual banks, e-commerce platforms, fintechs, payment wallets. This requires traditional banks to invest heavily into data, AI, and ecosystems – turning some of those competitors into sources of new business.
The risk that banks saw in going this route was they’d become “dumb pipes”, just funneling commoditized services to someone else’s customer.
“We used to say we’re the pipes,” Du said. “But now we say we need to become the platform,” which means embedding in other companies’ online activities to service their customers as well as DBS’s own depositors and investors.
Competing as DBS, therefore, means bringing partners access to its own customer base as well as the agility to integrate with third parties, and the capacity to keep up. “It’s easy to say, but this isn’t easy for a bank to do,” she said. “It has to start with the customer.”
