Tan Su Shan, managing director and group head, institutional banking, DBS, speaking at the 2019 ULI Singapore National Conference.

The urgency for organizations to transform themselves in the face of technology-fueled disruption has been a key challenge in many industries. In the banking sector, incumbent players are dealing with the emergence of financial technology, or fintech, firms that threaten them in a range of business segments.

One bank that has taken this challenge head-on is Singapore-based DBS Group, which embarked on an organization-wide transformation almost a decade ago. In her keynote address, Tan Su Shan, managing director and group head, institutional banking, DBS, shared with the audience some insights and lessons learned from the journey so far.

Recognizing that the nature of competition and consumer behavior was changing in the digital age, DBS crafted a strategy that encompassed becoming “digital to the core,” putting the customer first in everything the company does, and fostering a startup mind-set among its 26,000-strong workforce.

“We realized we had to learn to do things as fast, as efficiently, as cost-effectively, and with scale as the tech startups. When you look at Grab or Go-Jek, they don’t talk about acquiring thousands or hundreds of thousands of clients. They talk about hundreds of millions of clients. That’s the kind of ambition we are up against,” said Tan. “So we had to figure out how to make banking less painful and more joyful.”

Become Digital to the Core

DBS worked to become a truly digital organization in the mould of technology giants. With this goal in mind, the bank started a process in 2009 that involved examining every aspect of the business to see what was working and what was not.

More specifically, DBS set itself a goal of becoming a “GANDALF” company—which meant being as intuitive as Google, as nimble as Amazon, as data-driven as Netflix, as design-oriented as Apple, as connected as LinkedIn, and as social as Facebook—with DBS being right in the center of it.

To make such radical changes quickly, DBS adopted an agile team approach that involved forming small groups of no more than 10 to 12 people to work on projects. “We have a two-pizza rule that we learned from Amazon: don’t have a group that requires more than two pizzas to feed,” explained Tan.

Further inspired by Amazon, DBS began working on an open application programming interface (API) system and two years ago helped build some “life” partners since the bank can now work with different people—real estate companies or builders of blockchains for logistics. In doing so, DBS has created its own ecosystem to become a platform of choice.

Embed in the Customer Journey

DBS also worked toward changing the way it served its customers by focusing on providing services in a manner that they desired, whether it was through a face-to-face meeting with a banker or, increasingly, conducting their transactions online. “People want to do banking their own way, and this could be physically or digitally. The key is to be intuitive, to be intrinsic, to be invisible,” said Tan.

Taking this concept to an extreme, DBS launched its first “digibank” in India in April 2016. This was a banking service that existed almost exclusively in the digital realm, with no branches, no paper, and no signatures required from customers. When human interaction was required, DBS partnered with a coffee chain, Café Coffee Day, to help them verify customers with their national biometric identity card. The experiment was a success, and the DBS digibank today has some 2 million customers in India.

“This initiative was driven by my team who said, ‘Let’s try to radically change the way banking is done, we don’t need branches.’ So we pushed the boundaries, tested the limits to see where traditional banking could be changed. Who would have thought you can do your banking in Café Coffee Day?”

A 26,000-Strong Startup

Probably the most important aspect of DBS Bank’s digital strategy was changing the culture of the bank’s 26,000 employees so that they would behave more like a tech startup.

The company encouraged its staff to experiment and take risks through initiatives such as agile teams and hackathons. It also changed the physical configuration of the working space—using more S-shaped desks—to encourage interaction between teams. “So changing the way we work, changing the way our office looks does help in creating a very different work culture,” said Tan.

As a publicly listed company, however, DBS needed to eventually justify its digital spend by showing that its digitalization efforts had led to higher revenue and lower costs. The bank was able to achieve this by leveraging technology to reduce the number of branches, make the customer more efficient, and ramp up the productivity of its staff.

Overcoming Challenges

During a Q&A session following her address, Tan was asked about how DBS managed to convince skeptics that their digital transformation was necessary. The challenge, she replied, started with having to ask the DBS board of directors for the funds to spend on new technology.

“We told them that we had underinvested in technology for the longest time. The world was moving, and if you don’t invest, you are going to fall behind. Once we had the board buy-in, I then had to justify every dollar by showing higher return on equity [ROE], lower cost/income ratio, better acquisitions, better customer journeys,” she said. However, she noted that it was important to allow for failures during this process. To this end, DBS gives out a Best Failure Award every year to encourage its employees to keep trying despite facing setbacks.

Going digital to the core also means having to deal with digital threats. Replying to a question on cybersecurity, Tan said that DBS constantly tests its security systems to ensure they are robust enough to deal with attacks and breaches.

“We constantly hack ourselves. We do ‘red teaming’, we hire ethical hackers, and we constantly spoof our own clients as well. So I have gotten emails from our CEO, Piyush Gupta, saying, ‘Open this now.’ I got scammed by someone I thought was my boss! I learned my lesson very quickly.”