Creating the "Apple of banking"

DBS Bank has become synonymous with the digitisation of wealth management. And far from finished with the evolution of its offering for bankers and customers alike, the institution continues to make strides in taking its platform and the client experience to the next level.

Contrary to what some industry executives might appear to believe, riding the digital wave in banking involves more than just offering mobile applications and snazzy websites.

It involves, instead, a series of stages of evolution in thinking and acting which start with a shift in culture and mind-set, and culminate in an entirely remodeled back-end process to allow instant digital fulfilment.

The billions of dollars that it costs to attempt such a feat, let alone the time, expertise and flexibility required along the way, isn’t for most banks.

But DBS has embarked on what its senior management believe is a genuinely game-changing mission.

“We want to be the Apple of banking,” says Tan Su Shan, managing director and group head, consumer banking and wealth management at DBS Bank.

Thinking ahead

This is a bold vision, yet one which in today’s changing world is required if banks are as serious as they say they are about keeping up with the times and staying relevant to their clients, especially in competitive markets.

With more firms entering the financial services space, and from non-traditional backgrounds and perspectives, plus the acceleration in use of mobile devices, the behaviour of customers has changed markedly, based on the shifting expectations from their banking experience.

They don’t necessarily need a physical bank, but instead access to financial transactions anytime, anywhere, explains Olivier Crespin, group head of the digital bank at DBS.

Driving this step-change is critical given that the potentially disruptive digital entrants within financial services such as Google, Facebook and Alibaba, among others, are much more client-centric than the traditionally-slow moving and heavily product-centric banks.

In response, DBS has been among the most proactive players in terms of working towards doing things differently – and, ultimately, making financial advice more accessible to a larger number of people, giving them, in turn, more comprehensive information.

“With this new way of looking at the world of banking today, we are trying to combine the best of what a bank has to offer, such as risk management, financial expertise and payment security, with the best of the services of digital players,” says Crespin.

Optimising advice

While giving Hubbis a sneak preview of his digital bank in development, it is easy to see that Crespin is visibly excited at this opportunity to spearhead something that no traditional banking player has attempted before.

And seeing the digital platform in practice is a rare and practical insight into the evolving nature of the world of wealth management.

DBS’ digital bank involves three main types of technology. First, explains Crespin, the platform detects the pattern of behaviour of customers, by viewing their transaction history as well as their demographics to help the banker assess their investment preferences.

Secondly, the bank is using a rules-based engine, given its advanced mathematics capability to understand and interpret the multi-variable path that leads to an investment decision by a customer.

The third technology used within the digital bank is DBS Watson Wealth Adviser, powered by IBM’s artificial intelligence system.

This mimics comprehension using cognitive computing to recognise the sentence pattern of the English language, says Crespin.

“That reads all the research material the bank has for the RM (relationship manager) to use to identify what is suitable for an individual customer,” says Crespin.

A combination of these technologies is helping the bank resolve a key hurdle which most of its competitors continue to face – limitations on the time and expertise of the bankers, which lead them to default to the products they know best and are most comfortable talking about. “This bias is created by limits on capacity and experience,” he explains.

Now, DBS is able to level the playing field across its bankers and at the same time help them to understand more specifically the individual customer they are dealing with.

On any given morning, for example, Watson might select around 100 products for an individual client.

These are then ranked by stars, dependent on suitability – which is linked to a combination of customer preference, product performance against its peers, and also DBS’ outlook of factors which will impact the product.

Dividing the offering by product is a good way to do this, he adds, to engage the client and generate a certain amount of interest. “We have taken a decision to fine-tune the platform in order to resolve the issue of bankers not calling their clients due to their existing workload.”

The first step is assisted RMs with tablets, to enable them to have a more transparent and relevant conversation with their clients.

Plus, the automated process fills a knowledge gap by enabling clients to access information in a more organised way. “The goal is to deliver knowledge to the customer,” he explains. “A lot of people now want to know more about what they are investing in.”

According to Crespin, a key application of the intelligent, automated interactions between bankers and customers is effectively the bridge between advisory and discretionary.

“The system monitors a client portfolio on a continuous basis, and as soon as there is a trigger from positive to neutral, or neutral to negative, it can prompt a conversation about potential changes in the portfolio,” he says.

Implementation

The underlying architecture being built across the platform as a whole should be able to assess the credit, compliance and operational risks.

This is something which Crespin thinks will make the difference over non-banking players trying to enter this space.

As a result, it is important to leverage the rest of the bank and maintain open communication to get the best outcome possible. “We are not building everything from scratch. We are trying to leveraging our existing operations, compliance and technology,” explains Crespin.

This is important to stay connected to the main business and the advances being made in other areas, including apps.

Clearly some independence from the main bank is important to ensure flexibility in coming up with a new solution, but there must also be alignment with the rest of the institution.

Creating its own ecosystem

Critical to the success of the digital bank is getting the customer journey and overall client experience right.

To get everyone at DBS singing from the same hymn sheet when it comes to its digital initiative, the bank wants to be part of the everyday lives of all its customers.

For example, when a customer rides the subway, they can do their mobile banking via the DBS PayLah! app.

Or there is a service where the bank knows what coffee the customer wants, and from which shop, and orders it and pays for it via online banking as the customer is arriving at their office tower.

Or when there is a major life event, such as getting married, having a child, or getting a first mortgage, the relevant products and services are delivered seamlessly via the digital engagement the bank has with its customer.

“This isn’t about trying to sell something to the customer, but rather about helping the customer fulfil their goal,” says Tan. “Nobody wants a mortgage; they want to buy a house.”

The other key element is ensuring the delivery channel ties into what they really want. “We can be truly creative as we push ourselves in many new areas to think about what we do from a very different perspective,” explains Crespin.