DBS Group Holdings Ltd (SGX: D05), Singapore?s largest bank, is going digital and the results are beginning to show.
For 2016, DBS Group?s total income was $11.5 billion, an increase of 6% from 2015. Interestingly, profit before allowances grew at a faster rate of 10% to end at $6.52 billion. The reason behind this was the slower rate of growth in expenses. DBS Group said that costs were contained due in part to productivity gains from its efforts to digitalise its business.
Piyush Gupta, the chief executive officer of DBS Group, delved deeper into the bank?s digital efforts during its latest 2016…
DBS Group Holdings Ltd (SGX: D05), Singapore’s largest bank, is going digital and the results are beginning to show.
For 2016, DBS Group’s total income was $11.5 billion, an increase of 6% from 2015. Interestingly, profit before allowances grew at a faster rate of 10% to end at $6.52 billion. The reason behind this was the slower rate of growth in expenses. DBS Group said that costs were contained due in part to productivity gains from its efforts to digitalise its business.
Piyush Gupta, the chief executive officer of DBS Group, delved deeper into the bank’s digital efforts during its latest 2016 fourth quarter earnings briefing. Here are some highlights:
1. On how technology is a core competency – head here
2. On the lowering of end-to-end costs
Gupta shared some figures on how the digitalisation of DBS Group has benefited its cost structure. His points were centred around the following slide:
Source: DBS Group’s earnings presentation
Based on DBS Group’s edited transcript of the earnings briefing, Gupta said:
“Anecdotally, our digital customer acquisition is proving to be extremely helpful.
So now 25% of wealth customers [are acquired] digitally; 60% of SMEs customers in Singapore [are acquired] digitally. And the digital bank we launched in India [has now signed] up 800,000 customers.”
In April last year, DBS Group launched the mobile-only DBS digibank in India. The mobile-only bank does away with paper forms, signatures, and bank branches. Judging from the figures that have been shared, the bold technology move has seen some early success. Gupta mused:
“We [are on track to have] a million customers in our first year, all digitally acquired. The cost of digital acquisition is substantially lower than the cost of manual acquisition. And therefore you get the customers at a much lower cost point as you bring them on board.”
Digital customer sign-ups come with lower cost and that can help DBS Group reduce its expenses. But that’s not all. The cost reduction extends into customer transactions after the customer comes on board. Gupta said:
“Once the customers are on board, we’re also digitalising the way they execute their ongoing business with the bank. So we’re killing paper in terms of the execution. I [have] put some [examples] over here. [For] international [remittances], we increased digital online transfers [by 64%] to over three million transfers [last] year. A 64% increase means a lot of paper got converted to electronic.
[For] retail products, 43% of all [transactions are] now being done digitally, and that’s up from [37%] last year. Similarly, non-financial [transactions such as] enquiries, [getting] my account changed and so on, are also moving online. We had a 33% lift in [such] transactions [in Singapore]. Each one of these results in less paper, less intervention and therefore lower cost.”
In short, Gupta believes that DBS Group can benefit from the use of technology, starting from customer acquisition all the way down to the daily transactions done with the bank.
Gupta has been vocal on the need for banks to embrace technology. As the numbers flow in, it appears that DBS Group may be making good on its promise.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.