3 Big Ways DBS Group Holdings Ltd is Embracing A Digital Future   

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 go digital.

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 head here

3. On DBS Group’s digibank model in India

Gupta shared some statistics about DBS Group’s mobile-only digibank model in India. His focus was on the slide below:

2017-03-30 DBS Group Tech Slide 3
Source: DBS Group’s earnings presentation

Based on DBS Group’s edited transcript of the briefing, Gupta said:

“And finally our straight-through processing rates. The India digibank that we have [was] created on the back of this concept we call design-for-no-ops.

It uses only one-fifth of the total headcount that a comparable traditional bank would use, which is quite remarkable. The chatbot we have [employed], the artificial intelligence, is able to address, even [for] greater volumes, well over 80% of the queries, [which] don’t get touched by human beings. Just the computer takes care of them all.

Outside of that we’ve also been able to see a 12% reduction in our overall manual operation efforts. So [it’s] very strong. [And we, obviously, are] the world’s best digital bank.”

The Indian model is looking promising with just 20% of the headcount of a traditional bank. Furthermore, 80% of queries are answered through the use of artificial intelligence (AI).

Gupta rounded up his thoughts on DBS Group’s digital efforts with the following comment:

“So bottom line, the digital agenda that we have, the digital transformation that we’re doing, is actually giving us impact both on the revenue line but very visibly on the cost line. We’re comfortable that we should continue to see the productivity impact of that as we go forward.”

At the moment, we do not know if India’s mobile-only model will turn out to be a model for the rest of DBS Group in the future. But if DBS Group keeps on seeing success in its India model, the call to shift the bank’s overall mode of operation could become louder.

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.