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Inside DBS Group Holdings Ltd’s Push into Digital Banking: 1 Key Reason Why It Is Investing Billions to Go Digital

DBS Group Holdings Ltd  (SGX: D05) is investing big into digital banking.

In its latest 2016 annual report, Singapore’s largest bank said that it has put up billions of dollars to facilitate the move into the digital sphere:

“We have invested more than SGD 5 billion in the past few years to develop a platform which enables us to be faster to market.

We can now “plug and play” technologies from partners using Application Programming Interfaces (APIs) and have started to leverage cloud technology and microservices to be even more agile, scalable and fintech-like.”

There’s one big reason why DBS Group is pushing so heavily into digital banking.

Digital to the core

DBS Group’s chief executive officer Piyush Gupta said that technology is a core competency for the bank in its latest earnings report. In fact, the bank believes that it should be going digital to the core. In its 2016 annual report, DBS Group said that it was re-making its infrastructure:

“From re-architecting our technology infrastructure to transforming our front end, DBS is seeking to become digital to the core.”

Going digital allows DBS Group to engage its various customers through different channels. This includes wealth customers and small and medium enterprises (SME):

“Whether it is credit cards, wealth or SME, we make it simple and easy for customers to engage with us digitally. Coupled with a focus on agile methodology and journey thinking, we have been able to improve speed to market and the customer experience.”

Engaging customers through digital channels has its benefits.

The purpose of investing billions to go digital

The biggest reason for DBS Group going digital is captured in this statement in its 2016 annual report:

“This translates to more digitally-engaged customers, as well as higher returns per customer. In particular, consumer banking and SME customers who engage with us digitally account for 2x more revenue, on average, than other customers.”

In particular, DBS Group noted that customers that engage digitally contribute two times the amount of revenue compared to other customer groups. Furthermore, Gupta also noted that digital channels allow the bank to expand its customer base at lower cost.

So, there are tangible benefits for DBS Group to enter the intangible world of digital banking.

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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.