4 Big Ways DBS Group Holdings Ltd Will Transform in the 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.
For the first-half of 2017, expenses declined another 1% from digitalisation and productivity initiatives. DBS Group’s cost-income ratio was down to 43% for the same period.
During its earnings briefing, DBS Group chief Piyush Gupta revealed two ways that the bank will be changing in order to bring the cost-income ratio to 40%. He referred to the slide below to make his points:
Source: DBS Group CEO presentation
1. Fewer bank branches – click here
2. Fewer ATMs too – click here
3. End-to-end process digitisation
DBS Group is in a position to reduce the number of bank branches in Singapore as it moves more customer processes online. But the digitisation of the processes does not end there.
Gupta said that digitisation could also reduce the cost of obtaining a new customer. He added:
“The second is our end-to-end process digitisation. We’re moving a lot more of our business to online [customer] acquisition. That’s true in credit cards and unsecured loans, which are [more straightforward], but now we’re doing that in bancassurance, mortgages, SME origination and loans. When you acquire [customers] online, your cost of acquisition goes down.
So that will continue to be the case, and there is a lot of opportunity to continue the shift to online acquisition.”
DBS Group is increasingly attracting customers to sign up for credit cards, loans, bancassurance, mortgages online. When it does so, the cost of acquisition comes down.
4. War against paper
“We’re also moving a lot of our business to straight-through [processing and] we’re killing paper. The minute you kill paper, you don’t need to do the manual entries and the paper handling. The transaction goes straight through from the customer all the way to our back-end systems, eliminating work.”
DBS Group is also striving towards removing paperwork from its back-end processing. In doing so, the bank eliminates the need for manual entries and paper in general, which lowers cost.