DBS Bank is setting up India's first mobile-only bank, called digibank, a move that will allow the bank to ramp up its presence in Asia's third-largest economy.
This innovative model uses a wide range of technology - from biometrics to artificial intelligence (AI) - to introduce a new way of banking. There is natural language technology, which allows the phone to effectively understand what customers are saying, and embedded soft token security, replacing the need for one-time passwords via SMS.
Speaking in India at the launch yesterday, DBS Group Holdings chief executive Piyush Gupta said that the digibank is a " unique world first".
The mobile-only bank does away with forms and is a "completely paperless, signatureless and branchless bank". For example, account-opening can be done at an extensive network of outlets run by DBS' partners, including more than 500 cafes across India.
"There is no paperwork involved. Customer authentication is done using the Aadhaar card, a biometrics-enabled ID which has been issued to over 1 billion Indians in what is the world's largest biometrics identification programme," said DBS.
Mr Gupta said that DBS should be able to add five million banking customers in India over the next three to five years. "Once we refine and get this model right, it has the room to expand into markets," he said, adding that Indonesia and China are already working on similar infrastructures.
He also said DBS's cost-to-income ratio for running the digital bank in the long term will be "far more efficient than traditional brick-and-mortar banking".
Aspects of the digibank model may be seen in Singapore eventually. In fact, a digibank app was launched here last month, but Mr Gupta said it was a "lite" version.
He added: "In Singapore, we've a large legacy business with branches, infrastructure and more, and it's difficult to start with a clean sheet of paper. Over the next year or so, we'll slowly take capabilities we've built in India and add them to the Singapore offering."
For Singapore consumers, this will mean that they can look forward to banking entirely on their phone, without even needing their laptops to go online. DBS worked with United States-based financial technology firm Kasisto - a spin-off from the institute that created the technology behind Apple's Siri - to use AI technology
Customer service is provided by an AI-driven virtual assistant that can answer queries and perform banking transactions, such as finding out past transactions or transferring funds to someone. This replaces the need for a call centre agent.
With a more efficient cost structure at the mobile-only bank, DBS can offer better client value. For instance, account holders in India earn 7 per cent interest from the first rupee, and there are no minimum balance requirements.
The bank's India chief executive Surojit Shome said in a statement that the idea is to extend the reach in the customer segment. "With a billion Aadhaar cards and over 200 million smartphone users in India, the opportunity for growth with digibank is huge."