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Open banking ecosystems hold the key to what banking looks like in the future

The future of bank customers will be one where the best banks are invisible and everywhere, anticipating their needs and enabling them to live more, and bank less

The future of banking involves a collaborating banking ecosystem that enables all parties to come together to exchange assets, such as data, tech and design expertise. PHOTO: DBS Bank
The future of banking involves a collaborating banking ecosystem that enables all parties to come together to exchange assets, such as data, tech and design expertise. PHOTO: DBS Bank

We’re living in an increasingly connected world where, with just a few taps on a device, we can easily make purchases from stores thousands of kilometres away, browse reviews from customers all around the world, and have the items delivered to our doorstep in a matter of days. The digital waves have swept across the globe, sinking some sectors while creating others. Banks are no exception and have similarly been swept along with some sinking, some swimming and a few surfing the waves of change.

While most banks have established a presence online, the yawning gap in the industry between digital adopters and the laggards was magnified this year, when Covid-19’s emergence tested banks’ digital capabilities. DBS embraced the digital wave early on, and our ongoing investments on this front enabled us to nimbly continue our operations online and focus on serving customers seamlessly. The banking sector will see even greater change and competition, with digital banking licences being awarded to non-native applicants across the region.

Tech-driven disruption continues to pervade our way of life. While the what, i.e. the need for financial services such as payments, savings, banking or investing, remains fundamentally the same, the how has vastly changed. Customers want to do more with less, be it time or money; they expect their bank to be contextually present yet invisible. All digital journeys will be held to the same customer expectations and benchmarks.

The next norm: collaboration via open banking

A collaborative ecosystem approach will play a key role in enabling banks to address these expectations. Similar to how open ecosystems work in nature, banking ecosystems foster synergetic relationships between a bank and its non-bank partners, enabling all parties to come together to exchange and harness assets such as data (with customer consent), tech and design expertise. Facilitated by application programming interfaces (APIs) or otherwise, open ecosystems hold the key to what banking looks like in the future, and can greatly benefit both customers and the industry alike.

DBS is a strong proponent of ecosystem collaborations and, in 2017, launched the world’s largest API developer platform in the industry, with 155 APIs. Built on the Banking as a Service (BaaS) model, it sought to integrate as many service providers as needed to complete a financial service in an effective and timely manner. Today, it boasts over 1,000 published APIs. DBS PayLah! is another case in point – introduced in 2014 as a mobile wallet, the app has evolved to fulfil the everyday needs of its more than 1.8 million users today. They can book movie tickets and rides; pay bills and transport expenses; browse entertainment and dining offers; as well as scan to pay for their purchases at more than 180,000 acceptance points island-wide.

Open banking, which first emerged in Europe and has since taken root in many other jurisdictions, stems from the idea that collaboration across financial and non-financial players sparks greater innovation and efficiency to ultimately deliver better outcomes for customers. Singapore set out in as early as 2016 to steer the financial industry in this direction by laying out various building blocks, such as a dedicated API Playbook to facilitate API adoption among industry players, publishing API and open banking guidelines, and working closely with the API Exchange (APIX), an open architecture API marketplace and sandbox platform launched in 2018.

The Monetary Authority of Singapore (MAS) announced on Dec 7 the launch of the Singapore Financial Data Exchange (SGFinDex), the world’s first public-private open banking initiative. SGFinDex is a digital infrastructure that taps the national digital identity system, SingPass, to enable users to retrieve and view their personal financial information, like bank deposits, loans, investments, CPF loans, from across government agencies and private-sector organisations. SGFinDex consolidates key financial information to provide customers with a helicopter view of their financials, arming them with a clear picture of their overall financial health. Prior to SGFinDex, Singapore residents would have had to manually check with each government agency or bank separately to consolidate their respective financial streams.

The economic challenges wrought by Covid-19 revealed an acute need for financial planning among Singaporeans, many of whom were unprepared for a sudden disruption in income. With SGFindex, they are now empowered with a consolidated view of their finances – a fundamental step towards helping them to better understand, plan and manage their finances, and to achieve financial wellbeing.

A milestone in democratising financial planning for all Singapore residents: DBS NAV Planer

The launch of SGFinDex is particularly timely, given the widening income inequality gap worldwide, a situation further exacerbated by rapidly ageing populations and the pandemic. Low-income groups tend to be highly dependent on deposit savings, leaving them vulnerable to inflation, and tend to face numerous obstacles to financial and retirement planning.

As a purpose-driven bank, DBS hopes to grow financial inclusion by providing personalised financial planning to every Singapore resident. With our personalised insights and advisory, full spectrum of in-house financial services and solutions, and cutting-edge technology capabilities, DBS is uniquely equipped to help customers grow their wealth in order to be more prepared for retirement. We have been building solutions on this front for several years. We rolled out DBS NAV Planner: a hyper-personalised financial and retirement planning solution powered by artificial intelligence (AI) and machine learning, available to all bank and non-bank customers via DBS digibanking (online and mobile).

Designed to guide everyone to achieve financial wellness, regardless of their income level or life stage, DBS NAV Planner helps to track, protect and grow users’ money while providing personalised and actionable insights. These insights are powered by more than 100 AI models that have already delivered over 30 million nudges to customers this year. DBS NAV Planner can put together a personal balance sheet for users, identify their protection gaps, project their future cash flow, provide guidance on starting their investing journey, and much more.

Since April, DBS NAV Planner has helped more than 1.8 million customers make sense of their financial data by empowering them to make better-informed decisions with their money. It has also helped over 400,000 customers to turn their finances around and become net savers. More customers are coming forward to invest not just in cash, but also via their CPFIS or even SRS accounts – as of October, the number of DBS/POSB customers who topped up their CPF accounts more than doubled as compared with to the same period a year ago.

A new milestone in Singapore’s open banking efforts, SGFinDex has also possibly set a global gold standard on how best to leverage open banking for the greater good. DBS NAV Planner, powered by SGFinDex, will drive more people to take action, grow their wealth and secure their financial future. SGFinDex will supercharge DBS NAV Planner and amplify its effectiveness. We are now one step closer to our vision of helping to narrow the existing inequality gap in Singapore by providing everyone with the knowledge, tools and solutions they need to achieve sustained financial wellness.

DBS: Reimagining banking

Having been at the forefront of digital banking innovation, our retail and corporate customers today enjoy seamless access to intuitive digital solutions and services. As a testament to our efforts, we have also been accorded several global Best Bank accolades, including world’s “Best Digital Bank” twice, and “Best Bank in the World” for three straight years, including 2020. Our strong capital position and phygital capabilities, which combine the best of digital services with physical touchpoints – the most of any bank in Singapore – further differentiate us, and allow us to ensure our customers are well-supported on all fronts.

As Singapore’s digital banking landscape continues to heat up with new entrants, new technologies and, most importantly, new steps towards a future powered by open banking, we can expect to see intensified competition, collaboration and innovation that will collectively redefine how we bank today. Customers can await a future where the best banks are invisible and everywhere, seamlessly anticipating their needs and providing personalised, intuitive solutions without ever being intrusive – ultimately enabling them to live more, and bank less.

Visit www. dbs.com.sg/personal/deposits/ digital-services/sgfindex for more information on the DBS NAV Planner.

Faraaz Ali is the Digital and Ecosystems Lead at DBS Bank and Evy Wee is the Head of Financial Planning and Personal Investing at DBS Bank