DBS reaches out with more services, community efforts
Big is not always beautiful, but it might just be the case with DBS Group Holdings.
The largest bank in South-east Asia has been ranked among the largest 50 in the world based on market capitalisation - that is no mean feat for a lender that was set up in 1968.
Based on an FT Global 500 ranking for the banks sector, as at Dec 31 last year, DBS was ranked No. 44, while OCBC Bank came in at No. 56 and United Overseas Bank No. 58.
In an exclusive interview with The Straits Times, DBS chairman Peter Seah, 69, paid tribute to the policies and infrastructure that have made it possible.
"Singaporeans don't realise how large Singapore banks are and it's a testimony to the financial centre strategy and the liberalisation of the financial sector that has led to the creation of three very large banks," he said.
While he is proud that DBS has come a long way from its roots as a development bank and for turning in record earnings in the past few years, he is quick to add that giving him the most satisfaction is DBS' transformation into a corporate with more of a heart.
The bank, in the past, did not feature high in the popularity stakes. For some, it rankled that it acquired POSB, practically on a platter. For others, it seemed that DBS had put a disproportionate number of foreign talent in top positions.
There's no denying that there has been a concerted effort in the past few years to woo stakeholders.
Mr Seah took over the chairmanship of the board in 2010 and, together with chief executive Piyush Gupta, has focused on building up DBS. Mr Seah says: "In all developed countries, you see a widening gap between rich and poor. We have to try to manage the Gini coefficient and minimise the segment of people who are left behind. This gap is not just the responsibility of governments, but also of corporates.
"So you do see us more visibly bringing POSB back to the people, by opening more outlets, offering more services, acknowledging that as the owner of POSB, the people's bank, there is a social dimension, a duty to fulfil. There have been many efforts on this front, to reach out to people. For example, the bank brought back the POSB National School Savings campaign this year. During Chinese New Year, DBS also installed 29 pop-up ATMs at 10 community clubs for customers to withdraw cash more conveniently.
Apart from its efforts through POSB, DBS supported the National Art Gallery project with a contribution of $25 million.
But it's not only about culture, it is also about reaching out to Singaporeans as well. It has upped the fun quotient in the Marina Bay area with a slew of activities ranging from regular free monthly screenings of movies to the pop-up beach as part of the three-week-long DBS Marina Regatta festival.
DBS has also put its money where its mouth is and set up a $50 million DBS Foundation to support social enterprise start-ups.
Mr Seah says these moves have been aided by a "cultural mindset transformation of our people - a stronger culture of caring, reaching out to social enterprises, acknowledging our duty - to contribute to the country".
This ability by the senior management team to change the culture and mindset at DBS is a "big transformation", emphasises Mr Seah. If people take pride in their work and have fun, this is not just about improving employee engagement, it can eventually translate to a better bottom line.
The benefits of having a senior management team with a clear strategy is borne out by the numbers, with full-year profit crossing the $4-billion mark for the first time last year. A fortnight ago, it reported a 15 per cent rise in second-quarter profit.
But success brings its own challenges, including how to accelerate growth overseas.
Already DBS generates one-third of its profits from operations in China, Taiwan, India, South Korea and Indonesia, but there have been hurdles. In 2013, its plans to buy 67 per cent of Indonesia's Bank Danamon were stymied.
Recent moves include applying to be a wholly owned subsidiary in India, which it hopes will enable it to open 50 to 75 branches there over time. The last branch DBS opened in India was back in 2010.
However, under new guidelines issued in 2013, if foreign banks set up local subsidiaries, they can enjoy "near national" treatment in opening branches.
If DBS' application is approved, it will pave the way for significant expansion in India.
DBS also recently received approval to operate in Australia, its 18th market.
Over the coming decades, Mr Seah is confident that Asia will grow in stature with the rise of India, China, Asean countries and, hopefully, the recovery of Japan.
For DBS to bet on Asia's growth is probably the right move.
While the United States and European global banks are beating a retreat because of the ramifications of the global economic crisis, those banks will return to the region eventually because of the growth opportunities.
Mr Seah says: "We've had a window of opportunity these few years, but when the honeymoon is over, we better be ready to compete head on, take on the best in the world."
The integration of various countries as part of the upcoming Asean Economic Community 2015 is not going to be an easy one but, if successful, will offer a much larger market for DBS.
What will support this overseas expansion is a strong digital banking strategy. This means that DBS can open overseas in emerging markets without necessarily having to set up physical shops, which will incur much higher costs.
Technology is a key challenge facing the financial sector.
How technology grows and evolves will define the banking world of tomorrow, according to Mr Seah, but no one will be able to predict what customers will want in 20 to 50 years' time.
"It is almost impossible to imagine the shape, the form, the channels that banks or the man in the street are going to use... It may be a face over a screen."
But regardless, "if banks don't start what I would say is an aggressive tech journey, they will be out of business. I don't see Generation Z queuing up (at the bank)".
Despite slowing growth, he is confident of Singapore's prospects. But he noted: "We need to maintain our strength as the best English-speaking country in Asean and as a hard-working and honest country, but the restructuring of our systems and workforce and strategies are going to be major challenges.
For DBS, whose growth over the past decades mirrors Singapore's success, Mr Seah said it will push ahead with its strategy to be a leading Asian bank and have a strong focus on digital.
The future may be uncertain and full of challenges, but he is still very clear about DBS's role.
"We must continue to be an anchor bank for Singapore, to service the man in the street, to do business and play a role in the country's importance as a financial centre," he said.