Bank may suffer hit to reputation, but impact likely limited: Experts

DBS Bank may suffer some damage to its reputation and credibility as a result of the extended disruption to its services this week, but the impact is likely to be limited, experts and observers said yesterday.

But they added that banks in general need to implement more safety nets to improve reliability, especially given the increasing use of technology and reliance on digital infrastructure in the financial sector.

Problems with the DBS website and mobile app prevented customers from accessing banking services for about two days from Tuesday.

While the bank said its services were returning to normal on Wednesday night, some customers continued to report issues yesterday. DBS advised those still facing issues yesterday to restart their devices and clear their browser cache before attempting to log in.

Associate Professor Anand Srinivasan, who heads the finance department at the National University of Singapore (NUS) Business School, noted that DBS was recently named the World's Best Bank by British publication Euromoney for the fourth consecutive year.

He said this award is based on many factors, particularly the safety and soundness of its lending operations and customer deposits.

In this regard, DBS "continues to shine", and the recent disruption is likely to have minimal effects on its global reputation, he added.

Assistant Professor of Finance Aurobindo Ghosh of the Singapore Management University's Lee Kong Chian School of Business said the disruption, while "very distressing", should be viewed in the context of the bank's digital transformation as a whole.

He said DBS deserves the accolades it had received as it has been "at the forefront of digital transformation" in Singapore's financial services sector over the past decade and has launched many new and innovative digital financial products.

"Singaporeans are used to a high level of service. As an international bank, there could be some damage to the image and reputation of DBS as the main, and sometimes only, go-to option."

Prof Ghosh said there is a significant portion of Singaporeans who are underbanked - meaning they lack full access to mainstream financial services - and are unsure about adopting digital financial products.

"Disruptions tend to stick in the memory of those who were reluctant to begin with, so DBS must try to win back those clients and not lose the clients they already have," he added.

Experts from cyber-protection firm Acronis said the disruption could have been due to human error in a routine process such as maintenance or system upgrading.

DBS country manager for Singapore Shee Tse Koon had said on Wednesday that the issue was due to a problem with the bank's access control servers, but did not elaborate on the details. Last night, DBS said its systems remain secure and were not the target of a cyber attack.

Access control servers handle both log-in and payment verification using means such as biometrics, authentication tokens and one-time passwords.

Acronis chief information security officer Kevin Reed said authentication is one of the core components of Internet banking, and banks rarely outsource this critical function.

"DBS hasn't shared much information about what happened, and the reason could be that they still don't know what the issue is exactly," he said. "It is hard to tell, but a system upgrade or some external event could be causing a significant overload of the authentication platform, leading to its malfunctioning."

Prof Srinivasan said tech glitches often arise from outside the organisation and become problematic only if there is a repeated pattern. "I believe that the true usefulness of tech in banking for customers is not determined by large systemwide failures, but rather its reliability for day-to-day usage.

"In this dimension, DBS, like most other Singapore banks, scores well."

A version of this article appeared in the print edition of The Straits Times on November 26, 2021, with the headline 'Bank may suffer hit to reputation, but impact likely limited: Experts'. Subscribe