In an interview with Tan Su Shan, group head of institutional banking at DBS, she discusses the bank’s digital transformation journey, the evolution of the financial ecosystem and the role of technology in sustainability. Tan also serves as the President Commissioner for PT Bank DBS Indonesia. Prior to leading the institutional banking group business, she was responsible for leading the group’s Consumer Banking and Wealth Management business for close to a decade.

The financial services industry has gone through an unprecedented time of change. The pandemic has utterly brought home the point that the future is digital. In the past year, the industry has witnessed an acceleration in the digitalisation of products, processes and experiences.

The now widespread adoption of artificial intelligence (AI), big data analytics, and edge computing will enter a new dimension with the introduction of 5G and so will the migration to the cloud; open banking and ecosystems. And the maturation of blockchain technology will make central bank digital currencies (CBDCs) a reality. What will the role of banks and banking be in an era of blockchain, cryptocurrencies and decentralised finance (DeFi) disruptions?

The following key points were discussed:

• DBS Bank’s digital transformation journey, and the initiatives and technology that have impacted the customers and their relationship with the bank
• The importance of technology, especially emerging technology like blockchain
• Creating new businesses and new business models to reinvent the customer experience or the customer journey
• How DBS sees itself as a technology company and potentially developing and providing financial technology solutions to the industry
• DBS’ approach for a successful ecosystem and to extract value from the ecosystems

Below is the edited video transcript:

Foo Boon Ping (FBP): DBS is a first mover in the digital transformation space or race. You started your digitalisation efforts early in 2014. At a time when fintech and techfin disruption was a reason for change. And they were seen as disruptor to the incumbent banks, not as the technology enabler that many see them today. COVID-19 has also accelerated this digital transformation, creating a need for operational resilience to support businesses to access financing and to conduct transactions. Su Shan, could you tell us about the DBS digital transformation journey, how your key initiatives and technology have impacted the customers and their relationship with you? 

Digital transformation journey, initiatives and technology that have impacted customers

Tan Su Shan (TSS):Well, as you said, we started our digital transformation journey some seven, eight years ago, we realised that if we didn't disrupt ourselves, we will be disrupted by the fintechs or the techfins. The big tech companies who were unbanking banking. So we realised very early on that as Bill Gates famously once said, “People don't need banks, but they do need banking”. And if you could unbundle banking services and give the customer a really great seamless experience, backed by great journeys, great tech, seamless tech, end to end fulfillment, you could win this game. And banks who had big market share in the analog physical world, we're not necessarily going to prevail in the virtual world, unless you pivot. Because guess what? Banks have legacy systems that holds us back. Banks have regulations that also means you have to work within very tight constraints. And banks have internal compliances and we work within country boundaries and country regulations as well, and cross border rules. So when we set up on this journey, it's important to kind of look back at what we had set as our foundational step and that was based on three big pillars. The first is to really go digital inside out. This was not digital lipstick and it wasn't just a fancy nice looking app. It was really going into our core, into our body and saying, “Look, how digital are we?” And guess what? We had all these clunky monolithic systems that worked really well. But we had to move to micro services and ultimately to the cloud. How did we do that? That was the first pillar. The second pillar was really looking at our customer journeys. We used to be very bad on service. We had very low scores. And so we became really customer obsessed. And then the third was changing the culture of the bank. But at the time, 24,000 people today 33,000 people. How would you compete with fintechs? If you're a big organisation, how do you create that spirit of innovation, experimentation in a big bank? And so that meant massive cultural mindset shift. So with the three pillars we then set out to look at the best. And who were the best in the world, there were people like Google, Amazon, Netflix, Facebook, etc. So we said, “Well, if you put Google, fantastic in data analytics, Apple, great UX design, and you have “G”, “A”. Netflix, very good data analytics. And then you have Facebook, “F”, very good at their social linkage. And you have Amazon, AWS, frankly, with a cloud technology. LinkedIn, with their ecosystems, superb social linkage, and Facebook I talked about. So we put all the big tech alphabets together and came up with GANDALF with a “D” in the middle of being DBS, and we wanted to be the “D” and GANDALF. And that was the war cry that we set up to everyone, that our CEO, our head of technology, and our head of transformation, they came up with that. And that was the rallying war cry that led to that internal transformation, that led to us systematically looking at all our digital, technology stack. Re-architecting them for modern services, micro services, re- architecting them bit by bit for the cloud. So inside out, that’s done, that was hard work actually. Then inside out the cultural mindset shift is being done is a continuous journey of evolution as the world changes. And the customer obsession is still being done. I thought we did a very good job early on, we had some minor hiccups along the way. We're re-engineering that with great gusto today. So these three pillars were what we set up to change, , seven, eight years ago, was still on this journey. But I think we've made some significant progress.

FBP: Tell us how this journey will continue to play out. On the competitive aspect of it, the disruption from the financial technology companies or the techfins, didn't come to its full effect in that the disruption, a lot of that came from their ability to innovate, because some people say that they are less regulated, especially with how they use data. But since then, the regulatory attitude has changed. Now, the technology companies are, level playing field. The playing field has leveled out. How important is the technology part, especially emerging technology like blockchain. It used to be a time when peer to peer was the big disruption. Now it seems that decentralised finance has become the new peer to peer, how are you keeping ahead of this technology trend?

Importance of technology, especially emerging technology like blockchain

TSS:Boon Ping, I often wonder if we're a bank or technology company. We actually today have more engineers than we do bankers. We have some 7 to 8,000 engineers in the bank. And I think tech is ubiquitous. I often say tech is business, business is tech. You can't look at tech as backend or it's front, middle and back end. It is everything, even for our customers tech is everything. It's ubiquitous. So I would say that because the tech is there. It's really just getting people who understand it, getting people who don't understand it to at least understand the basics and the architecture of it, and to move forth and to experiment. And it was started with us. We set up our innovation hub, and we work with all these fintech companies, small startups, we sponsored them, we had plenty of hackathons, we still do to really get the ideation going. And constantly internally for my business, we crowdsource ideas all the time. It's really reaching out to the young. Ideation comes from inside, it comes from customers, it's also this customer obsession. We're always talking to our customers, “Hey, did you like that? Here's our five star review. Did you give us only four sounds or three stars? Why? How can we get better?” So this sort of constant feedback loop, this ideation from ground up, this working with third parties, setting up ecosystem partnerships means we learn. We also learned by doing. You never learned in the classroom nowadays. You got to really learn by doing. I remember I learned to make an app, in one of our MD offsites, because until you do it, you don't know whether it's hard or easy. And then once you get the ideation. I remember we all learned about AI and machine learning by trying this Amazon deep racer course online, it was great fun, we all tried to move our cars, our F1 cars, using machine learning to tweak it, moving in in different directions. And we realised, I don't need to code to do this, but I need  to understand how the code works and how the machine learns. And when you the machine learns and learns faster and faster, how powerful that is. And once you get that basics, and as leaders of the firm, we knew that that was how it worked, then we can apply it to our customer journeys, apply to our businesses, apply to achieve optimal impact, maximum efficiency, and great customer journeys.

FBP: You talk about many obsessions that DBS has. And one of its obsessions is with measuring the contribution of your digital business, digital value capture. And there are new businesses that are built around your digital capability, for example, DBS Digital Exchange, Partior, your collaboration with Contour, and so on, so forth. And these capabilities have a real value, SGD 350 million of new businesses, an increase or next year, increase of SGD 200 million over this year, and they are helping you to emerge from a stronger from the pandemic. Tell us, how are these creating new businesses for you, new business model? And how are they reinventing the customer experience or the customer journey? 

Creating new businesses and business models to reinvent the customer experience 

TSS:So I think to understand that, let's look at the world. Web 1.0 was the advent of the internet, web 2.0 was the growth of big tech. And with the growth of big tech, government started to realise, “Wow, big tech has a lot of data, that data equals knowledge, equals insights, equals power”. Power to shift anything, from buying behaviour to groupthink, to political winds. And so I think society realises that the old physical model where governments worked within geographic boundaries was disrupted by now, web 2.0, where big tech work with no boundaries, and a lot of data and a lot of smart insights. So what's web 3.0 going to be? And I think 3.0 is going to be this more decentralised world where people realise, “Oh, do I really want to share my data with all the big tech companies? Or do I want to keep that? That's mine. That's my own value system”. And so I think the decentralised world that we are now kind of entering was born out of society's pushback on too much concentration of power in the big tech. And the decentralised world means that as long as society permissions each other, it's transparent, it's immutable. And it's so far, to varying degrees of success, been working quite well. And so we looked at the blockchain, and we said, “Look, we've got to learn by doing”. And what kind of problems can the blockchain solve?” And we said, “Well, it really works very well as a proof of identity”. You are who you are, you are Boon Ping, you're going to my blockchain, you're going to do a transaction, I know who you are. It can be a great proof of transaction. So for example, in our digital exchange that you talked about, we're able to transact, buyer, seller, immutable blockchain, we know who's transacted, there's proof of transaction that happens instantly. And then as a proof of obligation. The IOUs between banks, for example, with what we did with Patior which we set up with Temasek and JP Morgan, it was really a real time blockchain based cross-border settlement system. With the permissioned blockchain, you actually can make it instant, you don't even need trust in the system as long as you have this immutable transaction. The proof of obligation is there. You can do it. And so, I think the blockchain is where we have experimented. And for trade for example, as you rightly said, trade is, has been, still is, I think to a large extent, very paper based, global trade, I mean supply chains. But our ability to work with some of these fintechs, Contour being one FE Trade, being another one is we are able to now link our suppliers and buyers seamlessly in an immutable blockchain and finance. So there's the proof of transaction, there's proof of identity, which we will finance it.The blockchain enables us to look at all the different milestones along the trade process. And different participants can then go in, do the digital documentation, validate the trade, validate that there's no duplicated trades, finance the trade. So we've also worked with many organisations, JD, Shun Feng, Alibaba with Trusple, etc. So we've announced many kinds of blockchain based joint ventures ecosystem partnerships, really to digitise the trade process end to end, to make it less clunky, less paper based, more seamless, and frankly, safer. 

FBP: You mentioned party or the joint venture with Temasek and JP Morgan, that came off Project Ubin by MAS, the final phase of the proof of concept. You mentioned that it's a lot of experimentation around the use of blockchain from cross-border payments to trade. Tell us in terms of Patior, adoption is key. Traditional payment is built around correspondent banking relationships and SWIFT enables that through the platform. How is a new blockchain based system going to work? You are out there talking about but you're trying to get banks to use it, what will be critical in its adoption?

TSS:So we liken it to kind of Star Alliance of banks. Critical to is to the success is adoption. And adoption means we do need participants and you need to solve for the major use cases. So that's the key currencies that banks trade with everyday interbank. It's dollars, euros, RMB, SGDs, whatever. It is about being able to settle seamlessly and real time. So our ambition and hope is to create the Star Alliance of key banks get all the major currencies in and our October launch is next month. And we want to get it done. 

FBP: So that will come onstream October and from then on you will build adoption. We talked about JP Morgan. It separated its tech capability under an umbrella called Onyx, In China, Ping An Bank has OneConnect where it is unbundling, in a sense, its technology capability and making it available to the industry especially in the area of AI and blockchain. In Southeast Asia itself, other large banks beside yourself, Kasikornbank for example, set up a separate technology subsidiary for essentially the same purpose. Recently, DBS Group CEO Piyush Gupta talked about unbundling certain capabilities like Remit in as a separate entity. Talk to us about how DBS sees itself as a technology company and potentially developing and providing financial technology solutions to the industry.

Developing and providing financial technology solutions to the industry as a technology company

TSS:So as I said, we don't have more engineers than bankers. Often we joke that we're a tech company today. Well, it's not a joke, it's probably true. And through that journey of creating various micro services, as we said, we've gone to the new tech stack and we're cloud ready. And all that knowledge and insights and ability to also morph technology, fit it for purpose, fit it for customer use cases means that we have the knowledge and the toolkit to help other organisations that might want it be it sort of getting into cloud in a cyber secure manner. Be it being able to transact with FX seamlessly, fast, real time, be it being able to set up financial planning with AI, be it being able to do contextual loan applications and loan fulfillments etc. So I think we've got various verticals that will be very useful, potentially to other financial institutions or corporates that might need to use it. So that's something that we certainly partnered with other banks and other ecosystem partners to give them the service.

FBP: You talked about ecosystem and you're building many ecosystems and being part of many different ecosystems. Tell us about your approach to ecosystem to be successful? Do you need to be in the centre of every ecosystem? How do you add value? And how do you extract value from the ecosystems that you participate in? 

DBS’ approach for a successful ecosystem and to extract value from the ecosystems

TSS:So that's a great question. And one that we have learned a lot over the years from our failures, to be honest. The way we look at ecosystems is you can either be a participant in somebody's ecosystem, or you can orchestrate it, or you can create. And, I run a corporate bank today. And our rubric around ecosystems is, again, three different pillars. The first is horizontal ecosystems. That means we join somebody’s big ecosystem, it could be an ERP company, it could be a big platform company. Then we we work with someone who has already got customers who have onboarded customers, and we provide whatever financial services you need. You need payments we help, you need settlements we help, you need FX we help. So we will partner with a big platform company horizontally. Then there's the second pillar where we go deep into the industry, that means we really understand the industry. upside down, I talked about vertical integration, and we try to help the industry solve problems. So for example, the building and construction industry has a problem around supply chain, has a problem around the smaller subcontractors being paid on time, has a problem around transparency of supply chain, delivery of goods and services. And so we said, “Well, that's a problem to solve”. So we work with a tech company called Doxa, to create that supply chain transparency, to then help us finance some of the smaller players around the supply chain. And then on a similar vein, we work with big anchor companies, so big MNCs, big Asian or Western MNCs, or big corporates, who have multiple suppliers, or multiple buyers, who find it very difficult to reach out to so many different players, hundreds of different suppliers and buyers, and we work with them. We say, “Look, if you're the anchor here, we will using data help you to seamlessly deal with all your different partners, hundreds of different partners will onboard them quickly, seamlessly using digital means. You don't have to get involved. We will make sure that their goods or supplies comes to you on time using the digital and data. We will finance it so you don't have to pay immediately. And we will ensure that we work with you around the data collection. You can start ranking who are your good suppliers, your not so good suppliers and credit score them accordingly”. And that's been very successful. We've worked with many Western MNC partners, and even with the view of bringing sustainability into that prism. Very important in this day and age where ESG considerations are almost topmost in everyone's mind. Then the third pillar is really around what I talked about in terms of creating these trade platforms. So if you can work right through these ecosystems. So we're not in any of these industries, but we're seamlessly plugged in. You don't see us, I tell my colleagues, “Hey, let's just be the Intel chip in all our customer journeys. So we disappear. We just disappear”. You don't see DBS. So sometimes I joke that DBS stands for “disappearing bank of Singapore”, that we just disappear and we fulfill. That to me is intuitive. It's invisible. It's very powerful. 

FBP: Sustainability is an important topic today. How will it transform finance? For the global transaction banking business, we see the topic revolve around customer support to transition to greener operations. ESG compliance, creating, as you mentioned, more sustainable finance, sustainable supply chain. How has DBS maneuvered its technolog adoption and digitalisation efforts to meet customer need in this area? 

TSS: So, I think it's important to realise that the region is very diverse, Boon Ping. And Asia is very different from Western economies in terms of our sustainability journey. We realised this earlier on and so our sustainability colleagues came up with a rubric and they call it the transition framework because we realise you can't go from brown to green overnight. That's just not possible. That means lots of emerging markets that rely on coal power today will not have power for a while. And renewable sources, they are certainly coming in on stream very well now, but It does take time to pivot. And so recognising that it does take time for this pivot to happen, led to us creating this transition framework where we work with our customers alongside them for this journey. It could be in shipping, where we realise you don't pivot from fossil fuel to hydrogen straightaway, it is too expensive. But along the way, what kind of experimentations? Can we do? What kind of new LNG gas can you add in scrubbers. We realised that the different pathways for each industry to get from brown to green. And so understanding those different pathways, working with the industry players, whether it's in transportation, with shipping, and there are all these industry based sustainable experts, working with them to create these glide paths using technology because every industry will have their technology, whether it's renewable technology, wind farms, solar farms, helping the marine guys rejig their rigs for wind turbines in the sea. In the past, they were using rigs to dig for oil, today, they're using rigs to create winter turbines in the sea. That takes some understanding, a lot of technology investments and transitions. So the banks like us partner these players through this transition. And that means really investing time, effort, people to understanding how this framework works for every industry, what is best practice, what is the different glide paths that we can help our customers with, and partnering the industry leaders and frankly, helping the smaller players alongside each industry ecosystem to get along the right glide path and financing it as they move. So it's been a hell of a journey. But I will tell you, I've been pleasantly surprised by the speed of the pickup in Asia, really pleasantly surprised. We set ourselves up to do SGD 25 billion by year 2024 in sustainable financing. We're already at SGD 30 billion. And, and we're at 2021. So we've doubled our target to SGD 50 billion. I think we'll get there because everybody sees the vision and everybody's executing to the vision. And the industry leaders of today have taken up the leadership and the mantle. And governments have seen the impact of climate change is so obvious to all of us today, floods, fires, bushfires, incredible climate extremities, that is not tolerable, not tolerable, we can't accept it, and we've got to do something about it. Banks play a pivotal role in really moving capital in the right directions, and recognising that the direction is a transition, and helping that transition and pushing it along the right way.

FBP: And DBS is right in the thick of that building your business around this key area of sustainability. And thank you Su Shan so much today for sharing your experience and insights into how DBS has very systematically, in a very structured, for every initiative that you work on, whether it's digital transformation, or how you view ecosystem, especially the transformational nature of blockchain itself and sustainability, how DBS takes a farsighted, a very structured approach to how you make that part of your core business. 

TSS:Thank you. It was great fun to share with you, and with everyone else,

FBP: We hope that our SWIFT Sibos audience will benefit from your insights and experience as well. And thank you so much for sharing your time with us. Thank you.