DBS: Banks on Mega Trends in Pursuit of Growth

DBS bank NUS branch. (Photo: Company)

Piyush Gupta is a social media aficionado.

The urbane Chief Executive Officer of DBS Group Holdings Ltd, Southeast Asia’s largest bank, admits, with a hint of sheepishness, that he is “a bit of a Facebook stalker”.

“I read all the news feeds to keep up-to-date with what’s happening with my entire circle of friends, those from my growing-up years to college and uni,” he said with a grin.

“But instead of posting on Facebook, I message them. That’s how I stay connected.”

Gupta, 55, is a “big believer” in relationships.

The elder brother to two sisters, who are in their 50s, returns to Delhi every year to spend time with his octogenarian parents.

He and his wife, a 53-year-old physiotherapist, face an empty nest. His son, 22, is an investment banker in New York, while his 26-year-old daughter recently left investment banking to pursue her Master of Business Administration (MBA) degree in Boston.

Nonetheless, the assembling of all the members of the family in India for their annual holiday remains an important fete.

“We’ve taught our kids the importance of family, and to focus on the basics. They have been raised to be sensible, to have a sense of rootedness,” he added.

I do manage to put a lot of stuff into my day, because you have got to have fun along the way. Life is a journey, not a destination.

- Piyush Gupta
CEO

DBS Group Holdings
(Photo: Company)

Gupta, who graduated with a Bachelor of Arts Honours degree in Economics from Delhi University’s St Stephen’s College, is passionate about making his life count.

“Having a sense of purpose is very important to me as an individual. You’ve got to have a sense of true north – how or why you are doing something, and what is the impact on others,” said the holder of a Post-Graduate Diploma in Management from the Indian Institute of Management in Ahmedabad.

“I want to make a difference, and play a meaningful role.”

Innovation is also crucial to progress, he added. “I hate status quo. We have to constantly strive to change for the better. The difference between managing and leading is how to take things to a better place.”

This philosophy is reflected in how DBS is building a culture of change, said Gupta, who is known for being “scary smart”.

“Traditionally, innovation or change hasn’t been one of DBS’s strengths; we tend to be somewhat bureaucratic, but over the last few years, we’ve worked very hard at creating a differentiated culture, a culture around customer journeys and rapidly embracing innovation.”

And it’s encouraging that this ethos is finally beginning to seep through the bank, giving DBS some of the flexibility that Internet companies have. “I think this is going to be a big game-changer for us going forward,” he added.

We want to build a large regional platform to bank SMEs on an industrial scale. Most people bank SMEs like cottage industries. We’re trying to commercialise the scale of that.

- Piyush Gupta
CEO

DBS Group Holdings

Looking forward, the bank’s biggest challenge in the short and medium term is managing the new Internet world.

“The value chain in finance is increasingly getting disrupted and dislocated. Alibaba, WeChat, Apple, Tencent, Google – these new providers are coming into every part of the business, whether it’s lending, payments or risk management.”

This is the “clear and present danger” facing the banking industry.

“If we don’t respond suitably by digitising our own offerings, by re-imagining the customer’s journey, and leveraging new technology to give them a differentiated experience, we are going to die,” Gupta said.

Unfortunately, this particular challenge comes with extra twists.

For one, banks and other legacy companies may not be agile or reactive enough, which in turn raises the question of how to create the right culture that allows them to emulate start-ups.

The next problem is cybersecurity.

“We want to digitise everything, but in this business, we are guardians of people’s money. We need to be very careful about cybersecurity as hackers are a big, big issue,” he said.

Needless to say, managing the technology challenge is at the top of DBS’s agenda. “If we don’t get this right, we can be completely irrelevant to our clients in the next five to seven years,” he added.

Regulation is another complex issue.

“The whole regulatory artifice got reconstructed on the back of the financial crisis, and it’s something that’s still being worked on. The changes are rapid and arbitrary – one step forward and one step back, and nobody knows where we’re going,” Gupta said.

It has been difficult to navigate within the plethora of rules. “Some of these rules are also creating a bias towards ring-fencing and protectionism. That creates its own set of problems for running a bank.”

But in many respects, DBS has what it takes to come out on top, Gupta said.

“We are very, very strong financially. Our pedigree – because of the 29 per cent shareholding by the Singapore government – is very good, and we have a lot of liquidity.”

And in a world of heightened uncertainty about counterparty risk, DBS’s financial wherewithal is a big competitive advantage.

Another plus for the bank is its “Goldilocks” size. “Not too hot, not too cold,” Gupta quipped, displaying one of his flashes of dry wit.

“We are big enough to matter, ranking among the top 50 banks in the world. We have clout, with a S$400 billion balance sheet. At the same time, because we operate in only seven to eight countries of any size, and our businesses are very simple, we operate nimbly and respond swiftly,” he said.

“We saw that when China opened up the offshore renminbi and its bond markets. We sensed the opportunities early and organised for them very quickly. ” 

What is important is the ability to look or think through cycles. If you change your strategy every time the region has a slowdown, you would not have the consistency and continuity you need to build a long-term franchise.

- Piyush Gupta
CEO

DBS Group Holdings

• Second-half outlook has some uncertainty, but loan and business pipelines remain healthy.
• Increased dividends (1H dividend of 30 cents a share vs 28 cents in year-ago period) reflects DBS’s confidence in the sustainability of its earnings.