Chng Sok Hui: The way it started is the realization that we were not just a bank, we were becoming a technology company. DBS Bank Chief Information Officer David Gledhill shares his insights on DBS’s digital transformation with McKinsey’s Vinayak HV, a partner in the Singapore office. In a 2012 report (PDF opens), called “Digital transformation in 10 building blocks to boost customer experience and ROE”, the Efma (a financial industry organization promoting innovation in retail banking) and McKinsey indeed stated retail banking was lagging behind in digitalization/digitization. . They had big systems. It seems much of the Fintech action in recent years has been in retail banking and for the casual observer, the digital transformation of commercial and corporate banking still appears to be stuck in the analog world. How do you build infrastructure engineering? Abstract Digital Transformation is far beyond just moving from traditional banking to a digital world. This interview was conducted by Vinayak HV, a partner in McKinsey’s Singapore office. Third, you have to really think about organizational constructs: How does DevOps work? So we started to learn how the best technology organizations operate, how they build technology, and how they move quickly. . Persistently low interest rates had forced banks to revise their business models and seek out new sources of revenue. I remember we had human-centered design thinking. That was hard for us to accept, actually. collaboration with select social media and trusted analytics partners The other thing we did very well I thought was customer-journey thinking, and thinking about the customer. We also learned about their culture and which cultural elements we could take on board and shift. But how do you build a mobile-only bank in India and attract customers at scale? Vice President - Digital Banking and Transformation at Axis Bank | Ex-McKinsey Mumbai Area, India 500+ connections. And we remind ourselves that it’s not only the executives at the top, that it’s not just the IT folks, that it’s not just the business folks, it’s everyone. Sengupta: Do you see any impact on the culture of the organization? The first thing is that most of these technology companies started much like where we are today. I just had a review meeting with one of the business units today and they were talking about the way they go about trying to accelerate digital adoption; so, for a traditional customer, how do you introduce incentives, products to attract them to buy a digital product? These last two points were just as important as the first one. So how do you attack a market of a billion people? And I would not necessarily focus on the pet projects. Things worth reading: 26th November 2020. Without those clear missions, we’d have had people going in all sorts of different directions. Because a lot of these metrics that fintechs and competitors put out is the rate of growth of the digital customers, it is the metrics around conversion, it is the metrics around income per customer, and how it was building up . Never miss an insight. Learn about Once you're clear on that, the rest starts to become very easy. People create and sustain change. He also plays a lead role in driving the bank’s innovation agenda, which encompasses design thinking, agile methodology, data analytics, fintech partnerships, and hackathons etc. September 14, 2020. business management consulting firm McKinsey & Company, 70 percent of banks have digital risk “prominently on their radar.”1 RSA believes the critical question is whether FIs will confidently pursue the opportunities digital transformation presents, or focus instead on the risk it creates. tab. The second was: how do we embed ourselves in the customer journey and push customer-journey thinking throughout the organization? One is how we digitized to the core. And we said to ourselves, “If we want to be digital to the core and act like a technology company, it’s best we learn from the technology greats, figure out how they do it and see if we can’t bring in some of those things internally.”. It’s a collective and collaborative thing to come up with each person’s scorecard and the weightings of those. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. We'll email you when new articles are published on this topic. Change, that is, that applies to: Today, the … Please click "Accept" to help us improve its usefulness with additional cookies. I understand how to create a mortgage product and sell it, and I know how to build systems for it. Unleash their potential. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. Chng Sok Hui: The key is to be able to translate operational metrics. Our flagship business publication has been defining and informing the senior-management agenda since 1964. We were trying to figure out how to scale our presence in India, where we had very few branches. How do you build business-ops teams, and how do they interact? So you have to balance it. It was very clear, something people could act on, and that drove massive change through the organization. Press enter to select and open the results on a new page. So you’d have these meetings and people would ask, “How could we possibly not have known that?” Well, it’s an experiment. We were able to show that digital customers had two times higher income per customer compared to a traditional customer. The ability to expand beyond traditional financial services … Transformation could consume every hour of every employee in the company for the next five years. DBS Bank recognized that digital transformation doesn’t just mean building a new website or putting on “digital lipstick,” as their CIO said in an interview with McKinsey. We'll email you when new articles are published on this topic. Now first of all, we had no clue how it was going to work. Of course, we don’t know. McKinsey senior partner Joydeep Sengupta, leader of McKinsey’s Strategy, Organization, and Corporate Finance Practice, sat down with Chng Sok Hui, DBS’ Chief Financial Officer, to discuss the bank’s approach to digital transformation. David Gledhill brings to his leadership roles at DBS Bank more than 25 years of experience in the financial-services industry, 20 of them in Asia. Use minimal essential So, test and learn, test and learn, test and learn was the only way we could get into a brand-new market with a product that we had simply no idea how it was going to operate when we launched it. There is a critical need for affordable computing platforms that provide greater agility. As head of Group Technology & Operations at DBS, David manages about 10,000 technology and operations professionals across the region and is focused on making banking simple and seamless for DBS customers by changing the company’s internal culture, re-architecting its technology infrastructure, and leveraging big data, biometrics, and AI. But for the analyst to translate that more concretely into a valuation model—because these are not technology analysts, these are banking analysts—the way that we have communicated is: how these operational metrics translate into a lower cost-to-income ratio. Please use UP and DOWN arrow keys to review autocomplete results. Chng Sok Hui: We have been running this digital value creation metric coming to five years now, and I think the value that I can see out of this is that the businesses themselves are very passionate about it. Select topics and stay current with our latest insights. tab. our use of cookies, and We saw many companies put on digital lipstick, some kind of front-end system, and a fancy website. The first is to create a separate internal organisation with a remit to develop new digital products and services, unencumbered by the bank’s existing legacy processes and technology. Why hasn’t digital transformation in banking gone far yet? The digital transformation of any enterprise is a herculean task requiring a willingness to embrace cultural change, the ability to immerse the entire organization in the customer journey, and a total commitment to digitize to the core. The top part of the scorecard is all financial metrics, customer metrics, shareholder value-add, and revenue generation. In their struggles to get digital transformation initiatives over the line, banks typically take one of two approaches. The main problem, paradoxically, is that legacy solutions still work. According to the Mckinsey survey, financial service executives across the world believe enhancing customer experience is the top priority for digital transformation projects, 76% of participants value investing in customers while 16% prioritizes productivity and operational cost reduction in digital transformation strategy. A shift to digital use of this magnitude would probably have taken at least a couple of years without the Covid-related branch closures, according to McKinsey. Never miss an insight. 10 hours ago. When we thought about how we wanted the business to digitize, we came up with a very simple framework of Acquire, Transact, Engage—customers Acquire digitally, Transact digitally, Engage digitally—and drove metrics around that. Making money out of a crisis. Use minimal essential Furthermore, participation by senior management … Sengupta: How convinced are you now of its robustness? all these are good metrics. Flip the odds. Below that we have the strategic initiatives we need to get done, and that’s another 40 percent. We came up with a mobile-only offering. Digital transformation has become a matter of survival. Back to Banking & Securities matters Becoming more than a bank: Digital transformation at DBS In an interview with McKinsey’s Joydeep Sengupta, Chng Sok Hui, Chief Financial Officer of DBS, discusses how mindsets and culture are just as important as technology for a digital-forward bank. collaboration with select social media and trusted analytics partners So what’s the difference in your approach versus what the other banks are doing? Digital transformation should not only help them increase customer satisfaction and prepare for the new age of banking, but also to generate more profits. So big transformations like automated lending into India or how to transform future-ready employees, go in that box. Subscribed to {PRACTICE_NAME} email alerts. It is a vital change in how banks and other financial institutions … Then you fund the platform, look at what outcomes that platform can give, and set it free. Finally, how do you automate everything from testing through deployment to increase cadence? Please try again later. The middle part is where the core of the digital transformation comes in, and we ascribe 20 percent of the value of the scorecard to this, which is then used to drive compensation for the company. They were hard to shift, and they went through this whole transformation agenda, and along the way, built a load of tools that we thought we could also use. McKinsey on digital transformation in banking (free research) I only just stumbled across this 124 page report from McKinsey and, building on yesterday’s free research from Deloitte, this report is all about digital transformation and replacing core systems, my favourite subject. So today when I look back I actually see an awesome culture change that has actually happened. If you can crystallize that down to a message that everybody can grasp on a single page, then you have something very powerful that you can start to push on.When we looked at customer service, for example, we came up with RED: Respectful, Easy to deal with, Dependable. Solutions considered ahead of … Reinvent your business. And the way we balance it is through group scorecards, which really drive everything we do and clearly indicate to people the amount of time we expect them to spend on certain areas. The other thing that I think we are beginning to do very well is to understand which processes are truly digital. Please use UP and DOWN arrow keys to review autocomplete results. Now that might sound a little cheesy, but in actual fact, it was an amazing rallying call to our people. No idea. With that, you can really start to practice agile at scale. If you embed that into the KPIs and scorecards that everybody’s measured by—and make sure it’s continually reinforced from the CEO and the leadership team down—then you get results and can shift and move. We use cookies essential for this site to function well. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Welcome to The Finanser by Chris Skinner. Build a Digital Driven Organization. For example, our DBS remittance product: it’s fully digital, and therefore whatever additional customers you acquire, additional number of transactions, actually the benefits flow through to the bottom line. Please try again later. The first letters of Google, Amazon, Netflix, Apple, LinkedIn, and Facebook together spell GANALF. You then have to think about how you engineer the technology and how you build for modern systems that are scalable, elastic, and made for experimentation. In a digital driven bank or credit union, digital is treated as a … Joydeep Sengupta: One of the things that people like most about DBS’s digital transformation journey has been the fact that it is able to communicate the value that you’ve captured through this process. Something went wrong. People create and sustain change. The core group building the digital bank should have a solid understanding of not just the new technology architecture, but also of the bank’s design and brand and the economics of its business model. Digital lipstick, some kind of front-end system, and that drove massive change through organization. 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