Things are changing fast in banking. This is not news. In parallel, we see rapid technology change. No news there either. The interaction of these two changing spheres provides a fascinating spectacle of transformation and evolution, what you might call an inelegant ballet of change. Fintech and challenger banks are nipping at the heels of the incumbents, pushing them to create better services and experiences for customers. Meanwhile tech is changing overnight with advances in AI, Cloud and IoT putting pressure on banks to be “fully digital”.

Whether financial services is ready for this double whammy of new tech and new banking or not, customers certainly are, and they expect the best experience at any and all touch points – branch, app, website, and contact centre. Most likely, the winning banks will be those who aren’t afraid to shake the status quo and commit to making tech developments early on.

In response, many banks are making shifts to the cloud. There are risks here, but undeniable advantages too, and the big players in financial services are doing it already, or at the very least playing catch up. At a recent investor briefing, RBS CEO Ross McEwan said “Our plan originally had not been to go to the cloud with a lot of our technology […] Our analysis to date shows there is good advantage for us from a flexibility and from a pricing point of moving it to the cloud […] If we don’t start moving today you actually have to renew all these centres again, again and again. So that’s what’s pushing us to thinking about more transformative activities of core banking activity up into the cloud.” Other traditional banks see the advantages too.

One bank that has taken on accelerated transition to the cloud is DBS (Development Bank of Singapore). With half its computing power already in the cloud, DBS’ success is credited to the healthy cocktail of starting early, resisting complacency, and an unfaltering focus on staying relevant to its customers. If you haven’t already heard about South East Asia’s biggest bank, here’s what you need to know, courtesy of The Economist:

  • DBS began overhauling its processes and computer systems in 2009, before starting to build a “digital bank” in earnest in 2014.
  • DBS’ share price has roughly doubled in the past two years, overtaking the gains of main rivals Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB).
  • DBS’s retail banks in Singapore and Hong Kong account for 44% of revenue, up from 38% in 2015 and likely to climb.
  • DBS divides customers into “traditional” and “digital” types, who deal with the bank mainly online. Customers qualify as digital if more than half of their dealings with DBS take place remotely i.e. Checking their balance, making payments, buying foreign currency.
  • Of its 5.9m retail and small-business customers in the Singapore and Hong Kong, DBS counts a whopping 2.3m as digital, up from 1.9m in 2015.
  • It costs more, per person, to serve them, the digital customers, than the traditional ones: each group soaks up S$1.1bn ($840m). But the digitals bring in more revenue, S$3.1bn against S$2bn, and hence account for two-thirds of the bank’s gross profit of S$2.9bn.
  • DBS is earning 3.4 times more on mortgages, and 2.6 times more on credit cards, from digital clients than it does from the traditional types.

So it appears that is how it is done. But what if you are catching up? ContactPartners is an AWS Partner at the forefront of cloud transition work. Our sweet spot is customer touchpoints in financial services, and we specialise in creating customer engagement applications in the cloud, or converting and transitioning current ones to this new world.

Our clients include the biggest names in the high street, and if you are in the midst of the “inelegant ballet of change” we described in opening this blog, feel free to get in touch for an informal discussion. We would be happy to share with you a few ideas on dancing your way to success.

Gibert Toppin

Non-executive Chairman

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