The launch of DBS’s all-digital bank in India last year is as much a transformation of the bank’s operations as it is meant to be a new customer experience – so much so that the digital bank is changing ‘operations’, traditionally a behind-the-scenes plumbing job, into a function focused on customers.
Michael Power, managing director at COO for technology and operations at DBS in Singapore, says the goal of the paperless bank is the de-facto end of the operations department itself.
This does not mean firing the 1,200 people working in the bank’s Singapore back office, although it does mean changing what they do.
Nor does it mean that operations people will now interface with customers, aside from call centers, which for now continue to field calls.
Digibank was introduced in 2016 as India’s first paperless, all-digital bank. It has since onboarded 1.2 million customers, although it also prompted domestic competitors to quickly roll out competing versions.
What’s a back office for?
From a COO’s perspective, the goal of a paperless bank was to cut operational cost down to 10% of those of DBS’s traditional, physical bank branches (it has 12 in India).
Operations has traditionally been about taking orders; it’s largely manual work. But Power says as customers increasingly bank via mobile or desktop, back-office functions should disappear. Order fulfillment becomes all automated and without failure, and therefore customers won’t need to place calls when things go wrong. Part of his job is to design the business to reach that goal.
“The purpose of operations isn’t just about processing instructions,” he told DigFin. “It will be about customer journeys, which we manage and monitor in real time.”
Instead of paper pushers, his division is gradually turning itself into a hub of ‘customer science’ specialists who combine user behavior with bank data and product performance, in order to try to understand what customers are experiencing – or what problems they are likely to run into, so the bank can try to mitigate a crisis before it happens.
That doesn’t match the reality of digibank in India, although Power says the launch has enabled big strides. He says it hasn’t met the goal of reducing costs (including headcount) to 10% of traditional banking, but it’s probably brought them down to below 30%, which is still a big number.
Taking customer calls
The holdup is the need for call centers. An important facet to rolling out digiBank was including a chatbot for customer service. The chatbot is provided by U.S.-based Kasisto. Success has been mixed. Power says there are still people who instinctively reach for a telephone when something goes wrong: he says now more than 80% of queries are handled by the chatbot, but the goal is to raise this to 90% or higher.
“We need to address who is ignoring the bot, and we’re looking into that,” he said. “It’s not clear why some people resist, but our goal is to eliminate failure-demand”, which is his term for getting rid of errors or bumps that require a customer (usually irate) to seek human help.
Part of the solution will reside in improving the user experience, Power says. (A Quora website page dedicated to user comments on digiBank in India finds many positive comments about it, including the 7% annualized interest rate on deposits that DBS is paying, and the paperless process. But the most consistent complaint is about the chatbots and the perceived lack of any human service.)
The COO has a part in getting this right. “We are designing our department for ‘no operations’,” Power said, meaning the elimination of the paper-based work the back office does for traditional banking. But that doesn’t mean layoffs, he says.
“It means instantaneous fulfillment, zero failure demand, and a unique customer experience. We’re now doing customer science, designing the journey, and data analytics.” The back office will spend its time monitoring customers using the digiBank app in real time, and ensuring they are serviced properly, in specific ways, at scale. It’s a different kind of mission.
Expanding the digital bank
The ability of the back office to support this kind of transformation will determine how quickly other parts of DBS’s business can go digital. For now, digibank in India is a limited service: it’s good for money transfers, paying bills, and ATM services. But digiBank is not yet a primary deposit bank for most of its customers because it doesn’t provide lending, mortgages or credit cards. Some of these are on the drawing board now, Power says.
The longer-term goal is to migrate some, or perhaps one day all, of the traditional banking services to digiBank. The high-touch nature of dealing with wealthy clients means a complete transformation is unlikely, but DBS wants to bring tools such as robo-advice and chatbots to the traditional business.
And getting the service right – using customer data to figure out what product to offer to whom, and when – will become the competitive battleground. Within months of digibank’s launch, domestic banks were rolling out their own paperless, mobile-friendly offerings (and everyone is competing against P2P giants such as Paytm, which has itself recently gotten a payments banking license).
Once DBS works out how to add lending to digiBank, presumably competitors will soon follow. So it’s not the product, but the customer experience and the quality of tools such as chatbots that will become the new arena – which also includes an operations team capable of supporting these.
Moreover, digibank may have begun in India last year but aspects of it are being introduced to the other markets where DBS operates. A similar offering is available in Indonesia, but the bank is also rebranding its online presence in its core markets of Singapore and Hong Kong with digibank apps.
However, it has not yet rolled out a completely paperless version in these developed markets. Instead the plan is to digitalize aspects of it, such as with mobile payments, but the bank operates largely in a traditional manner, partly because customers in Singapore and Hong Kong are used to doing business that way. Meanwhile in China, it’s harder to make an India-style splash, because of the presence of dominant internet finance companies. (Uptake of the digital bank in India was also facilitated by the country’s introduction of Aadhar, its biometric identity database.)
Power acknowledges the shift to digital banking has not been smooth: digibank is limited in its products, it has to offer high rates of interest to attract customers, and the artificial intelligence driving services is a work in progress.
“But we view our success in attracting 1.2 million customers [in India] is proof that the shift to digital is working,” he said.