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Finance

Singapore's DBS bulks up digital banking with AI and big data

Southeast Asia's largest lender goes on offensive as new rivals loom

DBS has spent SG$4.4 billion over the last four years on technology as it tries to meet a target of growing its investment income in wealth management to 25% annually.   © Reuters

SINGAPORE -- Southeast Asia's largest lender DBS Bank is betting on artificial intelligence and big data to shore up its digital offerings, as new rivals are set to enter its home turf in Singapore on the back of new licenses offered by the local central bank.

DBS on Monday said it was adding predictive technology to its mobile applications, which will proactively offer suggestions to customers on how to more effectively manage their money or cut losses on investments.

The move is the latest in a series of steps DBS has undertaken to modernize its services. In 1997, it became one of the first in Southeast Asia to introduce internet banking.

"We will continue to disrupt ourselves so that we can continue to stay ahead -- these days if you don't innovate, you will simply be passed by because the industry is moving so fast," said Sim S Lim, group head of consumer banking and wealth management at DBS during an online briefing.

The bank is keen to hold on to its position as one of the anchor financial institutions in Singapore and has steadily been investing in developing its electronic banking assets even as new rivals threaten to chip away at its standing.

A range of local and overseas financial technology and internet giants, including China's ByteDance -- owner of video-sharing app TikTok, as well as Alibaba Group Holding's Ant Financial, have entered into varying partnerships to bid for five virtual banking licenses in Singapore.

The city-state's central bank is evaluating the bids and expected to announce the winners later on this year. The stakes are high -- those permitted to operate will be able to tap a market worth almost $2 trillion.

There are two digital full bank licenses on offer that would allow entrants to take deposits from and provide banking services to both retail and non-retail customers. Three wholesale bank permits will also be issued that will allow institutions to receive deposits from and provide banking services to non-retail customers, including small- and medium-sized enterprises.

Full digital bank license applicants must be headquartered in Singapore and controlled by local entities, meaning that overseas players will have to form partnerships with companies in the city-state if they wanted to bid.

Singapore hopes that pure digital banks will be able to combine advanced technologies and improved data analytics to reach underserved segments of the market that differentiates them from existing banks.

Companies seeking the digital full bank licenses must have starting paid-up capital of 15 million Singapore dollars ($11 million) before progressing to becoming a digital full bank with paid-up capital of S$1.5 billion.

DBS said on Monday that by the first quarter of next year, it will have launched a suite of new features in its apps that will cover suggestions on stocks that its system determines are suited to a client's investment habits, and give customers the ability to pay all their monthly bills in one step, instead of separately.

"We are now on the offensive, telling you how to help manage your money and how to plan your retirement, so that part I hope we can differentiate ourselves [from the competitors]," Lim said.

DBS has spent SG$4.4 billion over the last four years on technology. Lim said the target was for investment income growth in his business to be raised from around 10% annually to 25% as a result of all the efforts poured into digital banking.

On the human resource side, the bank has collaborated with cloud computing provider Amazon Web Services to help develop skills in AI and machine learning for its staff, with more than 3,000 employees, including senior executives, set to be trained in new technologies by the end of the year.

The bank said it has seen a surge in virtual banking engagements amid the new coronavirus pandemic. It reported that between January and May, transactions on its retail digital platform surged by 220% year-on-year, with transactions on its wealth management system jumping 198% compared with the same period last year.

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