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Finance

Singapore's DBS explores metaverse in digital push

Bank's CIO says technology will be 'game changer' in finance industry

DBS intends to have a major presence in the metaverse, in which people interact as digital avatars in a virtual world.

SINGAPORE -- Singapore's DBS Group Holdings is looking for ways to bring banking services to the metaverse, the company's chief information officer said, as Southeast Asia's largest bank continues to invest heavily in its digital transformation.

CIO Jimmy Ng told Nikkei Asia in an online interview that DBS has been investing about 1 billion Singapore dollars ($730 million) annually in technology over the past decade in areas such as the cloud and artificial intelligence, and will maintain that amount of tech investment.

The metaverse is a concept championed by the likes of Microsoft and Facebook parent Meta in which people interact as digital avatars in a virtual world.

"There are a few key technologies that we are looking at. One of them, of course, is the metaverse," Ng said. "We are actively exploring this space even as it evolves."

Ng did not go into detail on how the bank plans to tap the metaverse's potential, but hinted that non-fungible tokens -- blockchain-based tokens that represent a unique digital asset -- could play a part. NFTs, he noted, are traded between online game players and between different metaverse platforms. "We believe that this is one of the areas that we can actually look at," he said.

While he did not specify when and what services the company might offer, Ng said that "the way we do banking can be imported to very different platforms, such as the metaverse."

DBS Chief Information Officer Jimmy Ng (Photo courtesy of DBS)

"We believe that over time, emerging technologies such as blockchain, [augmented reality] and [virtual reality] will converge to create very interesting use cases that we have never imagined," he said. These technologies will be "game changers" for the industry over the next few years, he added.

The metaverse is already drawing attention from other major banks. JP Morgan recently opened a metaverse "lounge" with an eye toward using it to offer financial services.

"The success of building and scaling in the metaverse is dependent on having a robust and flexible financial ecosystem that will allow users to seamlessly connect between the physical and virtual worlds," the U.S. bank said in its own report on the metaverse. "Our approach to payments and financial infrastructure will allow that interoperability to grow."

DBS started its digital transformation close to 10 years ago, Ng said, with 60% of customers now using its digital banking services.

DBS was named "the world's best digital bank" last year by U.K.-based financial publication Euromoney. Digital investment totaled SG$4.8 billion over the four years through 2021, according to the bank.

The company has about 10,000 tech engineers, comprising about 30% of its workforce, with most based in India or Singapore. Ng said the bank's tech team is growing at a pace of about 1,000 employees each year. "Over time, technology is going to be very pervasive in almost every aspect of financial services."

Digital capability is increasingly important for DBS, especially as Singapore's regulators are leveling the playing field with technology startups.

Nasdaq-listed Grab and New York Stock Exchange-listed Sea, who both won digital banking licenses from Singapore's Monetary Authority in 2020, are expected to launch digital banking services this year. The two will challenge traditional local banks such as DBS, Oversea-Chinese Banking Corp. and United Overseas Bank.

These newcomers are expected to capitalize on their huge existing customer bases -- including individuals and small to midsize enterprises -- to provide low-cost and personalized digital services, including loans and wealth management.

When asked about competition from rivals, Ng said: "To me, what's more important is not thinking about what technology is better or whether you have better technology compared to our competitors. It is how we apply technology to the customer journey and experience."

The bank's digital push has not been without hitches. Its online banking services suffered a two-day disruption last November, with the Monetary Authority later noting "deficiencies in [the bank's] incident management and recovery procedures." Ng said in the interview that DBS takes has "taken serious steps to review and improve our resilience and incident response."

Meanwhile, Singapore in early March announced financial sanctions against Russia after its invasion of Ukraine, prohibiting all financial institutions in the city-state from conducting transactions or establishing business relationships with four Russian banks, and requiring them to freeze the assets of those four banks. Financial institutions in Singapore were also barred from providing fundraising-related services for the Russian government, the central bank of Russia or entities controlled by them.

Asked about the sanctions' impact on DBS, Ng said DBS "complies with all applicable sanctions, including Singapore's recent actions, which are incorporated into these systems and processes to ensure compliance and to detect attempts at evasion."

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