Singapore-based DBS Bank wants to be an invisible agent of change in the realm of digital banking. Over the course of a decade of transformation, it has received awards and recognition worldwide for its digital banking services and innovation efforts.

Digital customers made up 42% of the bank’s total base in 2017, but contributed 63% of income and 72% of profit before allowances, according to the bank.

David Gledhill, chief information officer for DBS, in an email interview with Bank Innovation, outlined the bank’s quest to make banking “simple and seamless” for its customers. This conversation has been edited for brevity and clarity.

Bank Innovation: What prompted DBS’s digital transformation and what made these changes possible?

David Gledhill: We started our transformation journey around ten years ago, and we’ve made good progress. To be truly digital, we needed to transform the bank entirely, from the front-end to the back-end. We needed to start with a rock-solid foundation of core systems to build new technology, products and services on. DBS spent the first five years of our transformation journey putting in common platforms. Once that was done, we could then start to accelerate and scale, and this increased our speed to market and increased our cadence. The next five years were spent building our capabilities so we can operate on par with the tech giants. If we wanted to be digital to the core and act like a tech company, we needed to learn from the best in the business. These were Google, Apple, Netflix, Amazon, Linkedin and Facebook. Our mission was the become the ‘D’ in GANDALF.

BI: What’s been the largest culture change at the bank as a result of that shift?

DG: At the start of our journey, we knew we had to change the culture of the company. While it is important to build the technology, the hardware, it is even more important to equip our employees, the “heartware,” with the right skills. This is why we have invested SGD 20 million over the next few years to transform our employees into a digitally-savvy workforce. This is done through an AI-powered e-learning platform, experiential learning programs such as hackathons, grants and scholarships, and innovative learning spaces.

BI: How (and why) does DBS measure digital value creation?

DG: The goal of developing digital value capture was to answer a few questions – what digital transformation does for the bank itself, what it does for customers and what it does for shareholders. In developing this methodology of measuring a digital customer, we looked for the following behavioral criteria. The customer opened an account or purchased products via digital channels, conducted over 50% of financial transactions via digital channels, and conducted 50% of non-financial engagement (account information updates) via digital channels. Once digital and non-traditional customers were defined, DBS examined profit and loss over a period of three years.

BI: How does measuring the financial impact of digitalization, or the value of digital customers vs. traditional ones, help guide innovation at DBS?

DG: The digital value capture findings have demonstrated the real impact of digitalization within the bank, across departments. Through our digital value capture methodology, we have been able to draw up an effective business model to encourage digital behavior among customers, making it simpler for customers to engage online. As customers increasingly adopt digital behaviors, we are able to reduce reliance on physical infrastructure such as branches to support customers. With more of the income earned from customers contributing directly to the bottom line, this has enabled us to optimize enterprise costs over time. This allows the ultimate beneficiary to be the customers.

BI: What is DBS’s in-house incubator?

DG: Startup Xchange is part of a five-year SGD 10 million ($7.3 million) investment made by the bank in 2015 to support the development of startups. Since its pilot launch several months ago, Startup Xchange has successfully matched 21 startups with units within the bank as well as the bank’s SME clients to solve business pain-points. This has resulted in the successful rollout of 10 emerging technology solutions to-date, with another 10 solutions expected to be launched over the next 12 months.

BI: In reference to DBS’s #DisappearingBankofSingapore and #MakingBankingInvisible campaigns on social media, why does DBS want to “disappear” and what does “invisible” banking look like?

DG: By understanding the customer’s Jobs-To-Be-Done, seeing things from their point of view, banking can become so seamless that it becomes invisible. The whole idea is to make it easy for customers to buy from us, to use our products, and create stickiness in customer behavior so that we can cross-sell a lot better. At the heart of it all, we want our customers to live hassle-free with invisible banking. With an API-driven architecture, human-centered design, cloud technology, data analytics, we’re able to create better products and services for our customers.