DBS, the notorious slow bank… Transformation into the world’s largest digital banking

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Singapore Development Bank (DBS) employees are participating in the’DBS Hackathon’, which develops financial apps while discussing with startup officials. DBS provided

Kakao Bank attracted investment from TPG, a foreign private equity fund, last month, and was valued at 8,58 trillion won. It is a scale that exceeds Woori Finance, the 4th largest financial holding company (approximately 7 trillion won in market capitalization). In the OTC stock market, the value of Kakao Bank once soared to 40 trillion won. Kakao Bank, whose share of the banking market is only 1.1% (based on loans), was recognized as a’monster ransom’ because of the expectation that it will become better in the future. Kakao Bank has attracted 10 million subscribers within two years of its inauguration, with the convenience of linking with Kakao Talk, a’national messenger’.

In addition, the company is rapidly diversifying its profit structure with its unique cross-sectional strategy. In April, the number of credit cards issued in partnership with Shinhan, KB Kookmin, Samsung and Citi Card exceeded 400,000. Stock trading accounts for Korea Investment, NH Investment, and KB Securities opened through Kakao Bank exceeded 2.6 million.

Financial leadership, heading towards a technology company

DBS was notorious for the'slow bank'...  Transformation into the world's largest digital banking

The leadership of the financial industry is focused on the’one with the platform’. Big Tech (large internet company) represented by Naver and Kakao is stepping on an accelerator to enter the financial industry. Fintech startup Toss has also transformed into a’digital financial holding company’ in 5 years. After entering the insurance sales business and electronic payment business, it will open Toss Securities and Toss Bank in 2021.

The driving force behind Toss’ rapid growth also comes from a platform with over 18 million members. As subscribers flock to the cards, loans, and insurance that this company introduces, the bargaining power in the financial market has strengthened. Toss Securities is known to benchmark the US stock trading platform’Robin Hood’.

In the traditional financial sector, there are even concerns that “isn’t this a company that supplies financial products to the platform?” With the introduction of open banking, my data, and my payment one after another, it is becoming a difficult environment to check the entry of fintech and big tech.

30,000 R&D personnel, Ping An Insurance’s success

The CEO of a life insurance company, who recently met with a reporter, confessed, “I’m trying to grow online, but I don’t like it.” 99% of domestic life insurance is sold through planners. It is common to open a’non-face-to-face channel’ ambitiously and then quietly close it. Kim Ja-bong, a senior research fellow at the Financial Research Institute, said, “Financial companies have made a lot of effort to develop platforms, but they are still insufficient.”

Even abroad, it is hard to find a precedent for traditional financial companies to settle in platform business. It means that it is that difficult. One of the few successful cases is China’s Ping An Insurance.

Ping An Insurance is evaluated for being reborn as a technology platform company through active technology introduction and business expansion. The company has invested $7 billion in research and development (R&D) over 10 years. The number of R&D personnel is 32,000, of which more than 2,200 are scientific level. As a result, artificial intelligence (AI) analyzes the traffic accident photos, extracts a repair cost estimate within 3 minutes, and reads the expression of the loan applicant and uses it for screening.

DBS absorbing AI cloud experts

The Singapore Development Bank (DBS), the largest bank in Southeast Asia, also set a precedent that even large banks can succeed in digital transformation. DBS had to send out 40,000 employees in the aftermath of the global financial crisis 10 years ago, and the waiting time was so long that it was ridiculed as a’damn bloody slow bank’. But now, it is a good example of digital transformation, which domestic financial holding chairmen often refer to.

One of DBS’s striking strategies is’Innovation through Openness’. Since it was determined that there was a limit to the internal manpower alone, external experts were assigned to key positions, such as the Chief Innovation Officer (CIO). The’DBS Hackathon’, where employees gather with external startups to develop financial apps for five days, has become a representative event of the bank. It also launched platforms such as used car trading and housing finance in partnership with companies from different industries.

DBS is targeting the world’s largest digital bank. To this end, it has recently decided to select 2,000 more experts in fields such as AI, cloud, and data analysis. Ryu Chang-won, a research fellow at Hana Financial Management Research Institute, said, “Data is the core competency of big tech.”

Reporter Lim Hyun-woo [email protected]

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