The Better the Question
Should adapting services to a customer always be at the top of a bank’s agenda in every market?
DBS Bank‘s internationalization strategy is built on the cornerstone of a customer-centric digital platform which goes beyond banking by focusing on the customer’s lifestyle and evolving needs.
March 20161 marked a watershed moment for DBS Bank as it launched its innovative full-stack digital banking platform, the digibank, in Singapore. In the first two weeks of its soft launch, the app had seen more than 200,000 downloads2.
Within a year, DBS Bank had expanded the app across two high growth markets: India and Indonesia. Today, the bank is servicing more than two million online users in both countries and is expecting 8.5 million customers by 2021 – and none of them would ever set foot into a DBS branch.
A USD 375 billion3 asset size bank which serves more than 80% of Singapore’s population, digibank represents a FinTech-led strategy for entering new markets and growing organically, and to move forward in a digital-led economy and getting more embedded within their customers’ lifestyle. It is meant to manage customer digital engagement and provide a range of services centered on the evolving life needs and lifestyle of the customer.
For DBS, payments and transaction enablement was a starting point in many markets, in order to acquire customers and create stickiness. Over time, digibank is expected to evolve to offer the entire suite of banking services and more. This is what lays behind its ‘Live More, Bank Less’ vision.
EY has been a proud collaborator to DBS in this journey, advising on the formulation of strategy for Indonesia.
The battle for the Indonesian customer
It is evident that the increasing use of technology is changing consumer behavior in Indonesia. Despite being mostly unbanked, Indonesia boasts a young and tech-savvy population. The country has over 106 million social media users who make over 3.2 million paid online transactions per day4 on social media and e-commerce websites. Although most consumers still make payments through bank transfers and cash-on-delivery, it is observed that many people are already using or interested in internet banking.
Capitalists and entrepreneurs have surely taken notice, with some of the region’s largest tech-unicorns based here, including Go-Jek, Tokopedia and Traveloka. Some of the largest FinTech conglomerates in the world, including Alibaba’s Ant Financial, Tencent and Softbank, have made significant investments in this market. The local conglomerates, including Sinarmas Group, Salim Group and Lippo, too have launched their own digital propositions, to form protective moats around their ecosystems. The battle for the Indonesian customer’s attention is on and it is anything but pretty.
In this highly-competitive environment, EY worked with DBS to answer the following questions to form their growth strategy in Indonesia:
- What business propositions will solve the customer’s key and urgent pain points today?
- What use-cases will give digibank a distinct value proposition to differentiate itself?
- Will the proposition help digibank accelerate customer acquisition?
- Can this be a tactical move that has high future strategic value as well?
DBS understood that to grow its business in this environment, against competitors that in many cases did not have the pressures of quarterly public capital market reporting, it needed a differentiated and compelling proposition. It was going to be important that the digital bank addresses the pain points customers most often face, including inconvenient transaction handling, lack of service personalization and lack of context.
“Providing digital banking services will soon come to be a norm in the market. We want to be more than a provider of simple and effortless online banking, we want to provide an experience where banking is seamlessly integrated into the lifestyle of the tech-savvy and young population in Indonesia.” says Leonardo Koesmanto, Head of Digital Banking, Consumer Banking Group at DBS.
The Better the Answer
Defining “banking” for a new age
By seeking to integrate into all aspects of the customer’s digital life, DBS and EY are enhancing customers’ digital banking experience
Integrated multi-channel transaction features to improve stickiness
Fractured and fragmented customer experiences will provide opportunities for entry via interoperability
While increased acceleration in grassroots innovation is great for solving societal pain-points and offering a variety of services across segments, it also leads to increased fragmentation. Moving between platforms is clunky and not seamless, leading to a broken customer experience, errors and increased operational risks within platforms. Imagine buying, paying for and getting delivery of an item of interest off of an Instagram hosted store? There are multiple points of failure. DBS is very much aware of these existing and evolving pain-points, and a seamless customer experience is at the heart of digibank.
Larger Indonesian local banks have adopted internet banking as the core feature of their service proposition. As Indonesia consumers becoming more digitally adept, the preference toward digital channel comes naturally into play. With increased competition from outside the traditional financial services sector, there is a need to go beyond offering a high-quality web and mobile experience. It requires a complete rethink of the current financial services delivery model:
- From product centric, to customer centric
- Process orientation, to customer experience
- Competition to collaboration
- Traditional product placement to contextual
- Low engagement to high engagement
Numerous factors influence customer experience, many of which are intangible and driven by emotion or perception. In the past, banks have focused on giving competitive interest and merchant discounts. EY research however, suggests that customers put greater importance on intangible factors such as convenience and relevancy. The more banks can remind customers on a daily basis of their superior service, the more likely customers will pick them as the bank of choice in all aspects of their life. The DBS strategy is one such compelling approach to a transactional digital banking.
“To win the digital banking competition, a bank must strategically manage multichannel, to create a seamless customer experience,” says Nam Soon Liew, Managing Partner, EY ASEAN Markets Leader, Ernst & Young Solutions LLP, “An integrated transaction-platform ensures the transaction journey remains reliable regardless of the customer’s preferred device. This process will help to create a wonderful and consistent experience for customers, thereby increasing their loyalty to the platform.”
Building scale through beyond-banking ecosystems
Capitalizing on the emergence of integrated digital ecosystems that serve customers without having to leave
With the growing number of traditional players (e.g., banks, telcos, etc.) and new-economy players (e.g., FinTechs, ride-sharing platforms, etc.) offering digital services, there are increasingly blurring boundaries between sectors. This trend provides ample opportunities for financial institutions to merge their services into customers’ daily life, including bringing offline services to online.
“For customers, banking service is a means to an end: buying groceries, growing a business, or purchasing services. By only attending to one part of the customers’ journey, banks might miss out on substantial value. As Asia’s banking customers migrate to digital channels, banks are expected to follow suit by developing integrated digital banking capabilities,” says Varun Mittal, Director, EY Global Emerging Markets FinTech Leader, Ernst & Young Solutions LLP.
Looking into such trends, EY professionals advised DBS on how to capitalize on opportunities within the banking and non-banking journeys of the customer. “The starting point was more than 50 different retail payment use-cases that surround a customer’s life. Narrowing them down on criteria such as, macro-economic trends, use-case market potential, existence of competition, ability of DBS to create a differentiated proposition, etc., the number of use-cases was eventually narrowed down to three and presented as recommendations. This ‘Growth Hack’, built upon EY’s proprietary use-case scoring framework, allows platforms to objectively evaluate use-cases and select the ones that allow them to meet their business objectives.” says Patrick Hanna, Partner, EY Transaction Advisory Services Leader, Ernst & Young Solutions LLP.
“A platform wrapped around customers’ daily life is the perfect place to offer additional services. Such feature helps DBS enrich its relationship with existing customers and at the same time, increase monetization opportunities,” says Patrick Hanna
The Better the World Works
Better Digital Banking Experience means a Better Life for Customers
Live More, Bank Less!
DBS’ foray into Indonesia and India has resulted in an exciting strategic approach to digital services that solves key societal pain-points, while allowing for a seamless, integrated and personal digital experience. In emerging countries where there are more internet users than there are banked customers, this approach can drive significant growth, while managing customer acquisition cost. The platform successfully helped to enhance customers’ experience as well as attract new customers.
“Launching a successful digital banking operation requires understanding the customer’s behavior evolution and the resulting change in their needs. By focusing on customer-centricity, banks will be able to deliver superior digital experiences and stay ahead of their competitors,” says Varun Mittal.
Source: 1 DBS Website; 2 DBS Website; 3 DBS Annual Report; 4 EY Research