"Responsive and Responsible Banking" - An Interview with Piyush Gupta

I recently had the opportunity to interview Piyush regarding the state of financial markets, macroeconomic trends, and DBS’s continued progress as a leading provider of financial services. Excerpts of the interview are published in the IBM Institute for Business Value CEO Study 2021. Below is the full interview. 

Piyush, you have a unique vantage, as a CEO of an Industry-leading Institution based in Singapore. How do you see value in the financial services industry changing? 

Let me just quickly point to one macro economic reality: Rates are down to zero. Europe and Japan have been negative for several years, but now U.S. dollar is also close to zero. That means interest income, typically the main source of income for banks, is under pressure. This means your source of value is around three things. One, how do you drive non-interest income or commission-based activities, which means you have to start thinking beyond your traditional view of what a bank does. Second, you've got to focus relentlessly on the expense line.  With the revenue shock, you have to drive efficiency. And then, given the overall environment, you have to focus on cost of credit. That is the third big value driver.  

How do we drive the top line and the expense line differently? The big change is hyper digitalization. The bar on customer experience has been raised higher. And therefore we don't have a choice but to correspondingly up the game. You have to raise the bar on digitizing everything. Even though at DBS, we've come a long way in the last five, six year, we still had gaps in providing completely digital service. We need to raise the bar on the customer experience to a completely new level. 

You also want to really embrace the idea of an ecosystem that scales. You have to look beyond a traditional banking universe to find alternative sources of income. A large part of that will come in partnership with other players and other providers. How you think about ecosystems and partners is going to be a big change.

And then there is artificial intelligence. 

I'm convinced that the power to predict is going to be crucial over the next few years and will distinguish winners from loosers.

That means AI and machine learning at a level very different from what we've done before. 

Those three are the hidden drivers to top-line growth: a different focus on ecosystems, on AI and machine learning, and on complete digitization for customer experience. 

On the expense line, you have to change the working of the organization, the way you work. Data is going to be fundamental to that. At DBS we've been focused on a data-driven operation model. As we organize and understand the nature of roles and jobs, you can use control towers in a very different way. The future of work means more flexible places of working, probably in more countries. You can work from home, other more flexible work environments. And being data-driven in all this can, I think, take out a lot of cost.

How do you plan for the future in such an unpredictable time? 

The role of any leadership team is to have a point of view. You must have a point of view on what might be coming. But the ability of the organization to be able to respond to things is frankly, a lot more important than the ability to look around the next corner. You have to drive for an organization to be adaptive, nimble. 

So how do you create an adaptable management, people who can be nimble and respond at pace? One, the organization must be a learning organization. Some of the new, big techs are very good at it. You have to create the capacity for the organization to be self-informed and learn. You cannot be a static organization. You have to be a growth organization with a growth mindset. 

Second, you've got to be an organization where experimentation is built into the fabric of the business. The best way to learn is from trying. For banks, in particular, this idea of experimentation has been anathema because we're a controlled and regulated industry. So you have to break all those shackles. You have to give people the freedom to experiment and learn how to take risks. 

The third key dimension of being nimble is genuinely diverse HR and collaboratively working in horizontals and journeys as opposed to working in verticals.

If you can embrace those three—agile horizontal setups, experiments, and constantly nurturing a learning culture—then you become adaptive and nimble, which means you can respond a lot more quickly to opportunity and changes in the environment. That’s what we're trying to do. 

Of course we have to start making some bets. There are opportunities that 5G and IOT will throw up, that change the customer experience. There are opportunities with blockchain and distributed ledgers, things like digital currencies that change the nature of money.  Supply chains will, I think, benefit a lot from blockchains. You have to pick and choose some things to experiment with and hope you can create new business solutions on the back of that. But at its heart, it's about organizational adaptiveness.

What will be the primary sources of competitive advantage in the future?

Customer experience will be a big source of competitive advantage. 

A really simple and transparent experience. A lot of people are focused on the issue of trust. I think that will be quite important to consumers. Strong digital capability is anchored on a base of trust. 

The idea of creating unique product differentiation, including how do you get credit, how do you find partnerships, I think that will be a competitive differentiator.  How AI and the power to predict or personalize to a single customer is going to be a differentiator.

I think the business opportunities around ESG, the sustainability agenda, is going to be a multi-trillion dollar opportunity in the next 10, 20 years. It’s not just a defensive standpoint, because of the risks or because your shareholders and other constituencies demand it of you. It’s actually a tremendous positive opportunity. You start thinking about transition financing various industries from a brown economy to a green economy. Renewable energy is a great case in point. 

I think business models in many industries are going to change and that does add opportunity. The banking supply chain is simple, but when you start thinking about the supply chain of our customers, for anything from commodities to agriculture to logistics, to automobiles, all of those supply chains are changing quite materially. That gives us a great opportunity to weave into the supply chains in a very different way from traditional banking. 

How has Covid impacted your culture?

Covid accelerated what we were trying to do. The idea was to create a flatter culture, where you give a lot more people a seat at the table to participate in the decision-making process. So it's less hierarchical and less top down. When you're on a WebEx or a zoom call, everybody has equal face time on the screen. That’s actually helped us. 

But in other ways, COVID has been a challenge. I'm a big believer a family culture, where people are invested in each other, invested in each other's families and emotional successes. The bulk of your living is spent at work, and the work environment should have an emotional connection not just transactional.  That kind of emotional connection is much harder when you're working from remote locations.

We did the Hangouts and parties, giving people the hard stuff—e-learning and so on—but also the soft stuff: How do you get people to come and have fun? We created a program called the together program: Everybody gets an online buddy, you have a schedule of online casual catch-ups. 

We spent a lot of time focused on the future of work. Take remote working. We had to think about who qualifies to work mobile and who doesn't. If you’re a newbie in the company, it’s hard to expect you to start from home and feel the same emotional connection or be aligned to the company's purpose and vision and values. And so for the first X amount of time when you join, you can't work from home. You have to be in the office, so we can culturally acclimatize you to what the company is all about. We went through a whole bunch of things with our task force to determine the things you need to do to keep the soul of the company alive, despite having a distributed workforce.

You very deliberately talk about the purpose of the organization – Best Bank for a Better World. I know that this is tremendously powerful for the firm. Tell us some more on why this is important? 

This is DBS’s secret sauce. It is the real core of DBS’s strength. The company was created not really to make a profit but to help in the development of Singapore. It was carved out of the economic development board with the explicit agenda of helping Singapore develop. And if you go to the archives, it's quite clear that for the first decade or so, all the decisions were made not on the basis of bank profitability, but on the basis of, is this good for Singapore? That psyche, that we are here for a purpose and the focus is not just to make money, that's deep rooted in the company. When I did my first surveys a decade ago, trying to understand what defined DBS, the number one thing that came back to me from people was the sense of focus, of being there for a purpose.

We've been gifted to have a company where the roots of doing good things for your people and making a difference is deeply anchored. 

And so to that extent, I think we have a headstart on many people. It’s not something we’re trying to discover now or overlay an existing culture.

How do we make sure that we keep that sense of purpose but also marry it with success for customers and making an impact for shareholders? You need to get the balance right.  But in our case, we don't have to wrestle so much with the core idea of purpose.

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Piyush Gupta is the Group CEO of DBS. This interview was conducted by Sanjeev Chatrath, Managing Director, Global Banking & Financial Markets, IBM