DBS Bank's private banking division is making technology spending and innovation a big theme of its strategy.

DBS Bank’s private banking division has been drawing industry plaudits for investment in technology, which will gratify this bank given its stress on the strategic importance it attaches to digital channels. Earlier, this year the bank announced its partnership with IBM to use Watson technology or cognitive computing to bring artificial intelligence into the field of wealth management.

Watson is a cloud-based technology that can process enormous amounts of information with the ability to understand and learn from each interaction allowing the bank to analyze, understand and respond to vast amounts of data.

DBS has also partnered with a local government agency in Singapore, A*STAR’s Institute for Infocomm Research, to conduct new research in data analytics, mobile technology, social platforms and other leading edge technologies.

Recent investment into wealth technology
DBS Bank’s investment into wealth management technology is relatively recent and has been largely driven by the demographics in the world’s fastest growing high net worth market.

According to Neal Cross, chief innovation officer for the bank, “We didn’t want to get in the way of the relationship between the relationship manager and the client before. But what we see now, especially in Asia, is that the wealthy are at a lower age. Our clients are a lot more mature in their technology use and information is democratised.”

“You get people who want more control and transparency in their finances yet still value advice from their relationship manager. The way to do it is to enable more self-service and give customers more insight,” he told this publication.

“We have the YourDBS app which offers tools, calculators and our Asian Insights on markets around the region. This augments the discussion with the relationship manager so the customer can use that as a starting point to talk to a wealth professional,” Cross said.

Watson to roll out next year
Cross says cognitive computing will lead innovation in how wealth managers interact with their clients.

“Currently, we're giving people information based on their portfolio and not so much on them as a person. That’s the ultimate goal – getting to the segment of one. Once you can understand a customer as an individual rather than as a segment or portfolio or risk appetite, you can tailor the information that you present to them,” he said.

The bank’s partnership with IBM’s Watson for wealth is meant to help its relationship managers navigate the increasingly regulated industry that private banking has become.

“The life of the relationship manager is now more complex with more regulations, products and opportunities,” he said.

Cross likens Watson to a digital personal assistant, creating a dashboard for the relationship manager to understand product and market information. The dashboard also comes up with suggestions on products to recommend based on the client’s risk appetite and portfolio.

“Our best relationship managers provided feedback into what we’ve built in IBM Watson. It helps our relationship managers focus and spend time on the relationship instead of time on paper. It’s currently in pilot and will go live next year,” Cross said, although he declined to give further details on the rollout strategy.

“It has been a huge investment both in resources and finance, but by helping the relationship managers to re-focus on the relationship, our customers will get a much better outcome,” he said.

The bank is also moving towards more cross-department integration with its frontline interface.

“A lot of clients from the wealth side have their own business so we try to have a holistic view across corporate and SME banking, guided interactions across tablet banking,” he said.

However, Cross felt that the industry was moving too fast to look too far ahead: “In five years, there will be technology supporting face-to-face interaction, giving more insight into the customer and giving the customer more insight and transparency. I wouldn’t even look 10 years ahead as things are moving too quickly but simplification and products transparency is what customers are looking for."

Competing for finite resources
The main challenge for most local private banks is that the department tends to sit within retail banking and hence compete with a larger business for finite company resources such as technology dollars and the chief executive’s attention. Getting cross-department collaboration, though often cited as an ideal, often turns out into wishful thinking in reality.

Cross believes that is where having a multi-disciplinary approach becomes useful in his role. For someone who got his first computer at the age of 10 and started programming at 11, Cross is also ambivalent about technology-led innovation.

“People tend to confuse innovation with the latest apps or Apple or Google. Technology-led innovation is not the best way to go. You should see what is the bigger problem [that] you’re trying to solve, and it may be bigger than technology.”

“You need a level of salesmanship to sell a concept, be able to understand the technology implications, know how to get inside the mind of the customer and be a good coach. We have to draw from different disciplines to solve a business problem. Innovation for me is about solving problems and creating problem-solvers,” he said.

Don’t think like a bank
Cross acknowledges that it can be a challenge to bring that mindset change within the 20,000 employees of the bank but sees no other choice.

“We’ve had a record quarter, record profits, our customers are happier than ever and we’ve got more customers than ever. It can be difficult to get people to truly believe that there will be fewer banks in the future than there is today. Things can happen very quickly and from a place you never thought disruption would come from.

“If we continue to think just like a bank, we won’t succeed. Our competitor is not the next bank, our competitors of the future are the Alibabas , the Googles and the Facebooks. We think about how they innovate and what they are doing differently while still keeping the security and safety that a bank has,” he said.

 Top-down support is critical. DBS’ CEO, Piyush Gupta, is a firm advocate of looking beyond banking to innovate. In a LinkedIn post on September 2014, Gupta said that banks are in a “burning platform of competition from mobile and internet companies. That has allowed the bank to add S$200 million ($153 million) to its annual spending of S$600 million in technology over the next three years.

 “The single biggest thing you can do as an innovator to be successful is to pick the right CEO,” Cross added.