Question 1: In your view, what have been the key factors for DBS’ financial outperformance in recent years under various macro and geopolitical conditions, and can they be sustained?

Two principal factors have contributed to our financial outperformance.

The first is our focus on Asia. Notwithstanding slowing China growth, Asia remains the fastest-growing region in the world. This has been fuelled by structural trends: a rising middle class, burgeoning affluent population, greater cross-border flows and massive demand for infrastructure investment. We have strategically shaped our business to capture these trends. For example, our wealth management franchise rides the wave of rising affluence while our treasury and transaction banking solutions have been scaled to capture growing trade and investment flows.

Additionally, having a footprint in Asia’s three key axes of growth – Southeast Asia, South Asia and Greater China – through our focus on six key markets has been advantageous. We are able to intermediate intra-Asia trade and capital flows. Being anchored in Singapore and Hong Kong positions us to serve the regional headquarters of western and Asian multinationals while our local franchises in China, Indonesia, India and Taiwan enable us to go deep by serving local businesses and consumers.

The diversification also enables us to navigate divergences in economic cycles. For many years, Greater China was a significant propellant of our growth as we rode on China enterprises’ outbound expansion and Hong Kong’s role in the mainland’s development. Today, we are fortuitously placed to capture India’s accelerating growth momentum.

The second factor is the digital transformation we embarked on a decade ago. Because of the long gestation period before the fruits become tangible – to our customers in terms of convenience and ease, to our staff in terms of how they work, and to our shareholders in terms of the concomitant financial impact – our head start has continued to set us apart as a bank, employer and investment.

Our digital platforms have made it easier for customers to carry out the full range of everyday transactions. As a result, customer engagement has deepened, translating into stickier relationships and greater wallet share, and ultimately faster revenue growth.

Digitalisation has enabled us to become market leaders in high-returns businesses such as wealth management. Meanwhile, our APIs (or pipes linking our systems with clients’) have driven market share gains in cash management. We can also structure treasury products at speed and scale and with attractive pricing.

Technology has also improved the way our employees work and is central to our efforts to create a culture different from a traditional institution’s. It has enabled data to be quickly sorted, packaged and shared among teams, making it instrumental in breaking down silos. Decisions can be made and implementation carried out expeditiously, giving us the agility akin to a startup's. Not constrained by organisational limitations, we are able to adopt the customer’s perspective when creating products and services, resulting in a differentiated customer experience.

The institutionalisation of digitalisation into our franchise has also meant we can readily experiment with and assimilate new technologies that will ineluctably arise. We have infused artificial intelligence and machine learning (AI/ ML) into more than 350 use cases across the bank to drive productivity. We have expanded our business through ecosystem partnerships by using AI/ ML and data to identify the subset of existing customers in those platforms that we can suitably and profitably offer our products to. Ecosystem partnerships have helped double our Consumer Banking/ Wealth Management customer base over the past six years to 18 million today.

These dual characteristics of our franchise – unique geographical footprint and innate digital capabilities – are strategic advantages that are difficult to replicate. They are also the drivers of our performance. Their value has only become more apparent as interest rates rose. The record ROE we achieved in 2023 is one of the highest among developed market banks and six percentage points above the last time when interest rates and credit costs were at similar levels. We believe that the franchise we have developed will enable us to continue outperforming peers into the future.

Question 2: 2023 was the year of Gen AI and the use of AI will proliferate even more greatly in the years to come. It is also a big focus area for DBS. What excites you most about the space, and what about it keeps you up at night?

AI and Gen AI are game changers, and we will see significant developments in the next five years that will fundamentally shape the way we work. The use of AI is not new to DBS, and we have been working with AI for over a decade now.

In the past five years, we have scaled our AI capabilities to make it pervasive across all parts of the bank, delivering tangible outcomes of SGD 370 million for DBS in 2023, more than double that of the previous year. We are confident of growing the economic impact of our AI initiatives in the coming years, affording us greater flexibility to navigate through business and economic cycles.

What’s different with the emergence of Gen AI is that we now have the ability to process vast amounts of unstructured data. Coupled with our existing capabilities around structured data, we are well placed to sharpen the outcomes of our current AI use cases while enabling a new class of data-driven use cases.

In our early experiments with Gen AI, we came up with over 240 ideas, 15 of which are progressing from experimentation to production. These are broadly focused on three areas of opportunity:

• Driving productivity and efficiency gains by removing toil in the way we work

• Creating value through better customer engagement and new customer propositions

• Creating positive impact to our business model by potentially opening new segments and markets.

Our immediate focus has been on the first category. Gen AI is already augmenting the way we work by handling routine tasks, allowing employees to focus on more strategic and value-added activities, such as building deeper customer relationships.

The results are promising. In our corporate call centre, we are using Gen AI for call transcription, summarisation, service request generation and knowledge base lookup, reducing the amount of time needed to handle customer requests while improving our response quality.

In Institutional Banking, we tapped Gen AI to help reduce the time needed for relationship managers to fill in the ESG risk questionnaire by summarising company reports and prepopulating relevant fields.

Gen AI assisted software development is showing positive results. Through Gen AI code and tests generation, we expect significant time saving in software development.

The launch of "DBS-GPT", our employee-facing version of ChatGPT, is helping employees with content generation and writing tasks in a secure environment. We are also developing an enterprise knowledge base that will give our employees the ability to search and synthesise unstructured information for various tasks.

As with any new technology, the advent of Gen AI brings about a natural sense of curiosity and adjustment for our employees. But change also presents exciting opportunities for growth and innovation. We are determined to bring our employees along by focusing on the synergy between human and AI capabilities to leverage Gen AI as a co-pilot.

While Gen AI has tremendous potential, there are emergent risks, especially in areas such as data confidentiality, Gen AI hallucination/bias/ toxicity and cybersecurity. At DBS, we will continue to enhance our existing AI/ ML risk framework to cater for such risks.

We have also set up a Responsible AI taskforce comprising senior leaders from multiple disciplines to assess and address these risks prior to any use case being deployed in production. Our existing responsible data use framework for AI continues to provide us with guardrails as we look at new use cases. This framework, called PURE, ensures that our use of data remains Purposeful, Unsurprising, Respectful and Explainable for customers. In addition, we are building a technology infrastructure to enable the adoption of Large Language Models in a secure manner.

Concurrently we worked with the Monetary Authority of Singapore as part of the MindForge Consortium to develop a whitepaper that examines the risks and opportunities of Gen AI for the financial sector.

We are at a historic cusp in time, and we will all need to navigate how Gen AI figures in the way we live and work. On DBS’ end, we have in place a governance structure that will help us balance reaping the benefits of Gen AI while managing the risks of a still-emerging field.

Question 3: DBS often says that being purpose-driven is part of its DNA. How does this translate into the way the bank operates its business or interacts with society?

DBS was formed as the Development Bank of Singapore in 1968 to help finance the nation’s industrialisation, so a deep sense of purpose is strongly ingrained in our ethos. This shows up in a very clear approach – we are not just here to make profits in any way possible; we are here because we have a meaningful role to play in the economy and society, and our actions must always reflect this reality.

Banking and finance have had a very significant role to play over the ages – helping individuals save for the future, buy a home or grow their wealth. Banks also help companies grow by financing trade and enabling working capital efficiencies. Even though bankers have gone off course from time to time, the most sustainable banking models have been built on doing real things for real people. In recognition of this, our purpose at DBS is to drive amazing solutions and experiences for our customers, to make banking joyful and create a more sustainable bank.

In formulating our business strategies, we always start with the question "What value are we creating? For whom?". In most cases, we can earn a fair return while creating such value. In some instances, we compromise on short-term returns for the greater good. Our dealings with migrant labour in Singapore are a case in point. From pure economics, one could easily make the case that we should pass on this unprofitable segment. However, recognising our role as the people's bank, we chose to grapple with the problem, and figure ways to drive down the cost to serve and make the business viable.

While our strategies will continue to evolve, going forward, as part of our business, we will see what we can do to address four wicked problems besetting our world. These are: (i) climate change (ii) demographic shifts, particularly ageing societies (iii) rising income inequality and the growing social divide, and (iv) issues of trust. These issues are mammoth; however, the private sector – with its resources and talent pool – has an active role to play in tackling them in concert with governments and civil society.

A second agenda that is informed by being purpose-driven is the need to uphold the trust our customers place in us. Various customer surveys indicate that being financially strong, as well as providing banking that is secure and reliable, are key to being trusted. DBS’ robust franchise, underpinned by a solid balance sheet and prudent risk management, has enabled us to be among the safest banks globally. We also take seriously the need to protect customers from fast-evolving scam and fraud tactics. As an example, in 2023, we rolled out new security measures to thwart malware threats and enable customers to lock up their accounts.

Third, by creating impact beyond banking. DBS established the SGD 50 million DBS Foundation in support of social entrepreneurship in 2014; in 2022, the bank announced that it had set aside an additional SGD 100 million to create a new Community Impact Chapter and support other philanthropic efforts. In 2023, the bank further committed up to SGD 1 billion over the next 10 years to improve the lives and livelihoods of the low-income and underprivileged.

Fundamentally, DBS’ ethos drives us to do what is right by our clients, employees, shareholders and society. We are committed to continuing to do well by doing good as we build a sustainable franchise.