The Future By Design

Lim Soon Chong took over as DBS’ Group Head of Global Transaction Services on 1 August replacing John Laurens, who will be retiring at the end of the year. Lim, who also continues in his role as Head of Digital for DBS’ institutional banking group, spoke to TMI about his new position, and the role technology will play.   

With experiences in a range of areas including financial risk consultancy, bank capital and prudential policy, macroeconomic surveillance, monetary policy research and international financial cooperation prior to joining DBS, and across consumer, wealth, risk management and corporate treasury spaces in DBS, Lim has an undeniably broad view of banking. It’s perhaps no surprise then that, as a technologist too, his view of the evolving digital landscape in treasury is similarly all-encompassing.

And with a notable acceleration of the adoption of technology in transaction banking throughout the pandemic, while it’s clear to him that most organisations now accept that digitalisation is the way ahead, most also accept that recent events have pulled the digital agenda forward by several years.

For DBS, which invested earlier than many banks in the digitalisation of its platforms, applications and architecture, the freedom from the constraints of legacy technology has enabled it to scale up its offerings markedly. “It’s enabled us to drive further adoption and help our clients with the demand for new connectivity, products and services,” he confirms.

However, with the impetus to help client adoption now gaining across the wider financial services industry, he sees a somewhat “uneven” response emerging. This has translated into spikes of activity in certain processes and products where corporates see the greatest necessity, and other areas still facing an uphill battle. It’s an area of concern that he intends to address.

Adding human value

Digitalisation is often celebrated as a panacea for process inefficiencies and as the key means of optimisation. Lim takes a more nuanced view.

The relationship between bank and client is typically assisted by a solution set that has capitalised on better storage, bandwidth and computing power, he notes. These elements are very effective in tackling routine tasks and transactions, and there are certain value-added human activities, such as providing transactional quotations for clients, that can also be considered as repetitive that he believes are “entirely capable of being supplanted by technology”. Additionally, “higher-order client activities”, such as balance sheet optimisation and cash flow forecasting, can also leverage new technologies.

“However, for some activities that are less routine or repetitive, the flexibility of the human mind and empathy of human spirit is still needed,” he notes. Of particular interest here is relationship management, where building trust is vital when helping clients to make the right choices. “It’s in these kinds of higher-order cognitive and empathetic tasks that technology is not yet capable of resolving, even with the promise of AI (artificial intelligence).”

Bridging digital islands

In the trade and supply chain space, the digitalisation of documentation has been welcomed by many as a means of easing issues created by an historical addiction to paper. But Lim observes some areas where the technology roll-out is incomplete.

“So much of what we’ve seen so far has created ‘islands of digitalisation’,” he says. It’s a state that has come about through the delivery, by banks and vendors, of bespoke client solutions that are not interoperable. A further deficiency in the digitalisation agenda, he notes, stems from the implementation of partial solutions.

A business may have digitised its invoices and letters of credit, but not yet digitised its customs submissions or capital control reporting requirements. By creating breaks in the chain, it triggers inefficiencies and increases risk of error and fraud.

Furthermore, Lim believes that the digitalisation of trade and supply chain finance documentation will remain an “incomplete” exercise as long as movement of physical goods along logistics chains are not similarly represented through structured digitalised data. A digital bill of lading is a clear example of necessity here, he says, adding that there needs to be a “twinning of physical and financial supply chain process digitalisation”.

While DBS continues to double down on its digitalisation efforts in this space, Lim states that the bank’s key interest is in considering the whole picture, finding ways to “bridge the islands of technology” that have emerged in the wider corporate financial space.

“We’re pursuing more interoperability and end-to-end smart processing for corporates, not just around financial documentation but also for credit decisioning, fraud detection and analytics covering the entire value chain.”

Collaborating and engaging

Finding the right solutions for clients by adopting a holistic approach requires DBS to adopt a “collaborative mindset”, says Lim. The bank is already part of a number of industry initiatives, including Singapore’s Alliance for Action (AfA) on Supply Chain Digitalisation. Participation is aimed at supporting the notion of “physical and digital twinning” of financial and logistics processes.

“We’re also co-creating with our partners to understand and digitalise their workflows,” says Lim. “And there are a number of industry platforms, including blockchain-based solutions, that are aiming to accelerate and enhance digitalisation efforts, so we’re keeping a close watch on those and engaging with developments in this space too.”

With development of some of the industry’s digitalisation effort still at an early stage, Lim acknowledges that DBS cannot, or indeed should not, tackle the work on its own. “As an industry, we need to solve the problems of truncation and interoperability, and the twinning of financial and logistics, and this can only be achieved through partnership,” he states.

Describing the environment as one of “co-opetition”, where competing companies form strategic alliances, he feels collaboration is the only way forward. “As banks, clients, suppliers, logistics firms, insurers and other stakeholder agencies, we must all work together to form an open and agile response to the changing needs of the industry.”

The current level of activity between partners indicates that significant effort has already been put into achieving results, says Lim. However, while building an “ecosystem of ecosystems” is the ultimate goal, he acknowledges that with so many interested parties, it is not always easy to set the direction, or indeed co-ordinate the best approach. “The outcome will have to evolve organically,” he declares.

As part of its response, DBS has a three-tier framework, helping to orchestrate, create and participate in ecosystems. “With all these initiatives, it means being a much more open organisation,” notes Lim.

“Of course, we see ourselves as a standard bearer, but there is healthy competition across the industry, and no single player is able to dictate the rules of the game. We all need to stay engaged with the market, understanding and responding nimbly to changes, including the growth of its ecosystems and platforms.”

Shifting mindsets

Every year DBS runs a digital trends survey among its clients. Based on the survey’s preliminary findings, Lim confirms that the digitalisation agenda in the Asia-Pacific (APAC) region is advancing rapidly, but there are multiple technologies and ecosystems coming into view too.

“While understanding their need to digitalise, treasurers will be facing an increasingly complex choice around where to start, how to approach it, and who to partner with,” he notes. “It means they will have to think a lot more about how to use their ‘seat at the table’ as they seek to influence and bring the entire company with them on the digital journey.”

One way treasury’s influence should be exerted, believes Lim, is in shifting the mindset within the company where it sees digitalisation purely as a means of lowering transactional costs. Instead, he suggests steering it towards one where it is enabling optimisation. “Truly leveraging technology is about taking a longer-term view of how to enhance the balance sheet, not simply confronting the here-and-now of transactions.”

Technology is often cited as an enabler, but for Lim, while “digitalisation means better data, better data also means more dollars”. By making a direct link to profitability, he refuses to limit the power of digitalisation solely to its potential for efficiency and resilience.

However, he advises that successfully leveraging data demands that before realising the dollars, the treasurer must master the appropriate technologies and connectivity in every relevant channel, and then be able to convert that data into usable insights. “And for many, thinking about data, analytics, insights, and value will mark a whole new approach to digitisation.”

Help on the journey

With some treasuries still driven by spreadsheets, it is incumbent upon a digital-first bank such as DBS to help such clients pick up the pace. “It’s why, when we think about digitalisation, we really have to think about it from the clients’ point of view; we cannot be thinking in terms of ‘digital for digital’s sake’,” states Lim.

If it is so clear that digitalisation is going to be helpful, then questions must be asked as to what is stopping some clients from adopting it, or at least switching to a digital form of interaction, he adds. One of the main constraints reported by treasurers, he notes, is limited connectivity options afforded by other parts of the business.

In response, Lim says DBS clients are presented with three choices of digital connectivity. Application programming interfaces (APIs), e-banking through mobile and internet banking, and host-to-host are now standard, with blockchain-based network connectivity under investigation.

Perceived cost of adoption is a barrier for some, and this should never be dismissed by providers. To this point, Lim says providing tools such as APIs and software development kits (SDKs) enables clients to start their own technology journey, in their own time. “We know it can take time to digitalise, so for us it means having patience, empathy and the right tools to help them on that long voyage.”

Meeting the future

That said, with the DBS digital trends survey indicating that more than 80% of large corporates, and 67% of small and medium sized enterprises (SMEs) in APAC have started their digital transformation journeys, it offers confirmation that this is the way forward. The challenge now for every provider in this space is to deliver solutions to clients that work and are wanted.

“We use a 4D Framework (Discover, Define, Develop, Deliver) that places us very much in the realm of design thinking, using customer immersion to validate our hypotheses before we launch any new digitalisation effort,” explains Lim. “Our track record has given us a lot of confidence, and this year we will hit record numbers of transactions via our electronic banking channels,” he adds.

With the bank expecting to facilitate more than 100 million digital transactions in 2021, with 60 million comprising API calls, he says the numbers demonstrate DBS’ investment in digitalisation is starting to pay off. “Coupled with our design-thinking and validation process, it gives us every confidence to continue, and there is a lot more we can do with our clients.”

Of course, having only recently assumed his new position in DBS, Lim has a great deal on his plate. “My first task is to plan how to plan,” he comments. Paying tribute to the success of his predecessor, he says he must now “survey our strengths and then align our organisational resources to serve the changing needs of our clients and opportunities in the marketplace”. Digitalisation, he concludes, will remain to the fore.