Mumbai: DBS Bank is looking to grow its retail banking operation using digital channels.

On Tuesday, DBS launched a “mobile-only bank" and said it aims to garner 5 million customers and a deposit base of 50,000 crore over the next five years. Named digibank, the DBS mobile application will allow individuals to access a wallet at first and then open a savings deposit account with the bank. The balance in the account will earn 7% interest per annum.

“We are going to focus outside our affluent banking base and we hope to be a mass consumer banker through this product. We hope to get 5 million customers over the next 3-4 years through digibanking," said Piyush Gupta, chief executive officer at the bank. Currently, DBS Bank has 35,000-45,000 customers in India, according to Surojit Shome, head of India operations for the bank.

DBS Bank isn’t the only one to board the digital bandwagon. Large Indian banks such as State Bank of India, ICICI Bank Ltd, HDFC Bank Ltd and Bank of Baroda are building digital channels with an aim to garner new customers and serve existing ones better.

The rush for digital dominance comes even as 11 payments banks are preparing to launch their operations. These banks will have the infrastructure and technology to provide digital banking from day one.

Among the most popular digital channels is the use of the smartphone for transactions. Transactions on mobile phones in India have surged in recent months owing to large value transactions being concluded on smartphones by corporate clients besides an increase in retail transactions, Mint reported on 28 March. Data from the Reserve Bank of India (RBI) show that on a year-on-year basis, the amount transacted in December 2015 rose more than fourfold to 49,029 crore from the 11,323 crore transacted a year ago.

India is estimated to have about 220 million smartphone users in 2015 and a February report by networking solutions firm Cisco forecast this would jump to 651 million by 2019.

Gupta of DBS said the bank’s digital offering stands out because of an inbuilt dynamic security system that takes away the need for one-time authentications and a natural language interface that allows customers to use voice commands to transact.

Mobile banking products of most banks require the customer to enter a one-time password to conclude any transaction.

For the initial authentication of a new customer, DBS has tied up with Coffee Day Enterprises Ltd that runs the Cafe Coffee Day outlets. A customer will be required to carry an Aadhaar or a PAN card to a Cafe Coffee Day outlet and, using a biometric system, will be allowed to open an account.

Meanwhile, DBS Bank will continue to expand its branch network to service corporate clients and small and medium enterprises, Gupta said. The bank has 12 branches in India and has applied to RBI to move to a wholly-owned subsidiary structure. “The application is pending and we have been told it may take 12-18 months to process. We have not received any negative feedback though," Gupta said. The bank’s Indian assets form only 5% of its total book. Gupta said the bank is hoping for double digit growth in its India balance sheet.

The bank will leverage its digital platform to build a retail loan book of 10,000 crore over the next five years. “Right now, we are launching digibank mostly on the liabilities side. We will introduce investments and, later, loans, over the next few months," said Gupta.

“If you look at some of the global stories, the broad perspective is that a bank starts excelling in certain things when it begins to focus in some areas. Digital-first banks such as some in the US like Atom Bank, they channelize all their energies into one thing as opposed to existing Indian players who will continue to focus on traditional branch banking and in addition give digital services," said Vivek Belgavi, partner and leader of financial services technology at PwC.

Belgavi added that new companies would largely focus on untapped segment such as individuals who do not visit a branch as a target for their digital banking.

“It is a classic disruptor strategy. It will go after segments which are under-served. There is a segment that does not visit branches and because they don’t visit branches they expect a superior experience; if this is not catered to, this is what the disruptors will focus on," he said.

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