Aiming to add over 5 Mn banking customers in India over the next three to five years, Singapore-based DBS Bank launched its first mobile-only bank in India. The bank will be completely paperless and branchless, enabling customers to open accounts by leveraging biometrics-enabled IDs and Aadhaar card to ensure that that there is no paperwork.  To start with, account-opening can be done at an extensive network of outlets run by DBS’ partners such as the 500 Café Coffee Day outlets it has tied up with.

The digital bank will be offering 7% annual interest as compared to the 5% it was offering till now, will have no minimum balance requirement, and will allow free cash withdrawal across all ATMs. It will provide customer service through a 24×7 artificial intelligence-driven virtual assistant, which understands natural language and has learning ability, in order to respond in real-time. The AI-driven virtual assistant can answer queries and perform banking transactions, such as finding out past transactions or transferring funds to someone, thus negating the need for a call centre agent.

It is these features which have reduced the cost of investments which will enable the digi-bank to offer the higher 7% savings rate, as per CEO Piyush Gupta. At present, the bank’s cost to income is 55% in India which it aims to bring down to its global average of 45%.

Added Piyush, “We want to build a liability book of $7.5Bn (INR50, 000 Cr) and an asset book of $1.5Bn (INR 10,000 Cr) in the next two to three years on this platform. We are also aiming to have about five million savings accounts in the next five years.”

The account will also provide a physical debit card which can be used across all Visa-enabled online and point-of-sale transactions, including overseas. The digital bank will also come equipped with an intuitive budget optimiser that will enable customers to do their budgeting, track expenses and analyse purchasing trends.

Over the past three-odd years, DBS has poured in about $500 Mn globally for a digital transformation. India is the first country where they’ve launched the mobile-only bank and the bank plans to take it to Indonesia and China. Meanwhile, the bank is awaiting clearance from the Reserve Bank of India to convert into a wholly-owned subsidiary (WOS) in the country. The application was filed in April last year. Once the bank gets approval, it is looking to scale up its branch network to 60-70 in the next four years. At present, the bank has 12 branches. So far, the bank has invested $976 Mn (INR 6,500 Cr) into India.

The mobile bank comes as DBS aims to leverage the opportunity provided by a billion Aadhaar cards and over 200 million smartphone users in the country. Going completely digital will enable the bank to not only extend the customer reach but also reduce its expenses as the cost-to-income ratio for running the digital bank in the long term is expected to be far more efficient than traditional brick-and-mortar banking.

Banks are increasingly turning digital on account of the rapid change in the way people are transacting with the bank. As per data revealed by HDFC bank, in 2005, internet and mobile based transactions constituted only 13% of its total transactions. Come 2015, and the share of internet and mobile transactions has risen to a whopping 63%. Consequently, HDFC has also been digitally transforming itself through efforts such as getting into the category of wearables, becoming the first bank to introduce the Apple watch application, and entering into more and more partnerships with FinTech Startups such as Chillr. Similarly, banks such as SBI, Yes Bank, Federal Bank, are also tapping startups to increase digitisation and customer delight.


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