Question

How can Asian Crisis affect DBS Bank operations? Explain it in essay form to be longer.

Answer 1

The West has led much of the development of the world’s modern banking industry across all dimensions⁠—from size, to growth, to business models, and innovation. In recent years, however, Asia has tilted the scale, delivering game-changing growth and innovations in banking services. This reflects not only the increasingly central role of diverse Asian economies in global trade and economic growth, but also Asia’s renewed leadership in scaling innovative technologies and new business models. Now, as the pace of growth slows, Asia’s banks face serious challenges and must reinvent themselves to survive. This paper, in which we summarize the current status of Asia’s banking industry and outline one possible plan of action by which banks may reinvent themselves for the digital age, is part of McKinsey’s Future of Asia research program. The strong emergence of Asian countries on the world stage is creating new competitive dynamics, technology innovation and trade patterns, such as the growth of south – south trade routes. This is impacting business models, growth strategies, trading practices and cash management amongst all businesses operating in Asia and beyond. At the same time, the level and speed of change in financial market infrastructure in many Asian countries, from new clearing system to currency, tax and trade regulations, is creating complexity but also opportunity for treasurers and finance managers doing business in Asia. For example, the journey towards RMB internationalisation is continuing apace despite the current market correction, and developments such as two-way cross-border sweeping are increasingly driving discussions with corporates. At DBS, we are constantly exploring how big data can be employed and are using an artificial intelligence to develop a platform to predict potential trade fraud for customers. The enhanced levels of risk management this will deliver to clients will be significant. Working capital management is another space which uses big data. We have developed a number of tools, including real time analysis, projections of future cash flows and cash conversion cycle diagnostics. This advisory work has elevated our engagement with customers. Today, DBS acts as a key strategic business partner to customers helping them achieve their commercial objectives. Consequently, working capital discussions with customers have become more focused. No longer does working capital management involve simply reporting on working capital metrics e.g., days payable outstanding (DPO), days sales outstanding (DSO) and days inventory outstanding (DIO). Instead, customers are increasingly taking advantage of DBS’ industry benchmarking services to understand their relative performance across a range of cash and trade-related activities. In addition, our in-depth diagnostics enable customers to identify inefficiencies and opportunities for enhancing performance against key working capital metrics. This is the result of considerable investment in sophisticated technology, rich data and expertise: for example, we have invested in training over 2,000 of our customer facing executives trained in working capital advisory to support customers and inform our solution offerings Despite the crisis, we believed in the resilience of Asia and had confidence in its growth potential. Prior to the GFC, the bank had undergone a transitional period. We were experimenting with different growth strategies including joint ventures, taking minority stakes in banks and buying a bank in Hong Kong amid a push for the Singapore banks to evolve and grow. Even during this period, many of us recognised DBS’ latent potential – given the kind of history that we had, tied to Singapore’s development and its willingness to innovate and fund new horizons. DBS was always a very purpose-driven bank. It was never about revenue and profits alone, but growth and development and the willingness to step up, look beyond ourselves and our immediate horizon to build and grow the bank.