DBS Transformation (a): Becoming a World-Class Multinational Bank Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

DBS Transformation (a): Becoming a World-Class Multinational Bank Case Study Solution

The CEO announced in 2009 regarding the acquisition of the Danamon Bank in Indonesia. The main objective of this strategy was to expand the business. The CEO also stated that the decision was satisfying because it provided positive results. Major improvement was brought the operation, technological and cultural aspects. Before the acquisition; the bank was underperforming but the acquisition enabled the bank to improve its banking performance andit hadprogress in three central parts of strategic and plumbing. The decision was said to be an effective decision for the company. This case examines the transformation stage of the DBS bank from 2009-2017. Before this, DBS had increased its presence in the small markets but down the line, the CEO realized that now it was also important for the bank to expand in the international markets. The Bank had realized that it was the time to go for a transformation. The central focus of the company for this transformation was customers. DBS had focused on the customer’s preferences and it had also emphasized over the resources’ allocation to perform effectively in the market. In 2009, DBS made the decision of transformation because it was losing its ability of performing well and its overseas branches overseas were also underperforming to a significant rate. So, in this case, the implementation of the transformation process has been evaluated and it is also discussed that how should the bank enter the overseas markets.

DBS in 2009 and challenges

In 2009, DBS was an average bank which had least presence in the international market; whereas, it had potential but it was not performing on its full capacity. The bank was a poor performer but the ECO: Gupta, was an energetic person and was continuously looking for the ways to transform the DBS bank into an international bank. DBS was lacking in its compelling strategy, the main challenges were the operational architecture and the organizational culture. DBS had several cultures, banks, different policies and multiple systems. This was a challenge for DBS to overcome. To expand its business overseas; DBS had to maintain single operations, policies, leadership style and culture. There were several operational issues that needed solution for future growth. The challenges were very clear, indicating that the Bank had issues in its operations, procedures and leadership. Every point was clear and the Bank needed quick decisions to solve these challenges for its effective operations in future. The delay could cause a stagnant position for the bank. It cannot fulfil its future objectives until and unless DBS does not solve these problems.

Furthermore, the challenges that DBS was facing, are discussed below:

The increase demand of Fintech

Increasing e-commerce trend was one of the main concern of DBS, because in China, leading companies were promoting E-commerce and fintech through providing digital services. It was also spreading rapidly in the banking sector. DBS needed to meet the consumers’ demand and to move towards digitalization by opting for an e-commerce strategy. Banks was offering the loan services to the companies for these type of issues. In this race, DBS had non-banking competitors which were also acting as challengers for the company, for example: Alibaba was doing well and the DBS’s CEO himself stated that “in order to compete with these competitors; we have to be like Alibaba first”.

Acquiring the mass Asian market

This was one of the biggest challenges for DBS, because in 2013, the company was trying to enter into China, Indonesia and India but it did not work out for the company. The main difficulty faced by the company was the regulatory systems in other countries, i.e. while acquiring the Danamon bank; DBS had to step back due to the new government rule of 40% ownership.

Turnaround plan and digital strategy

Mr. Gupta got this idea earlier that the competition in the industry has been increasing and it was becoming difficult for the banks to enter into the international market. When in 2013, DBS was about to enter into the Indonesia through acquisition; the country introduced ownership stakeholder, following which, DBS had to step back because it was not feasible for the bank to share the ownership at such a huge margin. It made totally sense because it was a safe move to prevent DBS from incurring any future loss. On the other hand; the main challenges of fintech and overseas acquisition required DBS to prepare for the competition in the industry. To deal with these challenges; DBS had to prepare for fine technology and also collective enough resources to meet the government’s regulations. In China, Alibaba was the major player in the non-banking sector, as it was offering online payment services for the consumer, i.e. alipay. To tackle these challenges; DBS had to go for online based services for their consumers to compete in the international industry. The key element of the DBS fintech was taking into consideration the fact that the digital strategy was providing the consumer’s with online payment services as the strategy was focused on providing an ease to the consumers through digital banking, mobile apps . The company decided to build digital banks for its consumers. The basic investments required for the digital bank were the technology requirements and technical employees coupled with sound monetary investment for this project. First thing that will change after the implementation of this new system, would be the whole banking process. Consumers and employees would have to interact in the digital environment. The process of doing business will be changed, DBS’s organizational culture will also change, along with the changes in the organizational structure caused by this transformation.

DBS overseas growth and country option

The overseas growth is very important aspect for Gupta in order to move to the overseas market. The wise decision for DBS at this stage would be to strengthen the bank position today and to work on the digital services and then to move in the Indian market first. The Indian market would be better option for DBS to move into first, because Indian market does not have hard regulations for the new businesses. It is a developing country and it welcomes the new businesses in the country. Gupta has to focus on the consumers’ demand in India and the rate of consumers’ familiarity with the technology and how they can react to the digital banking. Other reasons to move into this country, are the exemption of taxes and low wage rates alongside cheap resources....................

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