Piyush Gupta, chief executive officer and director at DBS Group, our choice for 2020 Best Bank In The World, talks to Global Finance about strategy and the pandemic in Asia.
Global Finance: How has the pandemic changed your strategy?
Piyush Gupta: In the last five years our transformation strategy was based on three pillars. The first was the technology architecture, and that essentially meant a heavy reliance on building and on-premises cloud architecture, on using an API architecture for easy connectivity both internally and externally. The second pillar of our strategy was to focus on the customer journey thinking, and really learning how to embed ourselves in the customer’s processes. And the third part of our transformation was really trying to create a culture of a startup, so being agile, being a learning organization, experimenting at scale, etcetera.
Truth be told, COVID revealed that our strategy and the progress we made was extremely helpful. But it has also proven to be an opportunity to a double down on many parts of the strategy and other things we need to do as well.
Now one thing we realized is that even though we had a lot of technology in place, in many cases we were about 90% there. But when you come to a COVID kind of situation, you realize 90% is not good enough.
GF: What has been the effect of this crisis in Asia?
Gupta: From a pure health and economic, macroeconomic standpoint, I think North Asia has actually handled the pandemic well. China got the pandemic under control, and the Chinese economy is recovering more strongly than any other economy in the system. Taiwan has been very strong. In fact, Taiwan did not see a slowdown at all, partly because it’s a tech-dominated country. Korea had a little bit of an up and down. But IT has recovered, and Korea’s numbers are looking very good, so that’s very strong. The problem is Southeast Asia and South Asia. First of all, the capacities of the various healthcare systems were not that strong. The capacity to test and trace was not that strong. And unfortunately, the fiscal positions are not that strong.
The other issue is sectoral differences. Many cross-border sectors—tourism, hospitality, leisure, business travel, conventions— are going to suffer for a fairly extended point of time, even in North Asia.
The governments have thrown a lot of money at the problem, so they’re maintaining jobs and they’re protecting people. A large swath of SMEs have been given lifelines, but the lifelines won’t last. You’ll see the cliff effect when the government largesse runs out.
GF: Will your geographic strategy change as a result of all this?
Gupta: We’re not changing our geographic strategy. We are an Asian commercial bank, which means that we have to be in China, we have to be in Indonesia, we have to be in India, we have to be in the big countries in our region. And you have to recognize that you have to play the long game. This is the reality of emerging markets. If you have the capacity, the risk appetite, and the fortitude to play the long game, you’ll do okay. But if you go in and out of the market every time there’s a short-term problem, you can’t build a franchise.
GF: What are the other consequences of the pandemic?
Gupta: I’m convinced that one of the big things coming out of this pandemic is a much greater focus on ESG. And within ESG, there’s going to be a much bigger focus on the S part of ESG, the social issues. Because anybody has seen through the pandemic that inequality issues all come to the fore. So the issue of trust is going to be big.
Something else that sort of came from the COVID but not entirely, is much greater reliance on distributed ledger. Right in the middle of the COVID, there were some really large trade finance fraud. Blockchain technology and distributed ledger can actually resolve that. And so we are now doubling down in our efforts to use blockchain for these kinds of use cases, authenticity and verification.
There are some other changes which are not directly linked to our digital strategy but came out of COVID. One is geopolitics: China/US issues are going to be a big game-changer, especially in our part of the world. If you’re sitting in Southeast Asia, you’re sort of caught between two elephants dancing. You’ve got to figure out how you play with both of them without getting trampled.