SINGAPORE: DBS chairman Peter Seah acknowledged on Wednesday (Nov 1) that the bank fell short of standards after a series of digital banking disruptions, most recently on Oct 14, adding that senior management will be held accountable in terms of their “compensation”.
“With the incidents of the past year, we have failed to live up to these expectations, and have also fallen short of our own standards,” he said.
“As an acknowledgement that the bank could have done better, senior management will be held accountable, and this will be reflected in their compensation.”
The board and management of Singapore’s largest lender also apologised, saying that the bank is “addressing the issues at hand with utmost priority”.
These comments came shortly after the Monetary Authority of Singapore (MAS) announced that it has barred DBS from any acquisitions of new business ventures and from undertaking non-essential IT changes for six months.
It will also not be allowed to reduce the size of its Singapore branch and ATM networks for now, to ensure there are adequate alternative channels for its customers in the event of further disruptions while the bank works to improve the resilience of its digital platforms.
STRUCTURAL IMPROVEMENTS IN 12 TO 24 MONTHS
DBS said it is in the process of rolling out a “comprehensive roadmap” to improve technology resiliency, involving both immediate and longer-term measures to strengthen technology governance, people and leadership, as well as systems and processes.
This roadmap came following a review by consultancy firm Accenture, an independent third party that was appointed to look into the bank’s processes following a day-long service outage in March.
“The findings of the Accenture review – completed in August – were also corroborated against recent disruptions – the Sep 26 incident impacting FAST/PayNow transactions, the Oct 14 data centre incident, as well as the Oct 20 incident when some customers had intermittent access to DBS PayLah!,” the bank said in a media release.
Measures to address key areas of weakness
DBS said it believes that key gaps and deficiencies have been identified. According to Accenture’s review, they fall into four main areas: Technology risk governance and oversight, incident management, system resilience, as well as change management.
The bank said it has taken onboard Accenture’s recommendations to address these areas of weakness.
It will also take steps in addition to the recommendations to further improve its “technology resiliency”.
Some of these key actions include:
Establishing a new sub-committee of the Board Risk Management Committee called the BRMC Technology Risk Committee. It will provide dedicated oversight of technology risk and oversee the implementation of the remedial measures.Completed the transfer of its Technology Risk Management team to the Risk Management Group, reporting to the Chief Risk Officer, to enhance independent checks and balances.Splitting its technology and operations function into two separate units to allow for dedicated management oversight of each. Collapse Expand
DBS said it is strengthening system resilience and tightening processes around change management.
“As these improvements are more structural in nature, they will take time to fully implement and are expected to be completed in 12 to 24 months,” it added.
“With these changes, customers can expect to see concrete improvements in both service availability and service recovery in the coming months and over the longer term.”
For instance, DBS said it will set new service availability targets for three key digital banking services – balance enquiry, overseas payments and domestic payments.
“Should one of these services become temporarily unavailable on a particular digital channel, the bank will ensure that the service is available on an alternative digital channel,” DBS said.
“The bank pledges to limit downtime, where each service is completely unavailable across all digital channels, to no more than an average of 1.5 hours per month over a three-month period. This is a commitment DBS aims to deliver on within the next six months, and continuously improve on.”
According to MAS requirements, any unscheduled downtime for a critical system affecting a bank’s operations or service to customers must not exceed four hours within any 12-month period.
DBS added that it will maintain its network of physical touchpoints. These include branches, self-service banking machines such as ATMs and video teller machines, as well as POSB Cash-Points at merchant outlets including Giant, Cold Storage, 7-Eleven and SingPost.
If needed, branches will be opened on Sundays and public holidays as an alternative service channel, it said.
DBS CEO Piyush Gupta apologised for the digital disruptions, adding that the bank will set aside a “special budget” of S$80 million (US$58.4 million) to enhance system resiliency.
“We are deeply sorry for the digital disruptions. Over the years, DBS has focused on digital transformation so as to make banking simple, seamless and effortless. However, we acknowledge that we must now do better to deliver on this, and are taking a multitude of actions across technology governance, people/leadership, systems and processes,” he added.
“Our assurance to customers is that they can expect these actions to deliver concrete improvements in the near term and over time. In particular, apart from complying with regulatory requirements on system availability, we are committing to additional targets we are setting for ourselves on ensuring high service availability as well.”
DBS leaders had similarly apologised in March, with Mr Seah saying it is “unacceptable” that customers faced issues logging into digibank services, 16 months after a similar incident in November 2021.
“Our customers have every right to expect more of us,” he said then.
In November 2021, DBS digital banking services were disrupted for two days, prompting MAS to hit the bank with additional capital requirements.