Piyush Gupta: predicting disruption
DBS chief understood fintech’s threat to legacy banks long before his peers did
When the Development Bank of Singapore was looking for a chief executive, one name stood out. “There really was no contest,” says one board member. “He was so impressive.”
But Piyush Gupta, a respected executive at Citigroup who had served in senior banking roles across Asia, had reservations.
Nearly a decade ago DBS was regarded as conservative. “I was worried that Temasek [the investor and the bank’s largest shareholder] would be a back-seat driver,” he recalls, “and whether I could transcend what was then regarded as the government-department culture of the place”.
Mr Gupta thought turning DBS, Singapore’s largest bank, into a meritocracy would be his greatest leadership challenge. The bank was losing market share. “It was not run as a professional, meritocratic organisation.” But it turned out he would face a second, even bigger problem.
Several years into his tenure, Mr Gupta noticed fintech start-ups in China, a market to which Singaporean banks have always paid close attention. He understood that they would pose a threat to conventional financial institutions, such as DBS. But few of his counterparts shared his alarm.
“The chairman of ICBC wasn’t worried. Citi and Wells Fargo people weren’t concerned,” Mr Gupta recalls. “But I was paranoid.”
So in 2014, the year Alibaba listed in New York, Mr Gupta requested a meeting with Jack Ma, the charismatic founder of the e-commerce group and its Ant Financial unit, and Mr Ma’s chief lieutenant, Joe Tsai. To this day, many other bank chief executives have not met the founders of Alibaba nor Tencent, the tech giant, despite the Chinese companies’ impact on financial services, from online lending and wealth management to payments and digital wallets.
“It was clear that their ambition was to change financial services,” he says. “They weren’t concerned about footprints. Instead, they were all about the use of data.
“Alibaba and Jack Ma catalysed my paranoia,” Mr Gupta continues. “I knew I needed to think like them and be like them. Now I try to get everyone in the bank to ask: ‘What would [Amazon’s Jeff] Bezos do? Not ‘What would [JPMorgan’s] Jamie Dimon do?’”
Mr Gupta’s office is testimony to that belief. At first glance it appears to be full of conventional chief executive clutter.On his coffee table and shelves are books such as Above Singapore, (photographs), Lee Kuan Yew— a Tribute, and 100 Years of Citi in Asia. Photographs feature the chief meeting former US presidents George W Bush and Barack Obama, and UK prime ministers Tony Blair and David Cameron. There is one with cricket star Sachin Tendulkar, who happens to be the face of DBS in India.
But the books on his desk and behind his desk are the ones that matter, and they tell a different story. At the top of one pile is Laszlo Bock’s Work Rules! Insights from Inside Google, while on the top of the second is The Four: The Hidden DNA of Amazon, Apple, Facebook and Google by Scott Galloway. Mr Gupta has immersed himself on what he refers to as “a journey of discovery”.
When Mr Gupta says he is trying to get everyone in the bank to think like Mr Ma or Mr Bezos, he means everyone. One of his most difficult and bold decisions was to transform the entire bank — rather than incubate fintech in a standalone unit, as other big banks have done.
“He started with the customer,” recalls the board member. “And he discovered that customers are cheaper to service and will do more with DBS through technology than through our staff.”
For example, hackathons address both social challenges —such as how the bank might contribute to the provision of healthcare for older people — to the most practical commercial issues, such as how to improve the efficiency of ATMs. New technology is being applied in back-office functions, such as human resources and audit.
The transformation is evident in DBS outside Singapore as well as within it. In India, for example, the bank has virtually no physical footprint but a growing virtual one.
Meanwhile, Mr Gupta’s paranoia has proved prescient. Singapore has shown itself to be far more open to fintech start-ups than many other centres, notably rival Hong Kong.
Regulators’ support of innovation is forcing banks to react defensively, while for the past four to five years, by contrast, Mr Gupta has been on the offensive.
That stance is the result of his belief that traditional banks are treated unfairly, because new ventures are subjected to fewer regulations in most markets. “They can have losses forever while my bank can never,” he says. “They don’t have onerous reporting rules like we do.”
This means that Mr Gupta is unlikely to engage in bold acquisitions, either of traditional banks or of fintech outfits, though he notes that he did once consider Standard Chartered, of which Temasek is also the largest shareholder. But he decided against it.
“Banks are yesterday’s story,” he declares. “Also Standard Chartered is four times our size. And there is a lot of regulatory uncertainty.” As for fintech companies, he says “small partnerships make more sense than big M&A”. DBS has taken stakes in fintech where it sees strategic value, for example in Kasisto, a chatbot AI start-up from New York.
Mr Gupta is the first Indian chief executive of a bank that has only ever known westerners and Chinese at the helm. But after serving in executive roles in east Asia for 20 years, and in Singapore for eight years, there was no cultural mismatch: “Indians have a long history of leadership in Singapore,” he says.
With the bank’s market share significantly improved, Mr Gupta has one final challenge, and it is only partly in his hands: the appointment of his successor. “There is such an enormous gap between Piyush and everyone else,” says the board member. “Can we really have confidence that the momentum will outlive Piyush? Can any successor really ensure that there is no reversal?”