DBS doubles down on financial wellness to meet Asia’s aging needs

Asian societies are rapidly aging: The population of those aged 65 and above across 15 countries in Asia Pacific will increase by 18.3% to 620 million in 2025 and to 730 million by 2030.

In particular, a total of nine Asia Pacific countries or territories by 2025 would be considered “super-aged” – the proportion of the population aged 65 and above reaches 21%.

But many might not be on track to building their nest egg, much less achieve financial freedom, especially in recent times when consumer purchasing power has been dented by higher inflation rates and rising costs of living.

DBS Bank, Singapore’s and Southeast Asia’s largest bank by assets (of S$739 billion), currently serves more than half of these super-aged economies (Taiwan, Thailand, mainland China, Hong Kong, and Singapore).

“Banks must help customers improve their financial literacy, and not only provide bite-sized investment and insurance solutions, but also offer personalized insights and advice to help close any financial gaps,” says Evy Wee, group head of regional financial planning and advisory solutions at DBS / Photo credit: DBS

It has harnessed artificial intelligence (AI) and technology innovation in the past decade to empower customers in Singapore to better manage their finances. Users of its AI-powered financial advisory tool (Plan by digibank) save 83% more than non-users, invest four times more, and are twice more likely to be insured.

Widening accessibility to financial planning advisory and solutions can help break the cycle of financial stress, leading to improved financial and mental well-being. This underscores the bank’s commitment to “doing well by doing good,” as pledged by top executives. The bank is now looking to replicate its successful model in Singapore across Asia, which includes Taiwan, Thailand, Hong Kong, India, and Indonesia. By 2027, DBS hopes to quadruple the number of customers who can access the bank’s financial advice and solutions in its markets.

Evy Wee, group head of regional financial planning and advisory solutions at DBS, shares more about the bank’s ambition to bridge the financial inclusion gap in Asia by rolling out financial literacy, AI-powered solutions, and affordable investment ideas to the mass affluent.

What are the most promising opportunities you see in the financial inclusion space in Asia today?

Wee: As life expectancies increase, we need to help as many people as we can to start planning their finances now and in a proper manner so that they will not only be able to attain financial freedom but also enjoy a well-deserved retirement.

But people need to understand that saving alone will not be sufficient. Investing, especially with the effects of compounding, would help fuel wealth creation.

Yet many people are sitting out the financial markets, even when equities, especially those in the technology sector, have rallied.

Maybe this is because people do not appreciate the importance of financial planning or they simply have no idea what financial planning is about or the ways to invest. Some might be too risk-averse. Enabling access to qualified financial advice through national-level financial literacy programs will help mitigate this.

There is also a need to discuss the concept of decumulation, which is the careful planning of drawing down from one’s nest egg over the years, to ensure we don’t outlive our retirement savings.

We are doubling down on tackling this after launching Asia’s first retirement portfolio that not only automatically calibrates its asset allocation to an individual’s life stage and retirement timeline (also known as a “glidepath”) but also allows investors to automate their drawdowns according to their retirement income needs.

Finally, in my view, when serving the unbanked or underserved segments, there is also a need for banks to go beyond providing basic banking services. They must help customers improve their financial literacy and not only provide bite-sized investment and insurance solutions but also offer personalized insights and advice to help close any financial gaps.

What is DBS’ recipe for success in Singapore?

Wee: We are in a unique position in Singapore where, as a universal bank, we can offer an end-to-end financial planning proposition that covers the full spectrum of financial literacy, savings, investing, and trading, as well as insurance solutions.

Our commitment to ensuring more retail investors can invest at smaller ticket sizes leads to a focus on right-sizing investments (for example, S$100 a month with POSB/DBS Invest Saver) and lowering barriers of entry with our DBS digiPortfolio (where retail investors can invest in ready-made, professionally managed portfolios by our Chief Investment Office at S$/US$1,000).

More importantly, we always put our customers in the center of what we do. Our innovative framework is developed to right-size risks based on one’s life stage and financial well-being.

Leveraging AI, we nudge our customers to better financial health by pinpointing financial gaps that they might have missed.

For example, we can identify if they have adequate emergency savings set aside or when a new homeowner needs to purchase mortgage insurance.

In the case when a customer has too much excess cash savings that can be better utilized (to beat inflation), he will be nudged to access our (AI-powered) digital investment advisory tool which will serve up personalized recommendations based on his risk appetite and profile.

Finally, our “phygital” strategy – using technology/digitalization (AI and machine learning) to amplify our face-to-face physical connections with our clients very early on – has allowed us to earn our clients’ confidence in the way we manage their wealth via our use of AI and ML to deliver hyper-personalized insights and advisory.

In Singapore, our data-driven nudges, which analyze over 15,000 customer attributes, guide our 5 million customers toward better investment and financial planning decisions. These are complemented by face-to-face consultations by our wealth planning managers, who leverage the insights to help customers take targeted steps toward achieving their financial goals.

Over 3 million customers are engaged with more than 300 million nudges or actionable insights every month. On the other hand, we saved at least 50,000 hours from automating over 200,000 risk profiles.

How does DBS intend to help progress people along the wealth continuum in the markets it serves?

Wee: Data and technology have reached a level of maturity that enables us to export and scale our Singapore use cases to various markets – simultaneously where needed – but take care to adapt them to local needs.

Over the next few months, we will progressively roll out these capabilities in Taiwan, Thailand, Hong Kong, India, and Indonesia.

The demands for financial inclusion through financial planning are similar in regional markets, though developed and emerging markets differ in their demographic needs, thereby affecting segmentation strategy. For example, markets with a young population have different needs from those with an aging population.

Take Thailand as an example. Earlier in February, we announced the intention to launch our DBS digiPortfolio as part of the expansion beyond our securities brokerage services in areas such as wealth management and advisory.

While Thai customers have no lack of options when it comes to brokerages, we see an upside for retail investors to participate in global markets through DBS digiPortfolio. Our differentiation also comes from the fact that we can use our financial planning capabilities to make this a more structured process for customers.

But there are challenges. Differing regulations are one of them. For example, life insurance products which require longer term financial commitments must be sold face-to-face in many countries today.

Tackling the local clientele is also a challenge for non-local players like DBS, so we need to start by building their trust in us.

In your view, what would help drive financial inclusion?

Wee: In the course of my sharing with industry players and regulators in the region, everyone was very amazed with the ability for Singapore residents to use their digital identity, Singpass, to consolidate their personal financial information.

The information includes insurance policies, deposits, loans, credit cards, and investments from participating banks, insurers, and the Central Depository (a custodian of Singapore-listed securities), as well as other financial information (such as public housing loans and Central Provident Fund balances) from the relevant government agencies.

This is thanks to the Monetary Authority of Singapore’s foresight in developing open-banking architecture and launching SGFinDex, a world’s first, back in 2020.

This (free-to-all) open banking architecture and platform would be, in my view, a crucial factor to accelerate financial inclusion across Asia, as it can fully empower individuals to better understand their overall financial health and plan their finances holistically.

Another way to broaden financial inclusion is through fractionalization, such that fund portfolios can now be sold in smaller ticket sizes, as is the case with DBS’ digiPortfolio. Fractionalization allows investors to start investing at an earlier age and make recurring investments, which is a good money habit to have.

Bite-sized forms of financial literacy content can also be delivered digitally to nudge customers along their financial planning journey. This educational focus makes financial planning less intimidating for customers who would otherwise put off planning for their finances.

It’s also important to remember that bridging the financial gap is possible only when you combine financial literacy, investment affordability, and economic sustainability. It’s never about pushing products for customers to buy or inundating them with information, especially in this day where attention spans are getting shorter.

More is definitely not better. Rather, I believe in taking a more considered approach, leveraging AI and technology, to tailor insights and solutions based on their age, income levels, and risk appetite. This will go further to help people take action for themselves.

This story was republished with permission from The Business Times. It was moderately edited to reflect Tech in Asia’s editorial guidelines.