IT’S rare for a bank boss to take a 30 per cent cut in variable pay – after delivering a chart-topping return on equity of 18 per cent.

In doing just that, Piyush Gupta, the chief executive officer at DBS Group Holdings, has acknowledged the role of small things – like an overheated data centre – in making a bank good, average or bad in the digital age.

But the US$3 million hit to salary also shows how far Singapore’s largest lender is from realising its CEO’s ambition. Under Gupta, DBS has always aspired to be less of a bank, and more of a technology powerhouse. And not just any tech firm, but one that would rank alongside some of the world’s most admired brands. As DBS told McKinsey & Co, the plan was to borrow the initials of Google, Amazon, Netflix, Apple, LinkedIn and Facebook, supply the missing D, and voila: You have Gandalf from The Lord of the Rings.

Trouble is, after more than 14 years leading DBS, the wizard of Asian banking is running out of time: Succession is on the horizon. To cement his legacy as the banker who inserted DBS into Gandalf, the CEO has to act fast. In full-year earnings on Wednesday (Feb 7), Gupta promised to eliminate single points of failure for key services during the current quarter. The bank is also close to appointing a chief information officer, he said.

Stalled ATM transactions and other tech disruptions became the lender’s Achilles’ heel in what was otherwise a much better year than I had anticipated. Trouble in United States regional banking failed to derail the Federal Reserve’s campaign to keep interest rates higher for longer. That helped DBS extract a juicy profit margin on its loans. On its home turf, elevated borrowing costs failed to deter first-time local homebuyers. Mortgage demand in Singapore has been trending lower since end-2021, but it has not fallen off the cliff.

Yet, before the results, DBS shares were down nearly 12 per cent in one year, the worst among the Asian financial centre’s three homegrown banks. It was not big credit mishaps or spectacular interest-rate miscalculations that hobbled performance, but everyday operational snafus. In the end, 2023 will be remembered as the year in which DBS annoyed its customers and regulator and suffered business and reputational damage that were not expected from what Euromoney named the world’s best digital bank in 2016.

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The infirmities should have been addressed right after digital services failed for two days in 2021. Now DBS is playing catch-up in a somewhat less favourable environment. All lenders with exposure to China are anxious about the mainland’s deteriorating economy and its repercussions for the rest of the world. Though Gupta is still projecting a strong return on equity of 15 to 17 per cent this year, there would be a tradeoff between profitability and growth. Net interest margin is expected to slow slightly from 2.1 per cent in the December quarter, but loan growth may hum along, aided by the lender’s acquisition of Citigroup’s consumer business in Taiwan.

Credit quality remains stable, meanwhile. With the nonperforming loan ratio currently at 1.1 per cent, there is plenty of cushion to make provisions for losses without having to slow investment in technology, which must be Gupta’s top priority for the year.

It is unfortunate that when the tech world – titans and startups alike – is all excited over generative artificial intelligence, DBS should be stuck with a version of what American psychologist Frederick Herzberg described as a “hygiene factor”: A bank app that works 24x7 will not motivate customers to use it more often; but one glitchy experience can leave them miserable.

Forget ranking alongside the world’s iconic tech brands. The challenge right now is to get the basics right. When Gandalf the Grey could not complete his task on Middle-earth, the novelist JRR Tolkien gave the sorcerer a second chance. In some ways, 2024 may be the 64-year-old Gupta’s year as Gandalf the White. Under his leadership, DBS has got the big calls mostly right. If the bank does not make more headlines for its service snags than its return on equity – three percentage points higher in 2023 than in the previous year – investors will be forgiving. It is time to sweat the small stuff. BLOOMBERG

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.