How DBS' 'phy-gital' model can ease Singapore's looming retirement crisis

AS THE average life expectancy of people in Singapore increases, so too does the need for retirement planning. Being Singapore's largest consumer bank, DBS is on a mission to help people realise their ideal lifestyles after retirement, by developing sophisticated capabilities that effectively map out personalised and trackable financial plans for each customer.

With one in four Singaporeans slated to turn 65 years old by 2030, the bank believes in starting its customers on retirement planning early, says Nelson Neo, head of the retail consumer segment at DBS.

"The longevity (of Singaporeans) creates the need to manage risks of outliving resources or savings for individuals," he says, highlighting rising inflation as a "significant risk on individual cash flow".

This is backed up by a financial health report the bank published earlier in July, which noted that baby boomers - referring to those aged 59 to 77 - saw worsening wallet bandwidth over the past year, with their expenses up 86 per cent of their take-home incomes respectively.

This age group is spending faster than they are earning, with expenses growing 5.5 times faster than their incomes. The report notes that while policy support can help, boomers "would have to be even more mindful of their spending habits and exercise prudent budgeting".

Equipping customers with the right suite of tools at their fingertips

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To hedge against such risks, customers should leverage the power of compounding interest returns to achieve financial resilience, says Neo, who is also head of POSB.

To that end, DBS has developed a suite of solutions to help its customers make the best-suited investment choices that would help them make the most of their money.

The bank makes use of artificial intelligence (AI) to offer personalised insights via its digital financial planner, where customers have an array of financial and retirement planning tools at their fingertips.

These insights are also derived based on a customer's external account data and holdings consolidated via SGFinDex, Singapore's open banking platform, which ensures that the nudges are both relevant and based on the latest balances.

Out of three million customers who use the planner, about a third are active monthly users, which means they use the available tools regularly to not just map out their finances, but ensure they stay on track, says Neo.

"Our advisory tools effectively ascertains the risk profile of our customers and provide advice to improve their financial health. It also recommends suitable investment products for a customer that is aligned to their financial objectives and risk appetite," he adds.

Tailoring its insights to each customer is key to the value add DBS and POSB provide. Neo notes the usage can be quite different because it's based on their individual financial needs and requirements, with different risk appetites.

"For a first jobber, perhaps savings will be the main focus. That is very different from a mid-career professional, who is trying to accumulate wealth for retirement or other financial needs, such as planning for their children's education," he adds.

The bank has continued to enhance the features of its digital financial planner over the past two years. One such feature is Your CPF, which aims to provide customers with a clear overview of their Central Provident Fund (CPF) savings.

By projecting how much a user is likely to save by the time they reach the retirement age, Your CPF will be able to inform users how much they need to top up on a regular basis to achieve their goals once they have retired.

Alongside getting their customers to take charge of their CPF savings, the bank's digital financial planner also includes a 'Map Your Money' feature, which encourages customers to define their ideal lifestyle and spending styles.

Map Your Money is then able to project to each user how much they should save to meet these goals, identifying financial gaps customers have to fill.

Neo notes that these features together provide a holistic view of each individual's finances and will enable them to take a glimpse of their future by projecting the growth of their assets.

And while it is better to start planning for retirement as early as possible, anyone at any age can take charge of their finances with DBS' suite of tools.

"Even if the time horizon (some customers) are facing is a bit shorter, the more important thing is to recognise the gap from now until their retirement. To that end, these customers can still take advantage of the current high interest rate environment to accumulate more savings, by leveraging high-yield savings solutions to inflation-proof each dollar," Neo says.

A 'phy-gital' touch

But these nudges may not be enough for some customers to make a fully informed decision. And while DBS' digital tools were crucial to delivering these insights, the bank offers a physical touchpoint to connect with these customers - a "phy-gital" approach, notes Neo.

This is where DBS' wealth planning managers come in. These managers will receive information on these same insights, using them as a stepping stone to reach out to various customers to provide a "human touch" during the financial planning process. This includes elderly customers, a segment the bank feels must be especially safeguarded given the complexities of certain investment or insurance policies.

Empowered with these customer insights beforehand, DBS' wealth planning managers are therefore able to have more fruitful and productive conversations with customers when they meet at any of the bank's nine financial planning branches - outlets specifically modelled to facilitate discussions with these managers, says Neo.

These branches were transformed over the last three years to facilitate conversations with customers and avail them to DBS' financial services. They have since become central to the efforts of wealth planning managers as they engage more of these customers.

And DBS' efforts to improve its digital and physical engagements have yielded fruit. Neo says each user of its digital planner saves 61 per cent more than non-users, and are also four times more likely to be insured. Active users, which number about a million, are also more likely to invest - which is pivotal in an era of rising inflation that can easily erode savings.

Breaking down silos

Aside from SGFinDex, DBS aims to cultivate an ecosystem of partnerships, which customers would be able to use without hassle.

The bank has several key insurance partners, such as Manulife Singapore and Chubb, and at the end of 2022 inked an agreement with JP Morgan Asset Management to develop a personalised retirement proposition for Singaporeans.

In this exclusive multi-year memorandum of understanding (MOU), the two institutions will leverage technologies to develop end-to-end retirement plans, including an individualised glidepath portfolio that would be integrated into the DBS Nav Planner.

Neo says: "These solutions will complement existing government policies, such as CPF Life and the Supplementary Retirement Scheme." It will bring together various resources for customers to assess their retirement adequacy and project their future needs, building a system of diversified, predictable cash flows for a sustainable retirement plan.

In addition, the bank has launched an industry-first Healthcare insurance marketplace, with a focus on Integrated Shield Plans (ISPs). It is an aggregator platform where customers can easily compare and choose a most suitable plan across participating insurance providers.

This is a new development for the financial industry as up until now, ISPs are offered by financial advisors who are typically 'tied to' a particular insurance company. DBS is therefore pioneering an effort among the banks to tap on an open architecture concept to avail different Shield plans by NTUC, Prudential, Singlife, Raffles to all of its customers. They can also purchase a CareShield Life Supplement (CLS) on the platform, as well as browse other wellness-related products and services (such as health screenings).

Community engagement, digital literacy

Another area the bank is keen to pursue is the promotion of digital literacy, particularly in youth and seniors who are generally under-served, highlights Neo.

POSB, for example, has a Smart Buddy programme that was launched in 2017 with the intention of cultivating sensible saving and spending habits in children through an interactive programme, largely partnering with schools.

"We were the first bank to sign an MOU with the Ministry of Education to install digital payment infrastructure in more than 330 primary, secondary and tertiary schools," says Neo.

In this deal, the bank has provided around 400,000 students with smartwatches and cards, and will be continuing to drive the adoption of digital payments for youth.

Meanwhile, DBS has continued to engage seniors through digital literacy workshops islandwide, says Neo. These workshops and engagements take place in areas such as community centres and food centres, where ambassadors teach them about using the various digibank functions.

Not only does this encourage the use of digital payments, it also helps to create awareness among seniors to fight against scams and fraud activities, adds Neo, noting that the bank has had about 30,000 participants thus far.

The bank will be continuing its efforts to reach out to more seniors into the next two years, he notes.

Ultimately, these initiatives tie in with DBS's aim to use and leverage its digital capabilities and physical touch points cohesively to aid its customers in planning their finances.

Through providing customers with foresight on their investments and finances with AI-driven data, coupled with the continuous work carried out by the bank's wealth planning managers, DBS strives to ensure its customers will be able to spend their golden years in comfort, amid both the good and the tough times.

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