Digital transformation isn’t ‘digital lipstick,’ says DBS CIO

• FSIs need to think of themselves as tech companies; build tech like the best do
• OSS software, devops, agile and chaos methodology help bank lead

ONE of the greatest challenges that face organisations today is dealing with change. Due to today’s highly competitive business landscape, companies have no choice but to evolve, but they often fumble because they are held back by legacy technology and processes.

To compound this challenge, there has been a lot of talk about digitisation in recent years, forcing companies to embrace the trend. Many of these organisations may have however embraced digitisation cosmetically by simply digitising existing processes without looking at all the advantages of digitisation holistically.

But that isn’t what true digitisation is really about, stressed the group chief information officer (CIO) of DBS Bank Ltd, one of the largest regional banks in Asia.

Speaking to the Asian media in a session introducing Red Hat’s panel of customers at the recently concluded Red Hat Summit in Boston, David Gledhill, also DBS’ head of group technology and operations, argued that it was imperative that the entire DBS Bank stopped thinking of itself as a bank but started thinking of itself as a technology company.

“We have to build technology as good as what the best technology company on the planet has,” he stressed. “You have to do that in a radical way and not just put on ‘digital lipstick’ on the bank.

“As we thought about this transformational shift in the culture, we started by looking at how the best tech companies – Google, Amazon, Netflix, Apple, LinkedIn, Facebook – operate, and asked ourselves, ‘How do we become like them?’,” he said.

One of the leading banks in the region, DBS Bank was last year named the ‘World’s Best Digital Bank’ and ‘World’s Best SME Bank’ by Euromoney Magazine. DBS Bank operates its popular mobile payment solution, PayLah and also runs a mobile-only Digibank app, first launched in India, followed by Indonesia.

Gledhill said in today’s era of banking competition, DBS had no choice but to use technology to drive change within the bank. He added that to do this, DBS had to leverage on the same technology these giants are using, the bulk of which is based on open source software (OSS).

OSS is software whose source code can be viewed, inspected, modified, enhanced and used without the original author’s permission. Users who modify the codes are however required to contribute back to the OSS community, making available the changes made so that others can benefit from them.  

“As part of our journey of how we shifted ourselves from [being] a traditional bank to being a technology or software company, one of the key questions for us was, 'How to set free our developers and businesses, so that they can design new creative products and not shackle them to the traditional ways of doing things?’

“To set ourselves free, we had to use the best technology on the planet, and we had to get into OSS, and that’s the secret recipe [for DBS] as we took the bold step forward,” he said.

Chaos to the fore

Underpinning DBS Bank’s transformational journey is the ability to leverage on other companies’ OSS innovations to better itself. In the case of DBS Bank, the innovation came courtesy of Netflix Inc. According to Gledhill, DBS Bank began using a methodology pioneered by the streaming media provider dubbed Netflix Chaos Engineering (NCE).

In a nutshell, NCE is about purposefully injecting technical problems you would expect to discover in real production systems in order to systematically simulate what can go wrong – hence the term chaos – so that engineers can learn to anticipate these challenges and mitigate against them.    

Netflix used this method as far back as 2010, when it was beginning to move from its own data centre onto public cloud platforms, and released its OSS NCE tool to the public in 2012.

Gledhill explained that the traditional way of testing a banking product involved the evaluation of features rather than ‘break-testing’ it.

But the challenge of the old method is that you could never subject the product to real-life troubles and engineers would have to wait for it to fail before being able to troubleshoot the problems.

“Chaos engineering injects the faults all the time, and you ‘break’ the product before it goes into production, so that engineers can get the necessary feedback to design and re-design a better product that can withstand many failures.

“Who would have thought that five years ago, we would bank on Netflix’s [chaos method] to help us become more resilient,” he explained.

“Now in our development pipeline, we can test breakage before production, and we’re finding out lots of things that chaos tools have brought up that we never encountered before.”

Gledhill however said DBS Bank can’t use Netflix for production to run the banks core system, and that’s where Red Hat Enterprise Linux (RHEL) comes in. With RHEL, Gledhill said the bank gets the best of open source – the best of minds to collaborate with but also the enterprise grade resilience, quality control, reliability and support.

“Red Hat is the sweet spot for us in terms of being able to go fast and yet not ‘blow up’ the bank,” he claimed, adding that Red Hat is not the only OSS that DBS Bank uses.

Hybrid or public cloud?

One of the main themes at the Summit was Red Hat’s vision for the future of the hybrid cloud, and how the Raleigh, North Carolina OSS player is going to prepare for the future given that the three largest public cloud providers – Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP) – are branching out into their hybrid cloud offering to compete with Red Hat.

Quizzed as to what DBS Bank’s views were on this, Gledhill weighed in by noting that the bank is completely agnostic about its approach to the cloud.

The executive said the bank began partnering with Red Hat as it has the deepest and widest feature set [at the time] not because of any preference for a vendor, noting that DBS Bank also works with other public cloud providers such as AWS and Microsoft too.

Gledhill was however philosophical about the use of hybrid and public cloud, noting that “DBS Bank doesn’t care if it’s private or public clouds in operation.”

“You get 80% of benefits by building cloud architectures and so it doesn’t matter whether it’s public or private,” he argued. “What’s more important is that we’re able to rip out legacy, put in standard platforms, controls and scalability [and at the same time] be resilient; so we don’t even get to debate this [private vs public].

“What we get from reengineering the software stack in the last five years is that we’ve reduced our operational expenses as a percentage of our income by 40% and reploughed that back into building new technology, which we can now build faster and cheaper.”

NEXT: An analysis on Red Hat’s cloud strategy

Edwin Yapp reports from Red Hat Summit 2019 in Boston, at the invitation of Red Hat Inc. All editorials are independent. He is the contributing editor to Digital News Asia and executive consultant at Tech Research Asia, an advisory firm that translates technology into business outcomes for executives in Asia Pacific.