Digital banks impact on our jobs

I originally wanted to write about how the DBS Multiplier revision of terms with effect from 1 Feb 2020 will affect my wife. Then I saw a number of financial bloggers have written and analysed this in detail so I didn’t see a point in doing so anymore. But I might just summarise the impact on her DBS Multiplier bank account here.

My wife’s salary crediting will qualify under the Income category. Her POSB Everyday credit card spending still qualifies under the Credit Card Spending category. Her new POSB Invest-Saver into Nikko AM REIT ETF (SGX:CFA) back in Nov 2019 qualifies for the Investment category only until Oct 2020.

Which means from Nov 2020 onwards, the higher interest will only apply on my wife’s DBS Multiplier bank account balance up to S$25,000 (not S$50,000 anymore). It seems like this is the only action point for us and we just need to remember to do it later in the year.

Anyway, let’s move on to the main topic of this post. The MAS Digital Banks Licenses applications deadline of 31 Dec 2019 has passed. MAS will issue up to 2 Digital Full Bank (DFB – serve retail and non-retail customers) licenses and 3 Digital Wholesale Bank (DWB – serve SMEs and other non-retail customers) licenses.

You would think we are worried for our jobs since we work in traditional banks, which are constantly under threat by new technologies and developments. I’m actually excited about the entry of digital banks into the Singapore banking sector.

Traditional banks need to be pushed into investing in new technologies and improving their digital offerings. Nothing does this more effectively than increased competition. While FinTech firms can target segments of the traditional banks’ products and services, it’s difficult to take on a bank as a whole.

Digital banks should be up to this task. By being able to replicate the core banking business of a traditional bank (i.e. accept deposits and make loans), digital banks can go after the most profitable part of traditional banks’ multiple business lines. It’s important to know there are some traditional banks’ business lines that are loss-making and are being kept afloat by the profitable ones.

If you are wondering why we are not worried about this, it’s because we are in middle office departments that support the profitable business lines of traditional banks. Not so easily targeted in the short term and definitely not the loss-making ones. We are only worried about new technologies and developments that directly impact these traditional banks’ profitable business lines.

Which is why our main concern is actually internal restructuring for now rather than retrenchment. Because traditional banks will have to become leaner going forward to tackle such challenges to their businesses. And we could end up doing a lot more work for the same pay.

However, if you ask around, there will be many banking staff that are worried about these digital banks’ entry into the Singapore banking space. Because there is a lot of excess capacity in traditional banks. Take it from us. We look around every day at our jobs and often wonder what are certain employees, teams and even departments doing in their day-to-day jobs. And whether they would even exist when traditional banks are forced to become more efficient.

It’s about time these people got cut because they are dragging the rest of us down. They are resistant to change and even intentionally stop progress. Because they know they will be made redundant. They stopped learning and trying a long time ago but hang on like deadweights to get more mileage out of their dying careers. Which stops traditional banks from evolving and improving. Worse, it hinders the career and skills developments of our young banking staff that still have many more years of work to go in their jobs.

In time, it might become my wife and I who end up like these people. And if that’s the case, I hope we get cut because we deserve to be jobless. Which is why it’s a relentless chase for us to pivot into new jobs roles, gain more experience & skills, and have a open mind in addition to a willingness to learn and change. It’s a consistent reminder of our values and beliefs that we drive ourselves to uphold. If ever it’s our turn to be deadweights, then it’s time for us to exit and add value in some other way.

For now, while there are still traditional banks with jobs that we can work in, the answer is clear as we move into a digital age of banking. If you find yourself being lazy, going through the motion & not learning every day. Doing a job that is easily replaced by new technology. Or if your job exists because of the inefficiencies of traditional banks. Your risk of retrenchment goes up exponentially with time. Adapt or get left behind. It’s your choice.