SINGAPORE — DBS bank has been barred from acquiring new business ventures by the Monetary Authority of Singapore (MAS) and instructed not to reduce the size of its branch and automated teller machines (ATM) networks in Singapore.

In a media statement on Wednesday (Nov 1), the central bank said that during this stipulated six-month period, DBS is also required to pause its non-essential information technology changes.

The actions imposed by the authority were taken after repeated and prolonged disruptions of the bank’s services so far this year, and they are meant to ensure that the bank keeps its “sharp focus on restoring the resilience of its digital banking services”, MAS added.

On Oct 14, DBS customers experienced disruptions to banking and payment services.

They were unable to access many services provided by the bank, including the ATMs and fund transfers via online payment services PayNow and PayLah!, as well as payments at physical payment terminals such as those in stores and eateries.

DBS said then that the disruption was caused by an issue at a common data centre, Equinix, which was also used by other organisations. 

Earlier in the year, DBS’ customers were subject to disruptions in March and May.

After the March incident, MAS said that it directed DBS to engage an independent third party to conduct a comprehensive review of the effectiveness and adequacy of the people, processes and technology supporting its digital banking services.

Several shortcomings were later identified, namely on the bank’s system resilience, incident management, change management and technology risk governance and oversight.

MAS said on Wednesday: “Following the independent review, DBS has set out a technology resiliency roadmap to address the shortcomings, improve system resilience, and better position the bank to meet future digital banking needs.

“The roadmap is being implemented in phases, with the changes affecting its system architecture design taking more time to complete.”

MAS, which reviewed DBS’ remediation plan under the roadmap, said that it was “satisfied with its scope” and the planned measures to improve system resilience.

It added: “In line with MAS’ expectations, DBS will hold senior management accountable for the lapses and the board will enhance its governance approach to oversee implementation of the roadmap.

“MAS has directed DBS to suspend all changes to the bank’s IT systems except for those related to security, regulatory compliance and risk management for a six-month period.

“This is to ensure that the bank dedicates the needed resources and attention to strengthen its technology risk management systems and controls. MAS will not approve any new business acquisitions by the bank during this period.”

ATM NETWORK AND BRANCH SIZES

The bank was also directed not to reduce the size of its branch and ATM networks to ensure that there are enough alternative channels for its customers in the event of further disruptions while the bank works to enhance the operational resilience of its digital channels.

This direction will be in force until MAS is satisfied with the progress of DBS’ remediation plan.

MAS said that it will review the bank’s remediation efforts after six months and it may then extend the duration of the measures, vary the additional capital requirement now imposed, or take further actions at that point.

“In the meantime, MAS will retain the multiplier of 1.8 times to DBS’ risk weighted assets for operational risk, which was imposed after the March and May 2023 incidents.”

DBS will take up to 24 months to put in place the planned structural changes to improve the resilience of its digital banking services, MAS said.

“In the meantime, it is possible that disruptions may still occur. In such situations, MAS expects DBS to promptly recover its services and communicate to its customers in a clear and timely manner,” it added.

MAS’ deputy managing director of financial supervision Ho Hern Shin said: “DBS must put in place immediate measures to ensure service reliability while it continues to invest in the longer-term efforts to bolster its operational resilience.

“We have imposed this six-month pause on the bank to give it the space to take the actions needed to maintain customer trust.”

SENIOR MANAGEMENT WILL BE HELD ACCOUNTABLE

DBS’ chairman Peter Seah issued an apology on Wednesday for the digital banking disruptions that happened this year.

He said: “The board apologises for the digital banking disruptions. When customers bank with us, they expect to be able to access our banking services conveniently, and at any time of the day.

“With the incidents of the past year, we have failed to live up to these expectations, and have also fallen short of our own standards.”

Mr Seah added that the senior management will be held accountable as an acknowledgment that the bank could have done better, adding that this will be reflected in their compensation.

DBS’ chief executive officer Piyush Gupta said on Wednesday that the bank will be setting aside a special budget of S$80 million to enhance system resiliency.

“Over the years, DBS has focused on digital transformation so as to make banking simple, seamless and effortless,” he added.

“However, we acknowledge that we must now do better to deliver on this, and are taking a multitude of actions across technology governance, people, leadership, systems and processes.”