“In corporation with JD.com, DBS China’s procurement cycle, which originally took an average of 25 days, has been cut into 5 days, shortening the procurement cycle by 80% for office equipment. With JD’s support, DBS branches can make flexible purchases fit for their needs, and we no longer have to sign contracts with suppliers all over the country, which reduces the risk of non-compliance and enhances efficiency. More significantly, because of the whole digital process of having a track record, it also lays a good foundation for the digital management of the entire group.” Benton Gong has addressed the recent Digital Procurement Exchange held between DBS Bank and JD.com, who serves as Head of Technology and Operations and Chief Information Officer of DBS Bank (China) Limited.
Photo taken at the DBS & JD Business Exchange Meeting (Benton Gong, second from left)
DBS Bank (China) Limited (“DBS China”) is a subsidiary of DBS Bank, a leading financial institution in Asia. Formerly known as the Development Bank of Singapore, DBS set up its China office in Beijing in 1993 and in May 2007, the Bank was one of the first foreign-funded banks with legal person status registered in China.
DBS’s network and business have grown rapidly over the past decades. At present, it has 12 branches and 22 sub-branches in China, with a workforce of about 2,000 employees. DBS’s businesses include corporate and institutional banking and global transaction services, consumer banking and wealth management as well as treasury and markets. In recent years, with a digital upgrading orientation, DBS has adopted multi-faceted exploration and practice to achieve from digital transformation to digital operation, successfully setting a new model of digital transformation in the banking industry.
According to Benton, started from 2018, DBS launched the construction of the online procurement module and continued to promote the upgrade of the internal management system by adopting “DDOM” (Data-Driven Organization Management). In other words, all internal management and internal departmental decision-making is digitally driven and DBS has built a digitalized control tower for each department from top to bottom, involving different indicators such as cost, profit, order volume, error rate, and etc. All decisions of the Group are made on this basis.
As an important area of digital transformation in the banking industry, DBS has been concentrated on enhancing the digital transformation of the procurement process as a priority. “The financial industry tends to have more stringent operations and internal controls than other industries. DBS sets its single procurement department at the head office in China, and branches are able to process independent procurement,” said Benton, “Under this model and in light of the high compliance requirements, branches need to submit a list of purchased goods and detailed qualification materials of suppliers for head office’s review if there are major concerns about the suppliers’ qualification documents and it may even have a check on-site, which not only delays the purchasing cycle but also increases the cost of business operations. In addition, there are many suppliers of all kinds serving the different qualities of their products, making it difficult to evaluate and manage. The procurement process was characterized by numerous links and time-consuming, while relying solely on manpower for registration, urging, acceptance, among others, and in the absence of supervision throughout the whole process.” To this end, DBS China entered into a partnership with JD Business, the enterprise business arm under JD.com, many years ago. JD has established a unified group-wide online procurement portal for DBS China, with integrating JD’s massive genuine products, mall operation and mature logistics system and other resources, to provide exclusive procurement scenario solutions. This can centralized management of previously decentralized procurement needs.
By using new solutions, DBS China’s procurement staff can import commodity demand and distribution information into the platform with a single click, and efficiently distribute them to branches through JD’s enterprise-level supply chain, realizing one-stop procurement and integrated distribution of materials nationwide, while the entire process of material matching, order placing, approving, executing, delivering, and financial settlement be navigated through JD’s digitally intelligent procurement platform to achieve whole-process visualization and dynamic management. Through the cooperation with JD.com, the procurement cycle, which originally took 25 days on average, is cut into 5 days, shortening the procurement cycle by 80%.
In recent years, under the guidance of China’s “Carbon Peak & Carbon Neutrality” Goals , green and low-carbon development has become a “compulsory option” for the banking industry. Driven by this purpose, DBS Bank has actively promoted green and low-carbon development of its main business and daily operations on all fronts. For example, in its traditional financing business, DBS has now put green finance a strategic priority, granting certain “green loans” to enterprises that meet the green and low-carbon criteria, with corresponding interest rate concessions compared to ordinary loans.
In addition, the procurement process involves various types of bills, documents, papers and notes, which are known as import material consumption. In the procurement process, DBS focuses on “paperless” processes, which reduces the consumption of paper, documents, bills and etc., to make corporate development more environmentally friendly.
“The implementation of electronic bills and documents and materials is a key necessary part of financial procurement and the future direction of financial procurement. In daily operations, in addition to applying green energy, the use amounts of resources such as water, electricity and paper can be also an important indicator for assessing the bank’s green development index. An excellent green development model is important for a bank’s reputation,” Benton said.
The cooperation with JD Business has enabled DBS to realize the full-process e-procurement in terms of e-order, e-invoice, e-tracking, open account period and etc. Bidding procurement and settlement work saves a large amount of labor and paper costs, effectively lowering operating costs and conserving social resources. As a result of the reduction of procurement processes and related paper bills and documents, DBS has progressively built a better image in green development areas.
As China makes greater efforts to open up to the world, a large number of foreign enterprises have entered the Chinese market. The opening up of the financial sector constitutes an important part of China’s opening up landscape, while banking industry is one of the most key areas. In the wave of digitization, foreign banks at the crossroads have quietly picked up the pace of the journey of foreign bank digitalization. Major foreign banks have proceeded to develop their strategic direction of digital transformation with careful arrangements. In the view of Benton, the current foreign bank business model and competitive ecology are undergoing historic changes and digital transformation has become an irreversible trend in the industry. The future of banking industry should continue to accelerate the digital construction. With the help of digitization, banks can improve the ability and level of service to the real economy, enhance the efficiency of service to the real economy, and eventually boost the high-quality development of China’s industry.