Singapore’s financial regulator on Wednesday barred DBS Group from acquiring new business ventures or reducing the size of its local branch networks for six months, as it steps up efforts to get the lender to resolve a spate of digital banking service outages.
The changes will ensure that the bank keeps sharp focus on restoring the resilience of its digital banking services, the Monetary Authority of Singapore said on Wednesday. The actions were taken following the repeated and prolonged disruptions of DBS’ banking services this year, most recently last month.
Singapore DBS, Citi customers can’t use online services over data centre outage
Singapore DBS, Citi customers can’t use online services over data centre outage
The continued disruptions – with at least five this year – led some analysts earlier to raise the prospect of more severe punishments such as fines. Already, the MAS has penalised DBS by raising its capital requirements twice in over a year.
Lawrence Loh, director of the National University of Singapore’s Centre for Governance and Sustainability, described the ban as one that was “firm but fair” and would give the bank the space to “stay focused on the much-needed infrastructural improvements”.
He noted the bank had merged with Citigroup’s consumer banking business, which effectively made it the largest foreign bank in Taiwan even after its technological lapses earlier in the year.
“It is probably proper that the priority now should be to keep the house in order and safeguard consumer interest, more than engaging in expansionary activities even in various parts of the world,” he said.
Nizam Ismail, founder of Singapore-based compliance consultancy Ethikom Consultancy, said the move, while appearing “unprecedented and harsh”, was unsurprising given the “widespread and significant” implications on the broader economy.
“These disruptions have also recurred on several occasions despite earlier regulatory interventions imposed by MAS,” he said. “The perception is that these service disruptions do not bode well for Singapore’s drive towards the digitisation of financial services.”
DBS’ stock has lost 2.6 per cent this year through Wednesday’s close, compared with a 2.7 per cent loss on the Bloomberg Asia-Pacific Banks Index and 5.4 per cent drop in Singapore’s benchmark Straits Times Index.
Singapore requires banks to ensure any unscheduled outages that affect their operations or customer services not exceed four hours within a one-year period.
An October 14 weekend outage left DBS customers unable to access multiple services, including online banking and ATM cash withdrawals. The disruption, that also affected Citigroup’s local unit, comes on the heels of similar episodes that DBS has so far struggled to fix.
After the mid-October disruption, MAS ordered DBS and Citi to conduct a thorough investigation on why they were not able to recover their systems within the required time frame. While the outage had occurred due to a technical issue at an Equinix data centre used by the lenders, MAS said it expected banks to have contractual agreements with data centre providers that incorporate its requirements on system availability.
“There are some bank-specific issues they need to address and they are on top of it,” Menon said. “They will do it and we will hold them accountable.”
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Data released in April showed that the seven banks considered to be systematically important to Singapore – which include DBS and Citi – have reported 17 disruptions that lasted over an hour to their digital banking services since 2018.
Menon said despite the visibility of DBS’ outages, he did not see this as a systemic issue affecting the whole financial system.
“It’s not as if the entire banking system is prone to outages,” he said. “If you look across the banking system, I don’t think we have a problem.”