MAS will not extend six-month pause on DBS' non-essential activities

SINGAPORE: The Monetary Authority of Singapore (MAS) will not extend the six-month pause on non-essential activities that it imposed on DBS after the bank's multiple service disruptions in 2023.

However, the bank must still set aside additional regulatory capital by applying a multiplier of 1.8 times to its risk-weighted assets for operational risk, MAS said on Tuesday (Apr 30). This penalty was imposed last May, up from the 1.5 times that was implemented in February 2022.

During the six-month pause on non-essential activities from Nov 1, 2023 to Apr 30, 2024, Singapore's largest lender was not allowed to acquire new business ventures or make any non-essential IT changes. 

This was meant to ensure that the bank kept a "sharp focus on restoring the resilience of its digital banking services", said MAS.

The authority noted on Tuesday that DBS has since made "substantive progress" to address the shortcomings identified from the service disruptions last year, even as efforts to implement its remediation plan are ongoing.

Improvements have been made to its technology risk governance, system resilience, change management and incident management, said MAS.

"The remediation by DBS will continue with some longer-term measures still being worked on, such as the continued simplification and strengthening of the bank’s systems architecture," added the regulator.

"DBS has committed to prioritise resources and dedicate management attention to complete the outstanding remediation measures."

MAS said it would closely monitor the bank's progress and the effectiveness of the measures.

"In the event of service disruptions, MAS expects DBS to promptly recover its services and communicate to its customers in a clear and timely manner," it said.

MAS added that it will retain the multiplier of 1.8 times to DBS' risk-weighted assets for operational risk until the bank "has demonstrated the ability to maintain service availability and reliability, and handle any disruptions effectively".

DBS said on Tuesday that being able to resume its activities "will not dilute its focus on strengthening technology resiliency and enhancing digital service availability".

The six-month pause has enabled the bank to "further prioritise attention and resources on addressing gaps in technology resiliency", it said, adding that several areas are still being worked on.

"They include continued simplification and strengthening of the bank’s systems architecture; building deeper expertise in centres of excellence for critical third-party technologies; broadening the use of artificial intelligence to further strengthen change management; and creating more monitoring tools so as to be able to detect potential issues more quickly," DBS said in a statement.

DBS CEO Piyush Gupta said: “The pause has allowed us to reflect on the areas we needed to improve on and to better address them. While progress has been made, we are committed to building on this further.

"In the months ahead, we will continue to prioritise resources to strengthening technology resiliency. We will also dedicate management attention to ensuring that our efforts have sustained effectiveness.

"Our pledge is to ensure that innovation is well balanced with resiliency so as to meet our customers’ expectations for reliable, seamless and effortless banking."

2023 SERVICE OUTAGES

A technical issue with the cooling system at a data centre caused an hours-long outage of DBS and Citibank's banking and payment services on Oct 14, 2023. 

DBS ATMs were also affected, prompting the bank to reopen branches on a Saturday afternoon to assist customers.

MAS ordered DBS and Citibank to conduct "a thorough investigation", noting that the banks were not able to fully recover their systems within the required timeframe. 

Any unscheduled downtime for a critical service affecting a bank's operations or service to customers must not exceed four hours within any 12-month period. 

The Oct 14 outage was among several DBS service disruptions in 2023. 

In March last year, a day-long service outage hit online banking and payment platforms such as PayLah!, prompting MAS to issue a strongly worded statement saying the bank had "fallen short" of expectations due to the "unacceptable" disruption.

Following that incident, MAS 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.

In May 2023, digital banking services and ATMs were down due to "human error in coding the programme that was used for system maintenance".

Mr Gupta's pay dropped 27.3 per cent to S$11.2 million (US$8.2 million) in 2023, following a cut in his variable pay.