The ET jury has chosen you, the CEO of DBS, as the Global Indian of the year. Twenty-six years ago you decided not to join HDFC Bank and instead pursue your own goals. How do you feel when you juxtapose the two?
I have thought about it often. I continue to be very close to Aditya Puri, so we have compared notes and the journey. With the kind of franchise he built, I sometimes wonder whether it was a smart decision at that time and it would have been interesting to be part of that great building journey. On the other hand, given that he stayed in his job for 26 years, what it would mean is that I would have been number two and never the number one. The reality is that at some stage it is always helpful to execute your own strategies. On balance I can’t complain. Not taking that step at that time actually helped me through a different journey, which was quite fulfilling in its own way–multiple countries, roles, including a failed entrepreneurial stint which I would not have seen either.
Last year was extraordinary for you – the acquisition of Lakshmi Vilas Bank. You dared to do what no international bank has. Why?
When we raised our hands to subsidiarise in India, a lot of people asked how come you want to subsidiarise when nobody has done. And, I have maintained all along that we want to subsidiarise because we are genuinely bullish about the future of India and to capitalise on that you must be entrenched. You cannot be a niche player that operates in the top 10% of the market–you got to go down deep. If you see all the growth in India in the last 20 years, it is the consumer financing space, SME space and if you really want to benefit from it you have to be in that part of the market, and for us the only way was to subsidiarise. We were already thinking about these opportunities –what would make sense and had a strategic road map. We were mentally prepared and had done some homework around a range of possibilities and that allowed us to respond very quickly.
Does the role of white knight remain valid?
One of our basic things in doing inorganic deals is we must have the bandwidth. It’s got to be strategically aligned with what we want to do, it has to make economic sense and you must have the management bandwidth to go ahead. And therefore, if it’s a much bigger deal, we may not have the management bandwidth to do justice to it. If it was a much bigger challenge, I don’t think we would have been able to handle. For the next couple of years we have our hands full in integrating LVB. We are going to focus on aligning the culture, technology and build on what they have for now.
Cryptocurrencies are being called the 21st century gold or tulip depending on whom you talk to. Where are you in this debate?
We launched the first bank-sponsored digital exchange in December, which lets you tokenise assets and securities. It also helps you custodise digital services. It also helps us buy and sell cryptocurrency. So by our action we are creating capabilities for crypto, digital currencies and tokenisation for the future. But Bitcoin as a replacement for money is still challenging. Money is a medium of exchange, a unit of account and store of value.
Bitcoin seems to be all the rage…
Bitcoin is not a good medium of exchange because even though Elon Musk says he will take it for Tesla, it is very hard to do transactions because you can only do nine transactions per second while Visa and Mastercard can do hundreds of thousands. It’s also difficult to make it a unit of account because it is so volatile. When the value changes 60% to 70% every two three days, how do you take it as a unit of account? However, as a store of value it can work because if you think of gold, which has no intrinsic value, but we collectively as humanity have decided it is a good for jewels and a good asset. So we can collectively build a story that this limited supply asset is a store of value and that might happen. You could get to a stage when Bitcoins serve the nature of digital gold as opposed to digital money.
You have had a leadership role for decades. What did it mean when you started and what is it now?
A couple of things about leadership don’t change — to set a true norm, a sense of direction, build a culture in a company, to create a team — these things don’t change. Hallmarks of leadership are willingness to take accountability, to come up with ideas and have initiative, to question the status quo and most importantly to inspire people to go down a path they don’t even know exists. What does happen is the ways you express leadership tend to change over time. In the three and half decades I have been there, it’s quite clear, as generations and technology change, the manner and method you lead needs to evolve. You move from more top-down vertical leadership to horizontal leadership and learning to lead people through influence and being participative in your leadership format and ideas. But the fundamental is having a clear sense of purpose, focusing on building culture and getting the right empowered team , which don’t change very much.
You talk about culture and change. Aren’t they conflicting – isn’t one stationary while the other is not?
I am a big believer in shaping culture by design. Often you will find that there is a culture of a country and then you go to a company, which has completely different culture. Why is it that the company culture trumps the country culture? It happens because you can shape culture in a way. In DBS for example there is a sense of camaraderie, a family spirit and Asian values, which I kept. But there was another part of the culture which I shook up and that was (being an) offshoot of the government. A lot of decision making was quite bureaucratic. We went through committee structures. People were scared to take decisions. It was quite sarkari in many ways. I had come from an orientation where entrepreneurship, risk taking, individual accountability were important. So to me the big question was—how do I marry the culture of individual enterprise with the culture of harmony and collective operations that DBS has?
While institutions require change, there is resistance. How do you handle it?
In our case we stumbled on it. It was not a well-thought-through thing. We drafted a programme of change which had three basic pillars — becoming customer centric, changing the technology architecture and the culture change. As I reflect back, the first pillar of putting customer at the centre liberated everything else. We hired people for customer design, we taught people customer journey but underlying that was the belief that if it makes sense for the customer the bank will support the activity with what needs to be done. The main thing that changed the culture and overcame resistance was the people’s belief that they had a simple rubric—“If it makes sense for the customer, it’s okay to do.”
But there are various stakeholders pulling in different directions…
But if you want to drive change like this, it has to come right from the top, the board. I was quite blessed because my board and the chairman right at the top bought into this culture change and driving a transformation of DBS very early. So much so, that they were willing to take short-term pain for long-term gain. Early in our journey, I remember they gave me an X amount and said you spend it to drive the change I wanted and they will deal with the shareholders and the market because it was the right thing to do. So I think you need to make the investments for the long-term and for that you need the commitment not only from the senior management but all the way to the board. Once you see that the message goes down to the troops, that helps overcome resistance. As adults we are also anchored by the way we do things, so you’ve got to create an atmosphere for people to experiment and learn by doing and you’ve got to reduce the premium on risk so it’s okay to make mistakes. Because if people are scared of making mistakes, they won’t take a chance.
Where did you learn the lessons of management?
Most of the things I learnt about banking come from Citibank. I spent more than 25 years there and many of these things — getting your hands dirty, entrepreneurship, leadership — I learnt at Citibank. But a large part of leadership skills I learnt fundamentally do go back to being in India. I grew up in India in the 70s and many of the traits that I have acquired come from high school and college — the capacity to have a world view, to put things together coherently, to be able to communicate, and taking people along, to look for solutions. All these predate Citibank.