MAS slaps DBS bank with additional capital requirement following "unacceptable" slew of outages

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The Monetary Authority of Singapore (MAS) has slapped DBS bank with an additional capital requirement after the bank saw a disruption to its digital banking services last week, its second in a matter of weeks.

Together with the additional capital requirement imposed on DBS in February 2022, this translates to approximately S$1.6 billion in total additional regulatory capital, said MAS in a statement.

"The additional capital requirement on DBS Bank is now a multiplier of 1.8 times to its risk weighted assets for operational risk, an increase from the multiplier of 1.5 times that MAS applied in February 2022 following the November 2021 disruption," it said.

Don't miss: MAS slaps DBS bank with additional capital requirement following "unacceptable" slew of outages

MAS may subsequently vary the size of the multiplier depending on the outcome of ongoing reviews. It added that after the March incident, DBS Bank had convened a Special Board Committee to oversee a full review of the bank’s IT resiliency, to be performed by an independent external expert.

MAS had then directed DBS Bank to conduct a comprehensive review, including an assessment of the adequacy of management oversight, staff competencies, operational processes, system resiliency, and architecture design for its digital banking services, it said.

"Although the causes of the March and May incidents appear distinct from each other, MAS has now required the review to cover the May incident as well," it stated.

MAS has also required DBS Bank to take immediate steps to improve the resiliency and recoverability of its existing system, including enhanced monitoring, more comprehensive testing and additional system redundancies, in order to minimise disruption of its services to its customers.

“DBS Bank has fallen short of MAS’ expectations for banks to deliver reliable services to their customers. The repeated inconvenience caused to the public is unacceptable," said Ho Hern Shin, the deputy managing director (financial supervision) at MAS.

She said:

The additional capital requirement imposed at this time underscores the seriousness with which MAS treats this matter. DBS Bank must spare no effort in dealing with the underlying issues leading to these disruptions.

MAS' ruling comes days after DBS bank users experienced difficulties accessing banking and payment services, on Friday afternoon due to a "higher volume traffic" on its digibank, according to the bank who were responding to frustrated users on its Facebook page who were unable to access mobile banking services.

It later posted a statement on its Facebook page confirming that some retail customers faced difficulties accessing its banking and payment services, including DBS/POSB digibank Online and Mobile, DBS Vickers mTrading, DBS PayLah! and ATMs.

"Our digital systems returned to normal within 45 minutes at 1.30pm. Most of our ATMs are also up and running," it said. "Please be assured that our systems are uncompromised, and your monies and deposits remain safe," it continued.

It's CEO, Piyush Gupta, then put up an official apology on the bank's website. He said:

We apologise for the digital disruptions that have recently occurred. Our customers rightly expect more of us, and we are committed to doing better.

Gupta then acknowledged MAS' supervisory action and noted that MAS’ latest action will have an incremental 0.3%-point impact on DBS Group’s 31 March 2023 Common Equity Tier 1 capital ratio, reducing it from 14.4% to 14.1%.

The disruptions last week were particularly significant because it came just shortly after two significant outages in March.

Banking application DBS PayLah saw some frustrated users emerge as customers faced delays when it came to receiving their cashback in March after a high volume of logins affected a SG$3 meal subsidy that was being offered by the bank under its 5 Million Hawker Meals initiative.

According to DBS in a statement posted to its Facebook page, the bank apologised for the inconvenience and said, "We are aware that some customers who had earlier made eligible transactions under the DBS 5 Million Hawker Meals scheme did not instantly receive their cashback. Please be assured that we have credited the cashback to your PayLah! wallet."

Just days after the outage, services were down once again. DBS users found themselves unable to log onto DBS' digital systems after access was disrupted with the bank later saying that access was intermittent. Services were restored by 5.45pm according to an update by the bank at 7.30pm.

However, shortly after, the Monetary Authority of Singapore (MAS) released a statement saying that the disruption was "unacceptable" particularly as it was coming a year after a similar incident in November 2021.

"DBS has fallen short of MAS’ expectations to maintain high system availability and ensure its IT systems are recovered expeditiously," the statement read. MAS has also instructed DBS to conduct a thorough investigation to establish the root cause of the disruption and to submit its investigation findings to MAS. "MAS will take the commensurate supervisory actions after gathering the necessary facts," it said.

MAS also said it takes the reliability of banks’ critical IT systems seriously.

In response, DBS CEO, Piyush Gupta issued a statement on behalf of the bank:

We are disappointed that many of our customers were unable to access our digital banking services on 29 March 2023. We hold ourselves to higher standards and it is our utmost priority to review the events of today.

He continued by acknowledging the "gravity" of the situation and said that he appreciates the understanding of customers and "deeply regrets the inconvenience caused."

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