DBS Bank seeks to re-invent its current broking arm. Can it succeed in retaining exclusivity on its mobile brokers or transiting them to new roles?
Amid falling trade volumes from retail participants and downward pressure on brokerage commissions, DBS Bank is exploring ways to revamp its current broking arm DBS Vickers.
«The equities trading business is critical to DBS and we have no plans to shut it down. We are currently exploring different business models with a view to delivering a stronger customer proposition with minimal employee impact. We are working through the details and more will be shared at a later stage,» said a bank spokesperson who was quoted in a «Business Times» (behind paywall) report.
Uberisation Effect?
To cope with falling volumes and fee commissions, many local brokerages have shifted their fixed headcount client-servicing staff to flexible self-servicing platforms. This group of staff, commonly known as mobile brokers, need to meet an undisclosed threshold of trading volume individually so as to cover licensing fees and operational costs to their brokerage firm.
«The problem with mobile brokers is: how do you control them and ensure the quality of services? They can also work for other brokers with such arrangements,» commented one DBS Vickers remisier, who declined to be named. He cites the example of such non-exclusive work arrangements with no basic pay already happening in the local ride-hailing industry.
Headcount
DBS Vickers is estimated to have about 250 mobile brokers, which shrunk from 500 plus originally as some has left the industry. On top of this flexible workforce, there is slightly over a hundred fixed-desk remisiers, according to industry sources.
«It is about time the bank take action, as everybody (in mobile broking) is unsure of whether their future business could survive. I think only a small amount of staff will get absorbed into the bank,» the remisier added.
Shift Towards Wealth Management
As of the end of last year, the market capitalization of companies with primary listings in Singapore had fallen by S$97.5 billion, or 14 percent, from the end of 2014, according to SGX data. The bourse’s average daily turnover has been halved since 2007.
While money has been leaving the local bourse shrunk valuations and delistings, Singapore has strengthened its position as a leading wealth hub in Asia, with private banks overseeing more than $2 trillion in assets.
Combining Broking and Banking
In 2013, DBS was the first bank to put banking and broking under one roof to strengthen its wealth proposition. At that time, it moved a number of its employees from DBS Vickers into the bank. This initiative rolled out in phases, starting with DBS Treasures Private Client and DBS Private Bank customers in mid-2013. It subsequently extended this to all other DBS customers by end of that year.
Due to the combined services under one roof, DBS customers can now access equities specialists within the bank for advice on this asset class, on top of other internet Banking services offered. It hopes to differentiate itself with value-added propositions such as access to an array of research on equities, currencies and interest rates.
