Most people who get the chance to build a business twice do so because they failed the first time. Tom McCabe, on the other hand, has become a serial builder of businesses because he is good at it.
Appointed global transaction banking head at Singapore's DBS in January, McCabe is expected to double the team's revenues in three years. A daunting task, but he certainly has the right pedigree. A veteran of Asian transaction services, he was previously global head of product management for transaction banking at Standard Chartered Bank and is credited for being part of the team that built the institution into what it is today. Still, this is not the first time DBS has planned to become a truly regional bank instead of a Singaporean one and its success this time is far from certain.
McCabe recently sat down with FinanceAsia and outlined how he plans to transform DBS into the regional transaction bank it aspires to be.
What prompted the move to DBS?
I've always been a builder and DBS has a fantastic opportunity to build a great regional transaction banking business. I came to Asia in 1997 and worked with people like Anthony Nappi, Andy Dyer, Tom O'Donnell and Peter Sullivan to build StanChart's transaction banking business. DBS presented me with the opportunity to do it all over again.
That sounds like quite the opportunity, anything specific in building the business?
A big part of this business is building the intellectual capital -- the advisory aspect. The opportunity to build the next generation of leaders in this business is something that personally is very attractive to me. It's something that is a big part of what we're doing here, building the advisory capacity in individuals to consult on regional treasury centres or the more complex trade deals. Every company has something different about their balance sheet, for example their distribution network or the countries they are in. Most corporations start off by looking for advice about the individual markets, banking regulations, tax issues, how to mitigate risk in a particular country or how to create more cash flow.
You mentioned that every company starts off with something different about its balance sheet, what is the difference at DBS?
The first thing is how dominant our Singapore franchise is. In the past year, DBS has been named the best cash management bank in Singapore for five years in a row and won arguably the two largest cash management deals in Singapore with Resort Worlds Sentosa and Marina Bay Sands. Our market share here is huge -- we've got about 55% of the Giro [general interbank recurring order] transaction volumes originated by corporate clients in Singapore.
Now we need to take the success we have in Singapore and replicate that across our markets in Asia. The business already has good franchises in Indonesia, India, Hong Kong, Taiwan and China and when we scale those up to the size we have in Singapore, it's going to be a bank that can compete with anyone.
DBS has the advantage of being a local bank in Singapore. How do you intend to replicate that in other markets?
If we look at the different customer segments in Asia, you've got the multinationals trying to bring as much money as possible into Asia and drive growth, you've got the large Asian companies that are expanding outside of Asia into the other regions and you have the SMEs [small and medium-size enterprises] that are expanding across the region, who are jumping into the exponential GDP [gross domestic product] growth in all the Asian markets.
DBS's experiences with Singaporean companies going out into Asia can be replicated across the franchise, for example with Hong Kong companies going out or Taiwanese companies expanding across Asia. It's about focusing on jumping into the trade flows in a bigger way and with a greater effort than we've made in the past. Now we have systems investments in there to make sure we're serving customers with a standardised process, that we're giving them the information they need to manage their risk parameters and liquidity, but ensuring that it's not rocket science.
And in terms of transaction banking products, what is strong and what does DBS need to improve?
Probably the strongest area where the growth is going on in Asia right now is in the trade finance business. DBS is one of the few banks out there to have continued to expand its balance sheet month-by-month during the past couple of years. Being in a position where we're leading with trade, have a strong balance sheet, a great brand and one of the highest credit ratings of any of the regional banks operating in Asia, puts us in a great position to link that right in with cash management and operating accounts.
How will you grow DBS's regional transaction banking business?
When I look at the key markets in Asia and the macroeconomic drivers, it's first the large population countries -- China, India and Indonesia. Second, the regional treasury centres in Hong Kong and Singapore and third, the markets that are medium in size but have a huge middle class with spending power, such as Korea and Taiwan. DBS's franchise has operations in 50 cities, and my focus will be to continue to build out our capabilities in those markets.
Overall as a bank, Piyush Gupta, DBS's chief executive, has targeted having a more diversified earnings base across Asia. That means looking for a higher quantum of growth outside of Singapore. Singapore will be a growth market, but when we look at the other markets I mentioned, we should be seeing growth at two or three times the rate of Singapore, driven by our increased focus and the GDP growth rates in China, Indonesia and India.
There are a number of well-established large transaction banks in Asia. How do you intend to differentiate DBS from its competitors?
I can't tell you how excited I am when I sit down and start looking at the opportunities for growth. There is so much low hanging fruit for us to go after right off the bat, just from building additional capabilities to serve the corporates currently doing business with us across Asia. We can establish deeper relationships with them and build a wider product set to serve them.
We've committed to the corporations that want to grow across Asia with us to being much more aggressive with our balance sheet and we have a great suite of products across transaction banking, global markets, and advisory in the debt and equity capital areas.
If you had one wish regarding the transaction banking business at DBS, what would that be?
I'm sitting here smiling ear to ear and thinking I want to say 'to see what the business looks like in three years' but then, as I say that, I think about how much fun we had building the business at StanChart. The fun part is in the journey. That's where you build the friendships through the long hours, the times on the planes and the airports together. That's where the camaraderie and life-long relationships come from. I think I'd like the suspense. I'm pretty excited about enjoying what the next 24 to 36 months has in store for us.