DBS Group — Southeast Asia’s largest lender — saw trading volumes of cryptocurrencies on its digital exchange in the last two months surpass that of the first eight months of the year combined, CEO Piyush Gupta said in the bank’s third-quarter earnings call today.

Digital assets under custody surged 200% from S$200 million to S$600 million in the last month, Gupta said. DBS was one of the first traditional lenders in the region to launch its own digital exchange, which provides tokenization, trading and custody for digital assets. The digital exchange’s increased momentum follows DBS’s move to expand the exchange’s operating hours from Asian trading hours to 24/7 in August.

The DBS digital exchange is a members-only exchange for the bank’s wealth customers, accredited investors and institutions. The exchange’s customer base also saw steady growth increasing to 500 in Q3 from 400 in the quarter before. 

Scaling up the DBS Digital Exchange

“The fact that we now have over half a billion dollars of assets under custody so quickly just tells you how much demand there is for that activity in the business,” Gupta said. “Our intent over the next year is to continue broad basing the customer base and to look at moving out of that narrow private banking space into a broader retail offering.” 

DBS Group today reported a net profit of S$1.7 billion (US$1.3 billion) in the third quarter of 2021, an increase of 31% from a year ago and stable from the previous quarter. This brings DBS’ nine-month net profit up 46% to a record S$5.4 billion (US$4 billion). 

See related article: DBS Bank’s digital exchange assets surge 60% in Q2

DBS intends to scale its digital exchange as part of plans to step up investments in digital. DBS had, in 2020, set up a company called DBS Finnovation, to hold new businesses that are adjacent to the bank’s core banking activities. DBS Finnovation currently holds three entities: blockchain-based payments company Partior, carbon exchange and marketplace Climate Impact X and the DBS Digital Exchange. “This obviously allows us to build partnerships, do joint ventures or even build our own bespoke activities and keep them at arm’s length [from the bank],” Gupta said.

See related article: DBS, JPMorgan, Temasek-funded Partior goes live for cross-border transactions

How DeFi may reshape banking

The bank chief also spoke about decentralized finance (DeFi) and whether that would mean intermediaries like banks would not be needed.

“The heart of the DeFi world is blockchain and distributed ledger capability,” said Gupta, adding that the bank was making sure it was “plugged into the technology” so that it knew how to use it, and where possible, was starting to launch products that leveraged on the technology such as the digital exchange, Partior and Climate Impact X. 

“All of these are leveraging effectively blockchain and distributed ledger so that we can play a meaningful intermediary role in the new world,” Gupta said. “Exactly what the role will be, we will be nimble to adapt to how the situation evolves.”

See related article: Singapore grants crypto licenses to DBS and Australian exchange Independent Reserve