DBS, the largest bank in Southeast Asia and one of the first traditional banks in the region to launch its own digital exchange, reported today a 72% increase in first-quarter earnings to a record S$2.01 billion (US$1.5 billion), crossing the S$2 billion mark for the first time.
The bank reported its digital exchange business has been growing steadily with daily trading volumes increasing by more than 10 times since its launch last quarter. Digital assets under custody increased to more than S$80 million (US$60 million), and the investor base has grown to close to 120.
The DBS digital exchange facilitates spot trading between four fiat currencies (SGD, USD, HKD and JPY) and four cryptocurrencies — Bitcoin, Ethereum, Bitcoin cash and XRP — and is integrated with an institutional-grade digital custody service for these assets.
Unlike cryptocurrency exchanges such as Coinbase or Binance, the DBS digital exchange is only available to accredited investors and institutional investors, and trading is currently only available during Asian trading hours.
See related article: Singapore’s DBS bank becomes first in Asia to offer crypto exchange
But it is still early days for the DBS digital exchange. DBS expects to further scale its digital exchange business in subsequent quarters through the issuance of security tokens, which allows companies to raise capital through the tokenization of their securities and assets. The bank also plans to extend trading hours, to better suit the 24/7, nonstop nature of cryptocurrency trading.
In a media briefing, Piyush Gupta, DBS Bank’s chief executive officer said, “I’m actually quietly optimistic that the coming quarters and certainly the second half of the year will see us start getting a lot more traction with this business.”
“It’s going to be a steady process for us between now and the end of the year,” Gupta said during the bank’s briefing to analysts. “We’ll start seeing material contribution to income which I can point to only from 2022. I won’t hold my breath on looking for it in 2021.”
Earlier this week, DBS Bank together with U.S. investment bank J.P. Morgan and state-owned investment company Temasek announced they were partnering to form a technology company — Partior — for developing a blockchain-based platform for cross-border transactions. Partior’s platform will also be designed to complement ongoing Central Bank Digital Currencies (CBDCs) initiatives and use cases.
The platform, which will be built on the Ethereum-based ConsenSys Quorum blockchain, is targeted for launch by the third quarter of this year.
See related article: JPMorgan, DBS Bank and Temasek partner on ‘game-changer’ blockchain for payments
According to DBS, Partior will allow the bank to develop new financial infrastructure for payments, trade and foreign exchange settlement. This will allow the bank to enhance its value proposition to customers by providing greater speed, reliability and transparency. The bank intends to commercialize its proprietary technology to earn a new revenue stream from technology services.
Gupta said that DBS had decided in the early part of the pandemic to reposition itself for the future and build new lines of business by leveraging its technology capabilities. “I’m convinced that a big opportunity is to be part of the new digital infrastructures that are going to come into place as the world progresses down the digital trend.”
“If you think about the gold rush, the people who made the most money in the gold rush, the gold miners, they were the people who sold the picks and shovels,” Gupta said. “I think there’s an opportunity really, for somebody with good technology capabilities to provide the infrastructure and the picks and shovels of the new world, and that’s what we’re trying to do as we think about the new businesses that we can leverage and build.”