Business Digital Transformation: Are We At A Game-Changing Moment?

Business Digital Transformation: Are We At A Game-Changing Moment?

Faced with unprecedented challenges of adapting to operational and supply chain changes overnight, remote customer acquisition and economic uncertainty, going digital is right back at the top of the agenda for businesses and corporates in Asia Pacific.

Rewind a year and businesses were still in the early stages of their digital journey with less than one in four (24.8 percent) large businesses in the region having a clearly defined digital strategy, despite most recognising the importance of digital transformation to improve their ability to survive and thrive (http://eastandpartners.com/uploads/files/research-notes/2019/2019-07_Research_Note.html).

So where do we stand now with business digital transformation? The DBS/East & Partners second “Digital Treasurer” benchmarking research is out.

 

Businesses Are Making Strides in Their Digital Transformation Journey

As businesses reshape their overall business strategy in response to the Covid pandemic, taking into account the shift in customer behaviour, supply chain disruptions, business model opportunities and operational continuity, they are having to take a step back and reassess their roadmaps. Many businesses are reporting a shift in their priorities and resources for the digital roadmap itself.

Despite these challenges, a larger proportion of businesses in Asia Pacific now have a clearly defined digital strategy relative to a year ago, according to insights research conducted by East & Partners for the DBS Digital Treasurer Index II. This figure has grown by 7.7 percent to reach 26.2 percent. At the same time, there is a material drop in the proportion of businesses with no strategy, falling from 25.1 percent a year ago to 18.7 percent. Taken together, these highlight an accelerating growth in digital strategy development among businesses in the region.

Current State of Digital Roadmap Development

% of businesses

Insights Research: Current State of Digital Roadmap Development (Graph)

Source: East & Partners insights research for DBS’ Digital Treasurer Index II – H1 2020 (N count = 1,686)

Businesses Are Making Strides in Their Digital Transformation Journey

Reducing cost and improving efficiencies in the long run have always been the emphasis in many business cases for digitisation. But increasingly, enhancing customer experience is rising as a key driver and for good reason. Having a user friendly and seamless digital platform is now integral to ensuring business continuity, especially when direct interactions with customers are becoming increasingly remote.

In fact, improving customer experience has been highlighted as the greatest ROI from investing in technology solutions by treasuries in the region, alongside reducing cost. Perhaps unsurprisingly, our research suggests that middle-market enterprises stand to benefit more relative to the larger corporates when it comes to customer experience enhancement, levelling the playing field for market participants.

“Cost efficiencies were where we began developing business cases together for digitisation investments but we’ve actually found lots of other benefits that flow, in particular making our customers more sticky and spending more with us.”

- Treasurer, US$2.5Bn, Hong Kong Regional Hotel Group

Key Returns to Investment

Rating on a 1-5 scale, with 1= high return and 5=no return at all

Insights Research: Key Returns to Investment (Graph)

Source: East & Partners insights research for DBS’ Digital Treasurer Index II – H1 2020 (N count = 1,686)

Where Are Businesses Investing in Treasury Services?

There has also been a shift in treasury investment focus. Cash management digitisation has initially led treasury digitisation in the region, as evidenced by the higher level of automation reported in cash management for large Asian businesses relative to other functions such as trade and supply chain financing, cross-border payments & FX, and risk & compliance reporting.

But now, businesses seem to have already eked out efficiencies in their cash management operations and looking to digitise their physical and financial supply chains. This is particularly prominent in Malaysia, India, Japan, Hong Kong, China, Singapore and Indonesia where a majority of businesses are investing in new technology solutions related to trade and supply chain financing.

“We’ve currently got 3 supply chain funding and management development projects happening which will then drive a redevelopment of our cross-border payment operations.”

- Treasurer, US$1.4Bn, Malaysian Importer/Exporter

Top Investment Area for Each Market

% of businesses

Insights Research: Top Investment Area for Each Market (Graph)

Source: East & Partners insights research for DBS’ Digital Treasurer Index II – H1 2020 (N count = 1,686)

What is your experience implementing digitisation projects in your organisation? What is the most valuable learning point that helped you along your journey?

We'd like to hear your thoughts and opinions, get in touch with us below.

On behalf of DBS, we are delighted to provide you with access to an interactive benchmarking tool, where you can find out how your organisation measures up against your peers in digital readiness.

Upon completion of the tool, you will receive an assessment of your digital readiness via 4 core digital values. Kindly access the benchmarking tool here: https://treasuryprism.dbs.com/digitaltreasurer

Have a conversation with DBS today.

Start your digital transformation journey today by finding out more about the latest, available digital solutions that can help to solve your treasury challenges. See our most recent articles on Digital Pulse, or sign up/login to Treasury Prism today to discover a world of opportunities.

 

This article was first published by East & Partners on 20 August 2020. The Digital Treasurer Index Research 2020 was conducted by East & Partners, in partnership with DBS and The Corporate Treasurer.

The information herein is published by DBS Bank Ltd. (“DBS Bank”) and is for information only.

The information is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation

DBS Bank Ltd. All rights reserved. All services are subject to applicable laws and regulations and service terms. Not all products and services are available in all geographic areas. Eligibility for particular products and services is subject to final determination by DBS Bank Ltd and/or its affiliates/subsidiaries.

Digital Supply Chain Solutions: Asia at the forefront of digital growth

Digital Supply Chain Solutions: Asia at the forefront of digital growth

COVID-19 has made it clear that digitalisation is imperative for organisations to survive and thrive. As the pandemic accelerates global adoption of digital supply chain solutions, Asia is emerging as a catalyst for digital transformation and a beneficiary of economic growth, says Mark Troutman, Group Head of Sales, Global Transaction Services, at DBS Bank.

The COVID-19 crisis has created a need for contact-free interaction between customers, suppliers and employees, directly impacting business strategy, sales transactions, trade finance processes and treasury operations. As a result, many organisations have accelerated their digitalisation plans and treasury professionals are leveraging technology to overcome supply chain disruption – from API-led connectivity to enable remote engagement and eliminate manual workflows in the order-to-settlement journey.

 

Amid all these trends, Asia – spurred by its relatively quick recovery – is at the forefront of global digital transformation and poised to benefit economically from post-pandemic opportunities in Asia.

“There is a serious move to digitalisation and we are here to help,” confirms Troutman. “We are seeing a particularly notable swing amongst organisations operating in Asia.” And within this new normal landscape, he believes banks are playing a greater role in helping businesses adapt to the reality of a post-pandemic world.

A new global supply chain ecosystem

As organisations recover from the effects of the pandemic, there is a need to consider their broader supply chain needs. This is where banks can take a more proactive and far-reaching leadership role in driving digital transformation for their clients.

“Banks can leverage existing strengths of connectivity across the supply chain ecosystem, linking manufacturing lines to supplier lines with data, along with their ability to help finance and deliver on logistics needs in a contact-free manner,” explains Troutman.

APIs are also key in the digital transformation of supply chains; they allow organisations to upload trade applications digitally and directly from their own internal platforms, offering an alternative solution to replace wet signatures, with enhanced real-time status notification capabilities. Recently, DBS offered same-day financing to distributors of products made by Haier, the Chinese electronics manufacturer, via Haier’s own digital supply chain platform. Through a series of APIs, DBS enabled distributors to obtain financing digitally and Haier to sell more products.

The digital priority

Digitised supply chains offer greater efficiency and more robust processes, ensuring access to fast and fluid working capital for all parties and enhancing connectivity across a horizontal ecosystem. Each step in the client journey can be digital – from online account opening and digital onboarding of suppliers, to uploading or presenting transactional documents, online platforms, managing application and resubmission processes, as well as receiving financing.

Shorter processing time is another benefit. For example, DBS completed the first transaction through the CamelONE Trade Finance portal early in 2020, becoming the first Singapore bank to join Contour’s network, enabling shorter settlement times, less paperwork and simpler trade processes for customers.

Efficient liquidity management - crucial during times of crisis – is improved by instant settlement, automated reconciliation and greater visibility of the organisations’ cash. In the wake of COVID-19, banks enabled digital solutions for organisations to leverage surplus funds across entities, enabling treasurers to better manage borrowing costs, and to enjoy greater transparency over transactions and increased control over cash as the result of more instant payment transactions.

Asia at the centre of digital transformation

Troutman believes Asia, with its general resilience based on economic strength, robust domestic and regional demand and agility in digital adoption, is well-positioned to lead its Western counterparts in supply chain transformation and post-pandemic economic recovery.

“The overall recovery is slow, especially for major trading partners in Europe and the US,” explains Troutman. “There is also more economic interdependence between Asian countries as geopolitical and economic forces are impacting traditional relationships.”

As organisations look to minimise supply chain disruption and diversify production bases, this could mean a shift in procurement to countries such as Vietnam and India, where labour costs remain relatively low. In addition, organisations that built out their local and regional supply chains within Asia can benefit from shortened supply chains and expedited transactions as well as strong demand from a demographic that is highly receptive to digital services.

With attractive growth opportunities, Asia is expected to remain a nexus for trade, while propelling digital transformation across global supply chains in a post-pandemic world. This bodes well for organisations able to tap this potential first-hand and ready to embark on the next phase of their journey. “Organisations that prioritise digital transformation and look forward to the ‘new normal’ will position themselves to be more relevant, and improve their relevance in the post-pandemic world,” concludes Troutman.

Have a conversation with DBS today.

Start your digital transformation journey today by finding out more about the latest, available digital solutions that can help to solve your treasury challenges. See our most recent articles on Digital Pulse, or sign up/login to Treasury Prism today to discover a world of opportunities.

 

This article was first published in Global Finance in July 2020.

The information herein is published by DBS Bank Ltd. (“DBS Bank”) and is for information only.

The information is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation

DBS Bank Ltd. All rights reserved. All services are subject to applicable laws and regulations and service terms. Not all products and services are available in all geographic areas. Eligibility for particular products and services is subject to final determination by DBS Bank Ltd and/or its affiliates/subsidiaries.

API Innovation in banking: Creating competitive advantages for businesses

While the financial services industry may have less of a reputation for innovation than hi-tech and consumer goods industries, the pace of solution innovation is accelerating, and the potential for transformative change is growing, inspired by banks, established and emerging technology companies, and regulators. A key factor in this acceleration is the increasing use of 'open APIs', which enable banks and third parties to leverage and monetise data, and enable new business models, payment and information flows. So what are APIs and what opportunities do they offer in practice?

 

Application Programming Interfaces (APIs) in brief

Firstly, an API is the part of a server that processes requests for information and sends responses. This capability can be packaged up, effectively into a product - an open API - to enable an organisation to provide access to data held in its systems to its customers, or to third parties. As a result, APIs become the vital senses through which organisations and technologies connect to and engage with each other.

APIs are not new and we use them every day. On our smartphones, whenever we use an app or website to search for the cheapest flights and hotels, book restaurants, check the weather forecast or pay for online purchases, APIs are involved. The question, however, is what potential open APIs confer to banking, and why this has emerged as such an important evolution. Financial institutions and their technology partners already use APIs extensively for their own purposes, such as accessing market data for pricing of transactions. The issue now, however, is how to turn the use of open APIs around so that banks are providers rather than consumers of data.

One of the biggest challenges in banks is that due to the scale, reach and range of activities, often developed over many years, data is typically held in separate silos or systems. This makes it very difficult, costly and time-consuming to extract data from multiple systems to create new solutions and services for customers. Instead, using APIs effectively provide an integration layer across these systems.

"By using APIs to access information from across systems, banks are able to create dynamic new solutions far more quickly and cost-effectively. In addition, by opening up these APIs to trusted third parties, such as 'fintech' companies, customers benefit from the creativity, agility and innovation of these companies with access to innovative new solutions."

Raof Latiff, Head of Digital,Institutional Banking Group,DBS

Catalysts for innovation

But while APIs are well-established across many industries, there are two key reasons why banks are now embracing the potential for innovation and building APIs to make their data more readily accessible: regulator demand and customer demand. Looking first at regulation, in Europe, for example, the second payment services directive (PSD2) and Access to Accounts (XS2A), which take effect at the start of 2018, oblige financial institutions to offer customers and third parties the ability to have access to their data via APIs. The aim is to increase competition and fuel innovation in the payments space, primarily to benefit consumers, but the regulations also impact on commercial and corporate customers. 

Regulatory intervention is not limited to Europe, and regulators around the world are motivated not only to increase competition using open APIs, but also to fuel collaboration, innovation and financial efficiency across ecosystems, therefore enhancing overall competitiveness. As the Monetary Authority of Singapore’s Chief Fintech Officer shared1, "To this end, it is necessary for firms to look at how they can effectively meet existing customer and business expectations. If we want to realise our vision of becoming a smart financial centre, the key enablers of innovation - rapid experimentation, active collaboration, and a conducive ecosystem must be present. The Monetary Authority of Singapore (MAS) is of the view that the proliferation of Application Programming Interfaces (APIs) in the financial sector will facilitate Singapore’s transformation into a smart financial centre."

The second key driver is customer demand. While some banks continue to think of open APIs as a technical requirement to meet regulatory demands, banks that do not take the initiative to build competitive services will find their position rapidly eroded by third party payment service providers. According to a recent McKinsey report2, “The value at stake is significant. McKinsey analysis has estimated that as much as $1 trillion in total economic profit globally could be up for grabs through the redistribution of revenues across sectors within ecosystems. That makes APIs, which play a crucial role in linking organisations and technologies in ecosystems, a significant competitive battleground capability."

Many solutions have been targeted at providing new payment services to retail customers, but these solutions offer equivalent and in some cases greater value for corporations, such as to optimise collections. Furthermore, while payments are a key area where we have seen innovation so far, the potential extends far beyond this. By bringing secure data from disparate sources together, whether within one organisation or across a wider ecosystem, and leveraging big data, artificial intelligence and biometrics, banks and technology companies are in a better position to identify unusual financial transactions, enhance transaction and data security and improve access to information for liquidity and risk management purposes.

APIs in practice: transforming business models

Corporations of all sizes and across many industries can benefit from open APIs, integrating transaction and information flows in new ways that are closely inter-connected with their business model and create competitive advantage. For example, Grab, South East Asia's leading ride hailing platform, has worked with DBS in Singapore to introduce cashless payments for taxi fares without the cost or delay of using cards. This collaboration has resulted in GrabNow, an app that enables passengers to pay electronically through Grab’s cashless payment capability, GrabPay. This offers convenience and security for passengers, but drivers also benefit from the ability to transfer fares directly to their account or withdraw cash via ATMs.

DBS is also working proactively with partners to enhance clients' internal processes. For example, DBS and leading cloud accounting platform Xero recently introduced a new API-driven capability to enable Singapore businesses to connect their DBS business banking accounts directly to their accounting platform, creating a seamless, secure, timely flow of transactions and information. This replaces costly and time-consuming integration projects and greatly reduces the time spent on importing and reconciling bank statements, currently a major challenge and drain on productivity amongst smaller businesses.

 

Leveraging the opportunity

Looking ahead, the potential to use open APIs to design new ways of interacting with customers, suppliers, transactions and information is transformational. Banks that do not invest now will pay high opportunity costs and see an erosion in their competitive value. This applies in every region, but the risk and indeed opportunity is strongly apparent in Asia where the pace of innovation is fastest and the potential to create smart societies is greatest. Similarly, corporate treasurers and finance managers have an unprecedented opportunity to design workflow and engagement tools that build competitive advantage and optimise efficiency, transparency and control.

"As banks, fintechs and corporations co-operate and co-create, open APIs provide an essential means of accessing and sharing data to benefit the ecosystem as a whole. Corporations can benefit from these new solutions that enable them to leverage data to identify areas of inefficiencies and potential opportunities to improve returns."

Raof Latiff, Head of Digital,Institutional Banking Group,DBS

 

Discover a spectrum of opportunities

Explore DBS Treasury Prism today to start building your own cash management simulations.

 

 

References:

2016 MAS-ABS FINANCIAL WORLD API CONFERENCE POST-EVENT E-BOOK.

What it really takes to capture the value of APIs, Keerthi Iyengar, Somesh Khanna, Srinivas Ramadath, and Daniel Stephens.

 

The information herein is published by DBS Bank Ltd. (“DBS Bank”) and is for information only.

The information is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

DBS Bank Ltd. All rights reserved. All services are subject to applicable laws and regulations and service terms. Not all products and services are available in all geographic areas. Eligibility for particular products and services is subject to final determination by DBS Bank Ltd and/or its affiliates/subsidiaries.