Digital transformation and the treasury imperative

Digitisation will ultimately impact, and potentially transform every company, but the pace of change is very different across companies and industries. Finance and treasury professionals are under pressure to keep adding value to their enterprise and increase its competitiveness – on top of their day jobs. While managing change to progress towards the digital treasury adds to this pressure, digitisation also provides solutions that will allow treasurers to meet future challenges and achieve both operational and strategic objectives.

From left - Moderator: Mark Troutman, Group Head of Sales at DBS Global Transaction Services, Panelists: ​​​Ade Irawan, Group CFO at MG Group Indonesia, Rinaldy Santosa, Director at PT Profesional Telekomunikasi Indonesia ("Protelindo"), Putut Djagiri, Senior Vice President at PT JAPFA COMFEED Indonesia Tbk (“Japfa”), and Raof Latiff, Group Head of Product Management, Global Transaction Services and Group Head of Digital, IBG at DBS.


Where are you in your digital journey?

Rinaldy Santosa, Protelindo: Our business has grown rapidly, so our treasury requirements have also evolved. We started with manual processes and then moved on to traditional e-banking. We are now using host-to-host connectivity with our banks, together with additional, multi-level security using tokens and passwords to increase transaction security.

Digitisation is not only an issue in treasury but across our wider business. In maintenance, for example, we used to have paper-based processes and then migrated them into emails. Today, over 15,000 staff in Indonesia use Android apps to report on maintenance issues, and the information is immediately available to the maintenance team. We are also using apps more widely across our client and contractor network to report and resolve maintenance issues promptly. In finance, we have removed paper from our purchase-to-pay process by scanning invoices and then managing the invoice process electronically. As people no longer need to input invoice details, there is more resources to focus on reviewing and approving invoices.


Putut Djagiri, Japfa: At Japfa, we recognised that digitisation is essential to our future success. Two years ago, we developed a digital roadmap.  This is not a single pathway as digitisation means different things across different parts of the business, whether manufacturing, distribution or business management. We are now around two-thirds through delivery on this roadmap, and we have seen significant improvements in performance, efficiency and market penetration.

In treasury, we are centralising our activities and increasingly, leveraging innovative tools such as DBS Treasury Prism to optimise our cash and treasury management approach in key locations. We have taken a country-by-country approach to centralisation, starting with Indonesia which we have completed already. We can now monitor, manage and optimise our cash balances in the country, which is essential both for treasury and the CEO. We are now moving on to other countries, such as Vietnam and Myanmar, which becomes more difficult as the banking rules are different. However, we are centralising through our headquarters in Singapore, so as we expand our business to new countries in the future, we will be able to connect them into a centralised treasury organisation.


Ade Irawan, MG Group: Our core business is the bed bank i.e. we sell hotel rooms but mostly on a B2B basis. Our clients are travel agents both in Indonesia and globally, and our end customers are also from around the world. Our online platform is an essential business tool and we now have seven distribution channels. From a treasury perspective, centralisation was very important to us to support our global business strategy. We also needed to accommodate payment and collection methods globally, whilst minimising our costs. DBS Treasury Prism has therefore been very helpful at showing opportunities for cash pooling. We are also planning to explore virtual cards and review our FX strategy.


Rinaldy Santosa, Protelindo: Treasury centralisation is also important for our business. Our industry is very capital intensive, so minimising our cost of funds is a priority. One of our challenges has been that working out funding solutions with the banks takes time, with a lot of discussions back and forth, during which the liquidity and interest rate situation may have changed. Faster funding decisions are therefore important to us, so with a system from the bank that allows us to perform some preliminary analysis, we can speed up the process.


We’ve already mentioned Treasury Prism briefly and some of its benefits. In what other ways does address some of the challenges you are experiencing?

Putut Djagiri, Japfa: We have treasurers in each country that we operate in who will frequently ask us at head office how best to manage cash, and where to place cash to maximise return and minimise risk. The ability to simulate different scenarios in Treasury Prism and see the impact is particularly helpful and the platform allows us to educate our country treasurers, particularly those where our treasury presence is less mature.


Ade Irawan, MG Group: We see the value of Treasury Prism in supporting our plans to expand overseas. In the past, it was often difficult to quantify the value and efficiency of what we do, relying more on ‘gut feel’ or experience. This tool allows us to quantify the value more clearly, build more robust business cases and enable better decisions.


What are the main challenges to digitisation in your companies?

Ade Irawan, MG Group: One issue is to balance technology with the needs and maturity of the company. I would divide our company’s digital roadmap into three stages. Before 2014, when we were still a small company, we used simple technology. However, at that stage, we only had three products, so we recognised that we could not grow without enhancing our digital technology. In 2014, therefore, we took the next step to develop our technology, our platform and our accounting system. By 2017, we had become the biggest bed bank in Indonesia and South East Asia. It has been important for treasury to keep up. We started with paper-based banking but we have since moved to electronic banking. Over the next five to ten years, we will continue to enhance our technology platform with the aim of being the leading regional player in the world: our MG 3.0 strategy. To support this in treasury, we expect to use APIs to connect to our customers, suppliers and our bank to facilitate more efficient banking, payment and collection processes.


You mention APIs – Raof, can you expand a little more on APIs and what they mean in practice?

Raof Latiff, DBS: Absolutely – the use of application programming interfaces (APIs) to allow seamless exchange of data between different systems is growing rapidly. Everything that you do through your online banking platform or host-to-host connection can now be done through APIs. A major benefit is that the process is real-time, which accelerates transaction and information processing, and APIs can be embedded more closely into your operations.

Demand for API-based solutions amongst corporate treasuries varies. Digitally-led companies that have a predominantly digital interface with their customers are typically furthest forward in embracing the potential for APIs to solve business challenges. We already have a large number of digital journeys underway with these customers, and have developed solutions across a range of industries, including insurance, transport and taxis, and shipping companies.


Mark Troutman, DBS: These observations are very consistent with a question we are asked regularly: namely how we can make the banking experience as frictionless as possible. People don’t wake up in the morning thinking that they want to do banking . They don’t wake up thinking they want to make payments. They wake up thinking about the house or the car they want to buy, or how to pay for their daughter's wedding. The same applies at a corporate level. We think about what we want to do and achieve today, not the transactions that will be required to do it.  Banking, therefore, needs to become invisible: how is DBS doing this?


Raof Latiff, DBS: Invisible banking means that you no longer have to worry about it, or even think about it. There are lots of tools available to help: APIs, virtual wallets, cloud-based applications and newer technologies such as blockchain. These make invisible banking possible, but the technology itself should not be apparent to a user. Instead, these technologies enable us to create a better user experience where banking is just part of a wider business process. For example, if a consumer buys something, the payment should follow automatically. If you’re selling, you should know straightaway when, and from whom, a payment has been received. Much of this capability is already available, with huge opportunities both in Indonesia and across South East Asia.



An invisible transformation in banking

Treasury Prism is an example of the transformational approach that DBS has taken to digitisation both within the bank and in the solutions we offer to our customers. One of the impacts of digitisation is that banks’ competitors will increasingly come from the technology sector, such as digital platforms, rather than the traditional banking sector. 

Banking involves handling a lot of data and managing processes, and this is where the technical giants have an edge in terms of particular capabilities. Not only are these companies – Amazon, Alibaba etc. – able to process enormous volumes at high speed, but they are also bringing a new customer experience which will drive people’s expectations of banking in the future.

The challenge for banks is to make banking invisible, whilst providing the backbone to the flow of goods and services. In this context, we are focusing on three areas:

  1. Customer acquisition. Our aim is to make it as easy as possible to become a DBS customer. We have started a programme of digital customer acquisition in the SME space in Singapore, and almost 94% of SMEs are now onboarded digitally.
  2. Customer access. As customer expectations evolve, we need to enable our clients to access our products in an intuitive, convenient and increasingly real-time, and automating the flow of data and transactions, or straight-through-processing (STP). We are therefore re-engineering our processes to give customers a real-time banking experience. We have already achieved considerable success in Singapore and India with Digibank, and we will soon be rolling out these capabilities to China and Indonesia. 90% of our infrastructure is now cloud native which allows us to be more nimble in developing new capabilities in the future.
  3. Customer engagement. Having onboarded a customer and delivered an instant experience in the way we deliver our products and services, how do we then cross-sell additional products and services? This is the most difficult element as customers tend to log on to a system, conduct their banking and then log off.  We want to be able to suggest new concepts and ideas to enrich their experience of banking and benefit from a wider range of solutions. For example, we are now piloting analytics-based lending, using data on a client’s behavioural pattern, customers, suppliers and competitors to recommend targeted solutions.

What is very clear for us is that digitisation is not simply about building apps: everybody can build apps. What is important is to build an infrastructure that is trusted, secure and scalable, without compromising the user experience.


Rinaldy Santosa, Protelindo: For us, it has not just been the changes to our technology, but the changes for our people. People are afraid of change, particularly the growing use of technology: they are afraid of losing their job, of losing credibility, or that the value of their contribution will be lost. We have to build trust, explain why change is necessary, and how it will help them to perform better and have a better quality of life.


Putut Djagiri, Japfa: We have similar problems around people and helping them to change. Technology is moving very fast, but the value is lost if people can’t keep up. Simplicity is essential so that everyone understands what they are doing and can interact successfully with technology. As part our digital roadmap, alignment between people and technology is critical.


Another question we are asked regularly – what is the extent to which DBS works with fintechs to deliver on its digital banking strategy.

Raof Latiff, DBS: One of the challenges here is definition: the term ‘fintech’, or financial technology company, applies to long-established, large technology companies that provide solutions across the cash management value chain or small, newly emergent venture-capital funded enterprises that deliver solutions to address one particular element of it. As a bank committed to innovation, we have touch points with at least 200 fintechs across this spectrum, from core service providers to our business to the solutions we’ve brought into our innovation lab. In these cases, we have explored emerging solutions and built up categories of third party capability which we can harness to meet particular customer challenges. A specific category of fintech is platforms such as Alibaba and Amazon. We have classify them more as ‘bigtechs’.  We work with them and engage with them to understand how they are organised, the models they have built and how invisible banking can be part of these models. Ultimately, the aim of banks, fintechs and bigtechs is the same: to build market share by delivering the best possible experience for the customer, and each one has a complementary role to play in doing this.


Mark Troutman, DBS: I’d like to offer our thanks to the panel for their time and insights. What’s been clear to me today is how the needs and priorities of the business will help shape the digitisation agenda in treasury. With new technologies and changing expectations of how people engage with banks and conduct their banking, banking will increasingly become invisible, and in doing so, friction in transactions and information flows will be reduced.


Discover a spectrum of opportunities

Explore DBS Treasury Prism today to start building your own cash management simulations and discover opportunities that can shape your treasury strategy.



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