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.

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.

 

 

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.