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.

Next Generation Innovation in Receivables Management

While media attention often focuses on innovation in payments, it is often receivables management where many companies find particularly challenging and could derive greater benefit. Many treasurers and finance managers can influence the timing and method used for outgoing payments, but they have less control over incoming payments. As treasurers seek to optimise working capital efficiency, manage risk and streamline processes, we are now seeing a surge of interest in both established and emerging receivables management solutions.

 

The receivables challenge

Although every business seeks to manage receivables effectively, the challenges are not necessarily the same in every case. For some, the difficulty is influencing and predicting how or when a customer will pay. Others struggle with identifying, reconciling and posting incoming flows to customer accounts quickly, particularly if data is inconsistent across payment methods, currencies or channels. This affects days sales outstanding (DSO), and could ultimately impact sales and customer relationships. Multinational corporations also have to deal with a proliferation of accounts to receive customer payments in each country and currency.

As a result, it is essential that receivables management solutions are designed around the specific needs of each organisation. For example, some companies have chosen to replace multiple receivables accounts with a single account, either per currency or a single multi-currency account depending on the value and volume of incoming foreign currency flows. Regional treasury centres (RTC) or shared service centres (SSC) then collect incoming payments ‘on behalf of’ participating group companies (known as receivables-on-behalf-of or ‘ROBO’). These incoming payments are reconciled centrally and booked on the relevant entity’s intercompany account, often with a high level of automation. This improves DSO and working capital, frees up customer credit and enables more accurate credit management and reporting.

 

Virtual accounts, tangible benefits

Virtual accounts are often (although not exclusively) set up in conjunction with ROBO structures. These solutions are now familiar to many treasurers and are offered by leading banks. They allow a company to set up specific local account details for each customer (or for each entity, business line etc.) that resemble external accounts, but remittances are routed automatically to a single, physical account. The virtual account information can then be used to reconcile and post incoming flows to the relevant intercompany account and update the customer credit account automatically. Customers enjoy the convenience of paying to a local account, while treasurers and finance managers benefit from concentration of liquidity into fewer accounts, the ability to automate processes such as reconciliation and account posting, and better insights into customer payments.

“DBS provides virtual account solutions in key markets across Asia, delivering significant value to our clients in their reporting and reconciliation processes, whether or not they use these solutions in conjunction with ROBO. For example, a shopping mall with multiple tenants can reconcile rents more easily, as can FMCGs with a large number of distributors. The bank’s virtual account solutions include multi-currency, multi-country solution capabilities, combined with enriched remittance information on incoming flows to support automated processing and enhanced reporting.”

Navinder Duggal, Regional Head of Global Transaction Services for SMEs, DBS

 

Harnessing data to optimise receivables

Virtual account solutions demonstrate how rich data on incoming flows can be used to automate and add intelligence to treasury processes; however, the potential to harness and leverage data for enhanced receivables management extends beyond virtual accounts. For example, DBS’ enriched consolidation receivables (ENCORE) solution consolidates incoming payments (both manual and electronic) from multiple collection channels, and extracts invoice data to enrich information for process automation (such as reconciliation) and analysis purposes. This solution uses sophisticated technology, such as optical character recognition (OCR) to extract information from documents in formats such as pdf, allowing significant flexibility across different incoming payment methods.

“These services, which remain unique in Asia, are particularly valuable for clients with a high volume of incoming payments, and/ or that receive a wide variety of payment types, e.g. domestic and cross-border, electronic and manual, consumer and business payments. In these instances, it can be difficult to obtain information in a consistent format for reconciliation. Using virtual accounts to identify the remitter is a valuable first step but beyond this, DBS can enrich and make incoming payment data more consistent to increase auto-reconciliation rates, leading to enhanced days sales outstanding (DSO) and working capital management, and freeing up resources.”

Navinder Duggal, Regional Head of Global Transaction Services for SMEs, DBS

In addition, the bank provides immediate notifications when cash is received on a virtual account so that clients have real-time visibility over funds, including intelligence on customer payment behaviour, revenues by business line etc., without the problem of segmentation across accounts. Through ENCORE, clients receive receivables data from the bank in a structured format that can be integrated seamlessly with enterprise resource planning (ERP) and treasury management solutions (TMS) to facilitate prompt, automated processing and generated detailed insights for decision making. DBS is currently engaged in a proof of concept project with a leading ERP provider to upload enriched data back into the ERP system in an industry-standard format to provide two-way integration and facilitate the use of high quality, consistent data across the enterprise.

 

Receivables for competitive advantage

As the pace of innovation accelerates in the treasury and finance function, treasurers are in a better position to embrace new and emerging digital payment and collection methods which can be key to creating or reinforcing competitive advantage. These can be incorporated within solutions such as virtual accounts and enhanced reconciliation solutions to provide better choice and convenience for customers on one hand, whilst enhancing operational efficiency and the quality of customer analysis and reporting on the other. For example, QR codes on invoices that allow customers to simply scan the code and link directly to the correct payment instructions, complete with full remittance information, are already becoming popular in China, India and increasingly Singapore.

Corporations have different receivables challenges depending on their industry, geography and business model, so they rely on the spectrum of banks’ advice and solutions to meet these diverse needs. Over time, the spectrum of rich receivables solutions will continue to expand in line with changing customer demands and the availability of new technologies. Increasingly, these solutions will leverage robotic process automation (RPA) and artificial intelligence to resolve or supplement inaccurate or incomplete instructions, predict receivables behaviours and trends and support sophisticated analytics. By doing so, clients will be able to tailor their receivable management processes based on data-driven insights to address specific problem areas for their business, building better intelligence, improving predictability and timeliness of receivables and enhancing working capital management.

 

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.