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.

Post-pandemic Treasury: Innovation in Trade & Cash Management

As the impact of the pandemic continues, DBS Group Head of Global Transaction Services, John Laurens, shared his views on one expected outcome, in the webinar ‘Aftermath of COVID-19: Innovation in trade and cash management’.

The COVID-19 pandemic has left few untouched, and so it is not difficult to imagine that, as parts of the world begin to emerge, life will not look the same as it did before. In business, everything from people to processes to technology will be up for review as corporates seek to mitigate risk and maximise efficiency in what is proving for many to be a very rough economic environment.

But in adversity, opportunity may be found, and for DBS Group Head of Global Transaction Services, John Laurens, treasurers in particular will have a strong business case for the increased deployment of technology. Indeed, to ensure life after COVID-19 is as secure, safe and efficient as it can be, he argued in this webinar that post-pandemic life is going to be in the hands of digital more than was perhaps ever imagined.

 

Trade troubles

With WTO figures showing trade volumes having slumped by 18.5% in 2Q20, compared year-on-year, and IMF forecasts indicating that the global volume of goods and services trade will decline by 12% in 2020, the impact of the pandemic is and will be significant. It has struck at the heart of the global supply chain.

Although trade has fallen nearly 17% across the US, and in Europe by 20%, ‘emerging’ Asian trade has been spared the worst, declining only by around 6%. “The pandemic is driving a pivot in terms of the focus on China trade,” noted Laurens. Indeed, to May 2020, China-ASEAN trade rose by 1%, accounting for 14.7% of China’s total trade volume.

This in part is due to China’s primary trading partners in the US and the EU being variously subject to lockdown. But Laurens pointed to some interesting regional dynamics taking place too, with China’s imports from Vietnam in the first five months of 2020 surging 25% year-on-year, suggesting the latter is becoming a “vibrant market”.

There are a number of challenges being faced by businesses in Asia in terms of supply chain disruption and cash realisation, noted Laurens. Globally, demand curtailment has forced cash conversion cycles to lengthen, with SMEs in particular facing cash flow crises. Many face operational issues too, created by lockdown, including workforce restrictions in Asian production centres, and enforced homeworking that slows manual workflows (such as the need for wet signatures, and the stalling of movement of physical trade documentation which can slow progress of goods at ports).

Digital answer

The effect of such unusual events is the “phenomenal growth” in the adoption of digital solutions, especially APIs in the payment space, says Laurens, noting that “companies have had to move to provide for contact-free digital engagement with customers and suppliers, and their own employees”.

DBS alone has seen its digital cash management transactions rise by 78% across all industries and markets. “A big part of this is being able to move quickly to overcome the logistical and operational challenges as a consequence of COVID-19,” he explained. DBS reports a sharp pick up in Digidocs transactions in March 2020, up 204% month-on-month from February 2020, China businesses being the main driver here.

But with countries, including China, making special dispensation for the use of digital signatures, it provides some momentum for changes in the regulatory environment where these have not previously been permitted. It suggests change is coming.

Looking at the trend amongst corporates across Asia Pacific, treasury digital transformation journeys have been accelerated as a result of the pandemic. This comes as “no surprise”, said Laurens. DBS’ own research (of 1,600 mid to large Asia-based corporates) shows that 26% now have a clearly defined digital strategy, growing by 8% from nine months ago. Some 24% are starting to develop a digital strategy, increasing from 21% nine months ago.

For Laurens, the pandemic presents clear consequences for business. Firstly, there is an “absolute need to go contact-free”, with an immediate requirement to conduct business with customers and suppliers without physical contact. “There has also been a need for many companies to almost instantly transform their operational workflows,” he added, noting that a rapid move towards home or remote-working, an online sales model, and the automation of manual processes, has similarly become almost essential. Finally, he said most businesses will recognise that strong liquidity management, especially cash flow and working capital, has moved front and centre as they seek to cushion themselves from the impact of the pandemic.

Case for real-time

Laurens believes that there is now the strongest argument for the implementation of real-time transactional and information management systems. Citing a number of DBS’ own contact-free solutions, launched into diverse sectors, he offered a number of case studies to illustrate the power of digitalisation and real-time.

Notable here is how Chinese multinational home appliances and consumer electronics company, Haier Group, keen for domestic growth, adopted an integrated DBS financing programme powered by APIs. This allows the group’s nationwide distributors to be digitally onboarded “in minutes rather than weeks”. In these times of stress, Laurens explained that Haier’s suppliers now receive online multi-tier financing for their purchase orders within 24 hours. Managed through the company’s own digital supply chain platform, he added that Haier can now monitor its distributors’ business through real-time information exchanges with DBS.

“What has been phenomenal, in terms of the acceleration of digital adoption, is that the use of APIs has enabled some remarkable transformations,” said Laurens. “Delivering what companies were previously referencing as ‘something for the future’ has, with the impetus of having to alter operating models during the pandemic, been done today.”

Future days

It won’t stop here though, he states. The “new normal” for business will see a “replumbing and shortening of supply chains through reshoring and nearshoring”, something already being seen in the China-ASEAN trade flow data mentioned above.

There will be a further shift of major supply chains into ASEAN, with diversification of manufacturing and supplier sources being sought. The prevailing ‘Just in Time’ model will be augmented by ‘Just in Case’ supply chain processes, seeing the rise of low-costs markets, including Vietnam, Bangladesh, India and Indonesia.

Ecosystems with entire supply chains participating on a single platform, will continue to gain traction, says Laurens, facilitating far more effective use of data analytics across those platforms. E-commerce, which he said in many respects “has come of age during the pandemic”, especially with changes in consumer behaviour, will continue to gain ground throughout the region.

Digital innovation will continue apace as 5G rolls out, with new 5G-enabled business models and opportunities increasing. As part of this, he predicts that IoT-based solutions across commercial, risk management and sustainability agendas will further drive the provision of analytics-based financing.

As the accelerated shift to cloud reduces technology investment costs, and facilitates dynamic scalability of solutions, greater API connectivity will be achievable, itself powering new data-driven business models.

The degree of digitally-led change over the next few years even demands workforce adaptability, warned Laurens. “I think it’s unlikely that the workplace will revert to how it was pre-COVID-19, with flexible working arrangements and clear implications for business travel.”

However, far from negative, as digitalisation programmes assume the momentum exerted by enforced change, now is the perfect time to examine what tomorrow’s treasury will look like. There may never be a better opportunity.

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 on Treasury Today’s website 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.