Shaping and Enabling Ecosystems for Value Transformation

It is important for businesses to make efficient use of their value chain, both up and downstream. For businesses trying to remain relevant and competitive in today’s environment, being connected isn’t good enough. Advances in technology today are also enabling a radical change in the way businesses operate.

To this end, DBS invited the following speakers to discuss how the concept of ecosystem has matured, and what it means in practice in Asia at a recent event in Singapore in July 2019.

  • Moderator: Ramesh Sankar, Head of Digital Channels, DBS Global Transaction Services
  • Gerald Tan, Commercial Development Director, HeveaConnect
  • TF Cheng, Chief Representative, Wanxiang Blockchain (Singapore)
  • Jesse Oeni, Deputy Director, Financing Ecosystem Divisions, Enterprise Singapore

 

Ecosystems in practice

Gerald Tan, HeveaConnect’s Commercial Development Director described what the ecosystem concept means for their businesses.

“HeveaConnect is a digital market place for sustainably processed natural rubber. Every car has tyres, and every tyre contains natural rubber. Tyre manufacturers represent 70 percent of the natural rubber market.

Our aim at HeveaConnect is to digitise and integrate the entire natural rubber supply chain, from farmers right through to consumers. By doing so, we can streamline the mobility industry which is so reliant on natural rubber, but also increase sustainability.

Sustainability is an environmental issue, but also a social one. Smallholders that are key to the industry are being left behind in a gradually digitised world. The company is therefore trying to reach and empower smallholders through technology solutions that connect them more closely to buyers, and change the role of the agency network from middlemen to a more sustainable microfinancing role. On the buying side, it is trying to digitise and automate, removing paper and manual processes to increase transparency and efficiency.

One of the challenges when introducing a new, digital business model is that stakeholders will have very different views and levels of readiness for digital adoption. Some groups understand the value of digital strategy and are pushing for it. Others are concerned that they are being pushed towards change that threatens their jobs and livelihoods

Understanding and overcoming these worries is essential to encourage adoption and make the whole model work. De-risking through change management and proactive communication is therefore essential, so that people understand the benefits and recognise that the platform is a tool to help sustain, rather than replace, their livelihoods.

Since launching the platform in April, we are already conducting live trades between rubber producers and tyre manufacturers with adoption ramping up quickly. Working with DBS has been very positive to enable a new, more transparent, digitally-enabled ecosystem. For example, the bank has connected clients from across their community that consume rubber, not only tyre manufacturers, but freight forwarders, mobility providers and others, helping them to do business more efficiently and transparently, with better assurance of the sustainability of the natural rubber they purchase. Ultimately, this is good for the ecosystem as a whole, through to consumers and investors for whom ESG (Environment, Social and Governance) issues are increasingly important in their decision-making.”

“The role of the bank, in this digital market place, has evolved from providing financing to enhancing ecosystem connectivity, as well as making a positive impact on a sustainable future. This would not have been possible in the past, without APIs leading the way to facilitate connectivity and trade financing to both upstream and downstream players. We are pleased to be part of Halcyon’s ambition to be the leading provider of sustainable natural rubber”

Ramesh Sankar, Group Head of Digital Channels, DBS Global Transaction Services

 

Extending ecosystems internationally

No longer is digital the exception, but the norm. The concept of ‘digitalisation-as-usual’ poses a variety of new challenges for companies of all sizes, but there is support available to help companies to think differently and harness new opportunities. Governments, and policy makers for example, underpin corporates’ digital endeavours through digital infrastructure for trade, customs, tax and payments but they also play a role in enabling ecosystems.

Jesse Oeni, Deputy Director, Financing Ecosystem Divisions, Enterprise Singapore, shares how the Singapore government is enabling ecosystems for domestic businesses across international borders.

“At Enterprise Singapore, we actively encourage companies to think beyond Singapore and expand internationally. As you say, there are challenges, so we try to provide them with the tools they need to be successful.

One is e-invoicing using PEPPOL (PEPPOL stands for Pan-European Public Procurement OnLine and is an electronic data exchange standard). It’s much easier to work with partners, suppliers and customers if invoices are exchanged based on the same standard. In this context, enabling connectivity and consistency across individual ecosystems is not enough: ecosystems need to connect with each other. For example, companies need to connect their ecosystems in Singapore to those in other countries and other sectors.

We’re pushing for open ecosystems with open technologies and interoperability. This is one of the benefits of standardisation using PEPPOL, which is used in Europe, Singapore, Australia and New Zealand, and we’re encouraging other countries in ASEAN, such as Malaysia to do the same.

Standardisation also extends to digital economy agreements. While there’s a strong case for the value of free trade agreements (FTA) for the movement of goods, a digital FTA is just as important to digital services.

This is another element is creating or improving market access for our companies. We do this through international collaboration, such as the Singapore-Chongqing connectivity initiative, and others that are underway e.g. in Shenzhen.”

“Digital ecosystems are now an essential part of the financial firmament allowing various stakeholders, across borders, to connect and collaborate in ways that are reshaping business models. Today, banks help to drive digital customer journeys with capabilities, such as virtual wallets and real-time settlement infrastructures. And this is made possible by API-led connectivity, enabling the creation of solutions that never existed before, and offering mutual benefits for the broader community. “

Ramesh Sankar, Group Head of Digital Channels, DBS Global Transaction Services

 

Embracing a value transformation

New technologies are playing a growing role in facilitating the exchange of data and transactions between ecosystem participants, one of the most commonly discussed of which is blockchain, or distributed ledger technologies (DLT).

T.F. Cheng, Chief Representative of Wanxiang Blockchain Lab, a non-profit research institution focusing on blockchain technology explored how DLT-based solutions are playing a growing role in connecting and enabling ecosystems.

“Wanxiang has been involved in the blockchain space across the whole ecosystem of activities since 2014. This ecosystem includes: i) a technology layer; ii) a digital finance layer, which includes blockchain-based financing in which we work extensively with DBS, and iii) an industry layer, which is effectively applied technologies, or applications, offering new ways to manage existing processes or business activities.

We’ve seen a lot of talk lately about applied technologies, such as Facebook’s Libra. The point – and value – of emerging solutions is to connect industry participants securely - whether business-to-business, consumer-to-consumer or a combination - in a way in which every participant has assurance of the integrity of a transaction.

In some cases, digitisation of ecosystems involves incremental change, by using technology to optimise existing processes. In this case, the value is relatively easy to measure, in terms of time savings, cost savings, and improved output. The second form of digitisation is value transformation, creating entire new business models, which is Wanxiang’s focus, such as through its DeCo (Decentralised Economic model) ecosystem, which is similar to Libra.

The value of this more advanced form of digitisation is far more difficult to measure as it is, by its nature, unprecedented, but we believe it could unleash entirely new economic value. We are at a very interesting crossroads. We’ve been through the journey to develop the internet and worked out how to use it. We’ve done the same with mobile, and 4G and 5G telecom networks. What happened when these were brought together? China’s e-commerce boom. The question is what happens now? And who is driving it? The blockchain ecosystem revolution has the same, if not greater potential as the developments we have seen so far, but as with China’s explosive e-commerce growth, the outcomes and value are impossible to predict.”

However, whatever the level of digital maturity, the focus of digitalisation efforts, and the technologies adopted, the panel advised a step-by-step approach to create value gradually and encourage cultural change. This is summarised by Wanxiang below:

“My advice is Start, Believe and Do. If you don’t at least begin, you will never achieve anything. The technology should not be the driver, the business should take the lead, so look at where technology can help improve your business. That will help create belief and encourage the cultural shift within the business, but there also needs to be strong management support for cultural change that embeds digital into the way you think, behave and act.” - TF Cheng

 

 

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The information herein is published by DBS Bank Ltd. (“DBS Bank”) in Oct 2019 and is for information only.

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