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.

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

 

 

Have a conversation with DBS today.

Start your digital transformation journey today by finding out more about the latest, available digital and payment solutions that can help to solve your treasury challenges.

 

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