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.

Smarter payments for a smarter business

Making payments conveniently, efficiently and securely is a universal objective, and the opportunities for individuals, businesses or government departments to do so are being transformed. As economies in Asia, such as Singapore, Hong Kong, India and China seek to digitise their payments landscape, there is an impact on every consumer and business. By understanding and taking advantage of these emerging opportunities, treasurers can reduce costs, improve controls and ultimately contribute to the sales and supply models that will drive commercial success.

 

Innovative payment schemes in Asia

Regulators have been increasingly proactive over recent years in driving new, efficient payment developments domestically, with a view to reducing the cost and risk of processing manual payments and cash, improving economic productivity and enhancing security. The value proposition for doing so is considerable; for example, according to a Monetary Authority of Singapore/ KPMG report published in December 2016, the social cost of processing cash and cheques amounts to 0.5 percent of Singapore's gross domestic product (GDP), equivalent of SGD2 billion per annum, emphasising the scale of opportunity. As a result, FAST (Fast and Secure Transfers) was launched in Singapore 2014, while India has introduced Unified Payment Interface (UPI) for instant fund transfers, Thailand introduced a mobile payments system PromptPay and the Hong Kong Monetary Authority is planning to introduce a faster payment scheme next year.

It is not only regulators who are driving or encouraging the adoption of instant payment schemes. The emergence of third party platforms in Asia, such as Alipay, WeChat Pay etc, have also challenged the status quo by introducing both new payment methods and behaviours, particularly for consumer payments. Banks too play a critical role, firstly as enablers of new payment initiatives, but also as innovators in their own right. For example, by developing and leveraging application programming interfaces (APIs) they are facilitating new payment mechanisms and promoting innovation, transparency and automation.

Payments innovation is taking place in conjunction with the shift towards e- and m-commerce, and as a result, a wide range of organisations, from small and medium enterprises through to multinational corporations and government departments, are increasing their use of electronic channels and payment instruments, and exploring the opportunities that these present to develop new business and treasury models. While some industry segments are quicker to adopt new payment opportunities than others, no business can ignore the widespread shift in both consumer and corporate behaviour, and the way that they interact with customers and suppliers.

 

 

checking video 1

 

checking video 2

Cross-border payment innovation

The growing number of national instant/ faster payment schemes is also raising expectations amongst users of cross-border payments. Emerging technology entrants are challenging the existing cross-border payment model, and are prompting innovation and creativity across the industry. SWIFT's global payment innovation (gpi) is one such example. The aim of SWIFT gpi is to address the cross-border payment challenges experienced by corporate and institutional payment users in particular, initially using existing bank and market infrastructure, whilst also establishing a roadmap for future digitisation and transformation of payments.

The first version of SWIFT gpi went live in February 2017 following an extensive pilot phase with selected banks in all regions. The scheme includes a multilateral rulebook and service level agreement (SLA) to which participating banks sign up. This includes: faster, same-day use of funds (within the time zone of the receiving gpi member); complete remittance information transferred between banks; transparency of fees, and end-to-end payments tracking.

"DBS continually aims to be ahead of the curve in the design and adoption of payments innovation, with focus on improving the customer's journey. DBS was a pioneer in SWIFT gpi as one of the initial pilot banks, and the first bank to process a gpi transaction in both Hong Kong and Singapore."

Atul Bhuchar, Group Head of Payments, DBS

 

Optimising payment efficiency, security and convenience

While there is significant value to be derived from new initiatives such as FAST, UPI and SWIFT gpi, the priority for treasurers and finance managers is to ensure that their core, day-to-day payment processes are handled as efficiently, accurately and securely as possible. The resilience, capacity and security of a payment banks' systems, processes and controls are critical to achieving this objective. In addition, even within a relatively commoditised payments industry, there remain opportunities for banks to differentiate their products and services through competitive cutoff times, capacity, depth of in-country and regional expertise, responsive service and innovative solutions such as DBS PriorityPay.  

"DBS PriorityPay is a key illustration of the way that bank has differentiated its corporate payments proposition. When a DBS client makes a cross-border payment to another, within the DBS network, funds are credited immediately (as permitted by country regulations).

The ability to make immediate cross-border payments is particularly important for clients operating internationally, with working capital benefits for both payer and beneficiary"

Atul Bhuchar, Group Head of Payments, DBS

In addition to the speed, efficiency and accuracy of payments, security of transactions and information is a top priority for every treasurer and finance manager. Protecting the business from the risk of fraud, whether internally or externally initiated, has always been a crucial driver of treasury processes and controls. Digitisation of payments has been a highly effective way of minimising payments risk, particularly risks relating to cash and cheques, but digitisation inevitably brings its own risks, particularly with the emergence of new cyber threats. However, with the right processes, operational controls, security standards, staff education and bank advice, treasurers can mitigate these risks significantly and take advantage of the benefits that digitisation offers.

 

From 'disruption' to solution delivery

Many of the current and forthcoming innovations in the payments space leverage existing, proven technologies, but there are also new technologies taking shape. These include distributed ledger technology (DLT), often referred to as 'blockchain', which is the technology behind the virtual currency, bitcoin. There has been a great deal of talk about the potential for DLT to create an entirely new payments paradigm, but as yet, DLT projects are typically still at analysis, first or second pilot stages. At the same time, it is important to adopt a broad-based approach to innovation based on various technologies and adoption models, rather than relying on a single, as yet unproven technology as the basis for future innovation.

DLT development is often encouraged and undertaken by financial technology ('fintech') companies, which are becoming more significant participants in the payments space. While technology companies have always had a major role to play in payments, they have typically been involved in facilitating the process around the payment, such as initiation, approval, formatting, transmission, reconciliation etc. Today, however, we are seeing fintechs focusing on the exchange of value itself, particularly for consumer payments, but increasingly for corporate payments too. Some commentators have described this as a threat to banks, but this is not the case in reality, as payments still originate from and are credited to a bank account, so banks remain instrumental to the process, even if the payments channel itself may differ. Furthermore, there is the opportunity for banks to partner with fintechs in these innovations to deliver a more convenient experience for companies and create opportunities for both sales and supply.

"DBS continues to be closely engaged and motivated as both participant and leader in DLT-related proof-of-concept and pilot projects, and in time, we are likely see a variety of new opportunities emerge that have the potential to enhance or transform existing payment processes.

For example, we are playing a major role inSingapore's project for the next-generation of cross border payments and securities settlement services that uses DLT. These engagements places DBS in a good position to drive and influence the development of frictionless payment solutions in Singapore and throughout the Asia Pacific region, transforming the future to cashless economies."

Atul Bhuchar, Group Head of Payments, DBS

 

Embarking on a digital payments journey

Developing a new or enhanced payments strategy can be a complex and potentially daunting undertaking, particularly for companies operating in multiple jurisdictions with diverse payment and collection needs, or those that have not embraced digital payments or electronic bank communication channels so far. Centralising payments into payment factories, shared service centres or regional treasury centres can be a valuable way of centralising skills, resources and technology to achieve this. While payments centralisation has been a trend amongst large multinationals for some years, a wider spectrum of organisations is now recognising the opportunities to support international growth, optimise cost and operational efficiency, and increase consistency of payments and reporting.

New initiatives, such as the Central Addressing Scheme (CAS) in Singapore and UPI in India, allow instant payments to be made using only a recipient's mobile number or national ID in the case of Singapore or virtual payment address in India.

Customer behaviour is also changing, so companies' ability to support convenient payments and collections is becoming increasingly important in maintaining their competitive position, both for B2B and B2C payments/ collections. At the same time, however, some business owners will continue to prefer to sign and receive cheques, so payments transformation is not necessarily a simple or linear journey. By providing an experience that is as convenient and intuitive as possible, whilst recognising payment users' needs and challenges, our aim is to facilitate a smooth digital payments journey for our customers.

"Making the best use of digital payments brings significant cost, efficiency, security and commercial benefits to corporations of all sizes. While introducing digital payments and collections may appear more challenging in Asia than regions which are more cohesive in currency and regulatory terms, the speed of change and adoption of new payment innovation is significantly faster in Asia than many other parts of the world.

Therefore, with the help of DBS' proven expertise and solutions, companies can adapt to their business to embrace digital payments, derive its benefits, and position their business to take advantage of future innovations."

Atul Bhuchar, Group Head of Payments, DBS

Discover a spectrum of opportunities

Explore DBS Treasury Prism today to start building your own cash management simulations.