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.

Why instant is the new normal for payments in Asia

Rapid adoption of instant payment schemes in Asia’s two most prominent financial centres, Hong Kong and Singapore, is accelerating the digital transformation of businesses.

 

Innovation in payment systems across Asia

Innovation in payment systems is advancing rapidly; making transactions frictionless and and substantially reducing transaction costs for both businesses and consumers.

Asia is at the epicentre of instant payment developments with Unified Payment Interface (UPI) operating in India, PromptPay in Thailand, FAST and PayNow in Singapore. Other markets in the region, such as Malaysia, are also implementing instant payments.

Application programming interface solutions act as a catalyst for adoption of instant payments and collections. This technology enables businesses to integrate banking services (i.e. payments, collections and transaction enquiries) directly into their internal systems and processes to provide an instantaneous end-to-end customer journey.

Now, another wave of change is happening as regulators and banks roll out an instant payment scheme – Faster Payment System (FPS) – in Hong Kong.  

 

FPS in Hong Kong

FPS transfers may be made across banks and stored-value facility providers (SVFs) in seconds. They can also be made using quick response (QR) codes, email addresses, mobile numbers and via FPS IDs.

Hong Kong’s FPS went live in September 2018 with 21 banks and nine stored value facilities (SVFs) signed up for the service. Users can transfer money in both Hong Kong dollars and renminbi across different banks or SVFs with funds available almost immediately.

Within three months of being launched, there have been more than two million sign-ups from consumers and businesses combined.

From small and medium-sized businesses to business conglomerates, leveraging instant payments means everyday tasks such as paying bills, vendors or payroll can be performed easier, faster and with greater straight-through-processing. Being able to optimise cash flow also frees working capital for businesses.

“The development of instant payments in the region has opened up a whole new set of opportunities because it allows corporates to reimagine business models and their customers’ journey,” says Atul Bhuchar, group head of payments at DBS Global Transaction Services.

“B2B and C2C payments were early adopters for instant  payments, but with amount-caps for instant payments increasing, business-to-business payments are gaining momentum. For businesses, it’s expanding from ‘just-in-time’ supply chain management to ‘just-in-time’ payables and receivables management.” says Bhuchar.

 

PayNow in Singapore

Singapore launched its FAST system in 2014, and introduced PayNow Corporate service in August 2018, which allows transfers via a mobile device, an identification number and even a company registration number, as a proxy address for the recipient.

The proxy address and 24/7 capabilities of PayNow Corporate enable  businesses migrate from traditional cheques and cash to electronic payments and collections, reducing both costs and risks.

The Monetary Authority of Singapore (MAS) recently announced plans to open FAST to non-bank players in 2019. The city-state aims to be cheque-free by 2025. According to a KPMG study, commissioned by the MAS, the cost of cash and cheques transactions to the economy stands at 0.52% of GDP.

 

QR Code Revolution

Another cornerstone in the innovation space is payment via QR codes. QR codes were developed in Japan in 1994, and they have since been extensively adopted in mainland China. Singapore and Hong Kong leveraged payments using QR codes, especially since September 2018 when Hong Kong unveiled its Common QR Code Standard for Retail Payments, while Singapore launched its QR code standard, SGQR in August 2018.

Given a common QR standard allows inter-operability across different payment services providers, Bhuchar says the introduction of these common standards is timely, as it helps reduce friction for both consumers and merchants.

In comparison with costlier cards settlement fees, QR code payments are more economical and require just a digital (QR) label. “For smaller businesses, collections can take place via payment to a static QR code. For larger enterprises, the QR code may be integrated into their point-of-sale machines, invoices or online payments,” explains Jasmin Ng, group product head of cash product management at DBS Global Transaction Services.

Another reason for the rapid acceptance of these schemes is settlement of receivables take seconds instead of days, significantly improving cash flow for merchants.

Ryan Chioh, managing director, Far East Flora regards cash flow as the lifeblood of businesses. “PayNow Corporate has helped increase my cash flow so my team and I can be more productive. We can spend less time on administrative processes and accounts receivables, and more time on developing our business and delivering a better customer experience.”

 

Cross-border Roadmap

There are also developments occurring with cross-border payments. Last year, SWIFT held talks with banks to discuss the development of Asia-Pacific cross-border instant payments, based on SWIFT global payments. DBS is one of 12 pilot banks to have successfully completed the trial for cross-border instant payments from Asian countries into Australia.

Bhuchar believes it is only a matter of time before cross-border instant payments become a reality. “Instant payments are an important building block for businesses that are adopting digital solutions to transform their financial value-chain and to make their customers’ experience seamless, instantaneous and simpler,” Bhuchar adds.

 

New Normal for Businesses

Early adopters of instant payments in the B2C and C2C space have benefited from this transformation with instantaneous transactions and improved cash flow.

Digital transactions will undoubtedly become the new normal for payments and collections over time, including transactions in the B2B space, for businesses that are moving towards a digital business model to achieve greater efficiency and productivity.

 

(This article was first published in The Corporate Treasurer in January 2019.)

 

 

Discover a spectrum of opportunities with Treasury Prism

Explore DBS Treasury Prism today to start building simulations on using instant payments in Asia, and discover how it can benefit your business. 

 

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.