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.

A New Chapter In Digital Trade

For thousands of years, goods and services have been exchanged between different trading partners. But as supply chains have scaled, the $23 trillion world of global trade has only grown in complexity.

Large multinational companies' supply chains now comprise ecosystems of intertwined suppliers, buyers, logistics and other relevant trade players. Supply chains in the manufacturing industry can reach up to 25 tiers, often including hundreds of parts suppliers spanning almost every corner of the globe. Yet, many of these participants are not well connected and operate in information and technology silos.

In the physical supply chain, the movement of goods and services is still dominated by manual, paper-based processes (documentary letters of credit, bills of lading, invoices etc), which add unnecessary costs and inefficiencies and deliver little in the way of transparency and visibility when it comes to understanding the status of goods and payment for them.

But with the fourth industrial revolution upon us, promising to deliver a highly interconnected, digitised world - where smart devices seamlessly connect to payment, trading, inventory management and logistics networks — the world of trade will look a whole lot different in the future. A world where all parties in the supply chain — from small and medium-sized companies, to large multinationals — have the potential to benefit from greater cost savings and efficiencies.

 

Enabling transformational change

Distributed ledger or blockchain technologies, application programming interfaces (APIs), data analytics and machine-learning algorithms, are creating a new era of trade flow management and trade finance. DBS has invested heavily in its API platform. DBS RAPID (Real-time APIs with DBS) offers 'plug and play’ solutions for trade financing or settlement directly where our customers conduct their trade activities or within their ERP environment. We are leapfrogging legacy platforms and technologies to directly integrate new digital services into our customers' workflow – whether in trade, payments, collections, FX or reconciliations.

Information about buyer/supplier relationships and transactional flows can be extracted at source and used to identify financing opportunities in those parts of the supply chain where it is most needed, which goes some way towards addressing the $1.5 trillion trade financing gap identified by the Asian Development Bank.

APIs on their own are powerful enablers for digital transformation, but when coupled with blockchain technologies, has the potential to propel digital trade to a higher plane. The blockchain connects all parties in the supply chain and delivers greater transparency and automation of paper-based processes. Critical trade information is recorded securely on a common platform, which overcomes the challenge of 'digital islands' or silos of information that have arisen as supply chains grow in scale and complexity.

DBS RAPID has been a game changer for many industries that have deployed it, such as in the commodities, automotive, logistics and natural rubber sectors. We developed digital solutions that help strengthen supply chains, enable quicker disbursement of funds, deliver greater price and market transparency, and provide access to more affordable working capital, especially for small and medium enterprises.

 

Overcoming key industry pain points

In the automotive logistics sector, DBS partnered with Wanxiang Blockchain, a Chinese blockchain provider, and China Capital Logistics Co. Ltd (CCL), one of the largest automotive logistics companies in China, to create a blockchain platform that connects car manufacturers, exporters, logistics carriers and car dealerships. Users of the platform can view the delivery status of orders in real-time and enjoy an expedited credit-approval process due to the elimination of paper-based supporting documents (which shortens their working-capital cycle).

“Developing solutions that solve our customers’ business pain-points is our objective, and we’ve learnt that the best way to do that is through collaboration. By partnering with key industry leaders, we were able to tap on each other’s expertise and networks to develop a blockchain platform with the scale and reach to make a meaningful impact to the automotive industry in China.”

Neil Ge, CEO of DBS China

In the commodities sector, there is an over-reliance on paper-based processes, with little visibility of the end-to-end supply chain, from the point of purchasing raw materials, through to the manufacturing and shipment of the final product. DBS collaborated with the world’s leading natural rubber producer, Halcyon Agri Corporation to set up HeveaConnect – a transparent digital marketplace to trade sustainably processed natural rubber. The platform – where DBS owns a minority stake, connects all participants in the supply chain so that pricing and supply information can be more easily tracked, offering the scale required to effect change in the rubber industry. DBS brings experience in digitisation as well as being able to offer services including working capital, trade and commodity financing for buyers, and financing to small-holder rubber producers who may not have access to banking facilities.

DBS also worked with Agrocorp and blockchain technology provider Distributed Ledger Technologies to develop an end-to-end cross-border blockchain trade platform to digitise the entire process for commodities transactions. At any point in the supply chain, trading partners can leverage DBS RAPID to trigger a real-time payment or leverage available data relating to a trade to seek financing. Farmers now receive payments for their goods more quickly, and all parties in the supply chain can more easily trace where commodities are sourced from.

Bain & Co. estimate that blockchain or distributed-ledger technologies can reduce trade finance costs by between 50% and 70% as document checks are fully automated, which reduces the risk of manual errors. This is proven by the above real-life examples. The blockchain can also help companies promote sustainability within their supply chain by allowing businesses to more easily track where goods and raw materials are sourced from. Companies can be incentivised to meet certain ESG criteria via the provision of financing at attractive rates.

 

Revolutionising trade through data

Data analytics and artificial intelligence (AI) bring higher levels of predictability and intelligence to the world of trade. Trade finance has traditionally been a data-intensive business and technologies like Optical Character Recognition (OR), machine learning and robotic process automation — all forms of AI — can be used to more easily detect fraud in trade transactions, as well as manage high volumes of manual data entry and repetitive tasks with greater efficiency and accuracy.

'Intelligent OCR' enables computers to digitally format data fields in trade documents without any human intervention, results in substantial efficiency, cost savings and reduces the risk of errors due to manual data entry. This is important in the world of trade where businesses survive on extremely thin margins and faster turnaround times can hugely impact working capital.

AI can also help companies better manage risk in their supply chains. Data analytics can be used to detect patterns in transaction flows so companies can make better production and working capital forecasts and predict changes in logistics and inventory flows. Behavioural forecasting tools could be used to more accurately forecast actual revenue inflows for given products, channels, or business lines.

The Internet of Things (IoT) will deliver new and abundant data that can be harnessed to track shipments through geolocation data, to monitor volumes and values of stocks held in storage facilities to provide precise information and financing options, or enter into sale and purchase transactions remotely with complete confidence in the quality and ownership of assets.

"By reimagining and innovating banking, our approach is to embed ourselves in the customer journey and harness technology to deliver strategic value to our clients. Leading the charge in trade digitalisation, we are actively collaborating and co-creating with clients, fintechs and government agencies to help solve business problems, expand our digital connectivity and deliver ecosystem solutions to our clients in a bid to help transform trade interactions and supply chains globally."

Sriram Muthukrishnan, Global Head of Trade Product Management, DBS Global Transaction Services

 

 

(This article was first published by TXF on txfnews.com in September 2019.)

 

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.