APAC region still lags in digitalisation capability compared to mature markets

Polling around 1,700 corporate treasurers, CEOs, CFOs, and business owners across the Asia-Pacific (APAC), showed in the broader APAC region, Singapore (45 per cent), Hong Kong (44 per cent), Japan (41 per cent), Taiwan (39 per cent), South Korea (39 per cent), Thailand (32 per cent) and Indonesia (26) in a row.

However, SA and UK both mature markets had significantly larger business proportions with a better well-defined digital strategy. For example, almost half of businesses in the USA and UK have a well-defined strategy, compared to two in 10 in APAC. 0
Tan Su Shan, group head of Institutional Banking at DBS Bank said the impact of technology on businesses has never been more apparent than now. The chaos that the pandemic has caused, digital solutions have become a lifeline for most businesses globally, regardless of size or industry.

“As we embark on the ‘next normal’, we must chart a new direction and stand ready to constantly change and adapt to new circumstances,” she said. “With major and likely irrevocable shifts in consumption, work and travel patterns brought about by Covid-19, the coming decade will be more disruptive than the last, and businesses have to be ready for a lifelong journey of metamorphosis to survive and thrive.”

More external pressure to digitalise

With a more competitive landscape characterised by supply chain disruptions and with Covid-19 hastening the pace of digitalisation, almost all businesses in the region (99 per cent) have indicated that they are facing external pressure to transform digitally. Key pressure points driving the need to change include changing consumption patterns from their customers and key markets, competitors, and growing supply chain complexities.

Although businessmen surveyed understood the need for change, at the same time, they are also facing obstacles in adopting new technology. There are top three challenges cited such as speed of change (80 per cent), execution complexity (75 per cent) and lack of digital talent (64 per cent).

This is vastly different from the USA and UK where nine in 10 businesses cited that their main challenge was to keep up with the regulatory environment, supporting the perception that both markets have easier access to a pool of digital talent.

In terms of digital spend, cash management (33 per cent) and trade or supply chain financing (30 per cent) represent the two biggest investment areas for APAC businesses. This mirrors the business preferences in the UK where six in ten (60 per cent) are focusing their investments on trade and supply chain financing-related technology, while in the US, corporates are dedicating the bulk of their spending to risk & compliance reporting (34 per cent) and cash management (26 per cent) solutions.

Banks viewed as most favoured digitalisation partner in APAC

Banks remain the most popular partner for businesses in APAC to keep abreast of fintech innovations and identify the right solutions, with seven in 10 businesses citing this preference – in line with last year’s survey findings (69 per cent). This is especially prevalent in Vietnam (90 per cent), Indonesia (84 per cent), Thailand (82 per cent), Malaysia (80 per cent), and South Korea (76 per cent) where businesses tend to be more dependent on their banking partners for strategic guidance. In the UK, the level of preference for bank guidance (69 per cent) is also similar to that of APAC (70 per cent).

Banks are less preferred in the US (47 per cent), however, as businesses prefer to engage with fintech companies directly (89 per cent). This trend is also prevalent in developed APAC markets such as Singapore (80 per cent), Hong Kong (73 per cent) and China (69 per cent), where businesses prefer regular contact with fintechs.

Kunardy Lie, corporate banking director, PT Bank DBS Indonesia said many companies have been affected by the Covid-19 pandemic, making it difficult for them to run their businesses, especially when the large scale social restriction is being applied, where we need to do all banking transactions from home.

“Fortunately, Bank DBS has several systems to assist its institutional investor base in digitizing their operations,” he said. “DBS IDEAL, a corporate digital banking platform owned by Bank DBS is a perfect solution for companies in carrying out its day-to-day operations.”

Digital trends ahead

The use of Application Programming Interfaces (APIs) and enterprise cloud solutions in bank connectivity is expected to continue gaining traction among both large and small businesses across the region. APIs remain the most popular way for bank connectivity with almost half of APAC businesses (48 per cent) using it in their current operations compared to cloud-based solutions (31 per cent). But a big shift to cloud is expected in the next three years as it has proven to be a useful tool for businesses to migrate data seamlessly.

About six in 10 businesses (59 per cent) in APAC are looking to implement cloud-based solutions in the next three years – as compared with the US (50 per cent) and UK (68 per cent) respectively – with close to three in 10 businesses (29 per cent) planning to implement cloud infrastructure in the coming 12 months.

“The Covid-19 pandemic is the crisis of a generation and has reset the way countries and businesses operate, said Tan. “It has forced many to rethink their strategies to ensure their sustainability. However, every crisis also has its silver lining and there is no better time for corporate leaders to grab the bull by its horns and re-engineer their business blueprints quickly to adapt to the changing landscape to build our businesses back better and stronger.”