The “DBS Digital Treasurer 2020” survey has revealed that businesses in Indonesia ranked third in terms of digitalisation capability among Southeast Asian countries and ranked seventh across the Asia-Pacific.
Polling around 1,700 corporate treasurers, CEOs, CFOs, and business owners across the Asia-Pacific (APAC), the survey showed that in terms of digital readiness, around 26% of Indonesia’s corporates have a well-defined strategy – coming in third among its Southeast Asian peers, after Singapore (45%) and Thailand (32%).
In the broader APAC region, businesses in Indonesia ranked seventh in terms of digital readiness, after Singapore (45%), Hong Kong (44%), Japan (41%), Taiwan (39%), South Korea (39%), and Thailand (32%) in a row. Comparing businesses in APAC to their global peers such as the USA and UK, it seems that both of these mature markets had significantly larger business proportions with a better well-defined digital strategy. For instance, almost half of businesses in the USA and UK have a well-defined strategy, compared to two in 10 in APAC.
Group Head of Institutional Banking, DBS Bank, Tan Su Shan said, “The impact of technology on businesses has never been more apparent than now. Amid the storm 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. 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
Amid 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%) 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%), execution complexity (75%) and lack of digital talent (64%).
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%) and trade or supply chain financing (30%) represent the two biggest investment areas for APAC businesses. This mirrors the business preferences in the UK where six in ten (60%) 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%) and cash management (26%) 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%).
This is especially prevalent in Vietnam (90%), Indonesia (84%), Thailand (82%), Malaysia (80%), and South Korea (76%) 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%) is also similar to that of APAC (70%).
Banks are less preferred in the US (47%), however, as businesses prefer to engage with fintech companies directly (89%). This trend is also prevalent in developed APAC markets such as Singapore (80%), Hong Kong (73%) and China (69%), where businesses prefer regular contact with fintechs.
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%) using it in their current operations compared to cloud-based solutions (31%). 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.
Six in 10 businesses (59%) in APAC are looking to implement cloud-based solutions in the next three years – as compared with the US (50%) and UK (68%) respectively – with close to three in 10 businesses (29%) planning to implement cloud infrastructure in the coming 12 months.
As Indonesia and the world adapts to the changes brought upon by Covid-19 disruptions, companies are increasingly seeing the value of going digital and accelerating their digitalisation plans.
“The Covid-19 pandemic is the crisis of a generation and has reset the way countries and businesses operate. 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,” said Ms Tan Su Shan.
