Four ways businesses are transforming for good in an era of uncertainty
We explore four digitisation trends emerging as a result of the coronavirus pandemic.
In Mandarin and Japanese, the character for ‘crisis’ is written with two symbols, the first meaning ‘danger’ and the second meaning ‘opportunity.’ While crises are always feared, by clearly dividing the way the world was from the way it will be, they also provide unique opportunities to engender long-term resilience.
The Asian financial crisis of 1997-1998, for instance, plunged many Southeast Asian countries into deep recession, rapidly increasing unemployment, poverty and social dislocation. Among other reforms, these economies built up their foreign exchange reserves as a buffer; most have current account surpluses; and many have allowed their exchange rates to float, making their fundamentals stronger that they were in 1997. For the same reasons, they were also able to weather the Global Financial crisis of 2008 better. 1
While the COVID-19 pandemic is far more pervasive than any other crisis we have experienced in our lifetime, it has prompted companies to think long and hard about the fundamentals of their business and what they must to do to survive and thrive going forward. Regardless of the industry, at the outset of the crisis digitisation was a crucial first-response action for businesses to implement continuity plans and stabilise operations. Now they are rethinking and accelerating their digitisation strategies to increase resilience and optimise business processes at the same time. 2
“Technology is a great enabler,” said Kahina Van Dyke, Global Head of Digital Channels and Data Analytics, CCIB at Standard Chartered. “It’s often the best path to solving core business problems in good times and bad. We’re seeing that play out right now. Financial services, supply chains, consumer goods – everything is digitising rapidly.”
To navigate their transformation journeys more effectively, many companies are embracing industry partnerships, co-creation and collaboration with digitally enabled partners. Here, the financial services sector plays a vital role.
Already among the four most digitised sectors before the pandemic, according to McKinsey3, the financial services sector has been leading the digitisation agenda of late. It is emerging as a “standout” sector because it is able to quickly adapt Big Tech techniques to deliver innovative solutions for core business challenges. The sector has witnessed four key pillars of digital transformation emerging: reinventing supply chains, shifting to e-commerce, pursuing end-to-end digitisation and ensuring operational agility.
1. Revolutionising trade and supply chains
Global trade disputes recently created supply-chain headaches. This year, travel restrictions, higher air-cargo rates and longer transit times stemming from the pandemic have created migraines. Many companies had already begun redesigning supply chains. Now, the need to diversify production and distribution and ensure access to supply-chain financing during times of risk has become more acute.
“Companies are increasingly embracing digital tools to manage financing and supply-chain disruptions,” said Kahina. “Standard Chartered recently collaborated with a healthcare supply-chain platform in Kenya called Medsource, automating their entire payments process using APIs. This facilitated supplier payments and expedited the shipping of medical supplies during this critical time of need.”
2. Dramatic increase in B2B e-commerce
Supplying goods is one thing, selling is another. Aside from the headline-grabbing surge in online retail, the pandemic will be seen as a watershed moment in the comparatively less-developed arena of B2B e-commerce and payments. The growing trend in B2B e-commerce, already forecast by Frost & Sullivan to double in value to USD1.36 trillion a year by 2024 in Asia-Pacific alone4, will accelerate as more companies play catch-up.
“Digitisation is critical for a lot of companies right now, but most don’t have the bandwidth, expertise or regulatory engagement to build the financial infrastructure they need,” said Kelvin Tan, Venture Lead for nexus, Standard Chartered’s Banking-as-a-Service (BaaS) platform. “That’s where deeply integrated / comprehensive partnerships make a massive difference. nexus, for example, enables companies to quickly set up their own branded financial services without the usual pain of becoming a digital financial services provider, instantly opening up new revenue streams and multiple use cases to keep their customers stickier to their ecosystems.”
3. Unprecedented focus on end-to-end digitisation
While the mile marker for today’s crisis will eventually pass in the rear-view mirror, one day another will shine in the headlights. As such, digitisation with the aim of fostering long-term resilience will remain an ongoing focus.
Many businesses are pushing their technology investment plans forward in a multitude of ways: accelerating end-to-end digitisation via AI, automation and APIs, fixing bottlenecks, migrating to cloud and Software-as-a-Service, embedding data-led decision-making, upgrading credit and treasury operations, and investing in cyber-security controls. In most cases, success hinges on working with the right partner.
“Digitising paper-based processes is great example because it’s much harder than it sounds – particularly for trade where there are many different parties to a transaction-,” said Lisa Robins, Global Head of Transaction Banking at Standard Chartered. “But we did just that through Contour, a blockchain-based platform that we invested in recently. We launched a pilot project involving petrochemicals companies in Singapore and Thailand. The system improved transparency, increased cost efficiency and reduced settlement risks across the supply chain.”
4. Operational agility emerges as the new business mantra
Flexibility and agility are also critical to navigate sharp bends in the road. Here, businesses have rapidly discovered that adopting flexible production strategies and accelerating digitisation during the crisis has made them more resilient. Whether it was repurposing car-part assembly lines to make ventilators, rapidly expanding digital fulfilment centres, or setting up hyper-local supply chains to feed small-scale physical F&B markets, agility has become a watchword for companies in planning their futures.
Earlier this year, Standard Chartered committed USD1 billion of not-for-profit financing for companies helping to fight COVID-19. Some of those companies ramped up their existing manufacturing of personal protective equipment, while others rejigged their entire production lines.
That agility extends to the workforce. The pandemic has stimulated a transformation in the concept of the workplace, which in turn is triggering investments in digital infrastructure and remote-working technologies. Many of those changes are here to stay.
The essential journey ahead
The COVID-19 pandemic is inflicting a painful human and economic toll, but underlying that pain is the hope that the world can emerge stronger. No one can be certain about what the future will bring, but COVID-19 has forced businesses to reflect and rethink traditional ways of doing business.
In an era when the term “essential” has entered the global lexicon, for businesses around the world digital transformation is proving to be the most essential journey of all.
Produced by Bloomberg Media Studios in partnership with Standard Chartered.
This article is part of our ‘Digital Transformation’ series, exploring digitalisation trends to build resilience, efficiency and achieve transformative growth.
1ADB
2 Harvard Business Review
3 Frost Sullivan
Digital transformation
This series explores digitalisation trends accelerated by COVID-19 to build resilience, efficiency and achieve transformative growth.