COVID-19 has forced more businesses to think deeper about how to leverage digitalization and technology, but even today, these tools continue to help companies navigate challenges thrown up by the multiple headwinds the region faces.
Lawrence Loh, head of group business banking at UOB, shared that pre-Covid, between 15-20 per cent of UOB’s SME (small and medium enterprise) customers were thinking about digitalization.
“Prior to Covid, a lot of SMEs knew about digitalization, some may even have started transformation efforts. But there wasn’t great impetus to push for more extensive change then,” said Loh.
“Now, 50 to 70 per cent are looking to digitalize… as they get more comfortable with digitalization and understand the benefits of digital transformation to their businesses.”
According the Asean SME Transformation Study 2022, 66 per cent of the respondents spent more on technology through 2021 compared with previous years.
The same number indicated they are keen to invest more in technology, especially in the areas of digital marketing, customer management, sales, network management and operational processes.
Some 1,500 SMEs in Singapore, Indonesia, Malaysia, Thailand and Vietnam were surveyed for this third edition of the study which was conducted in the first quarter of this year by UOB, Accenture and Dun & Bradstreet. The previous editions were published in 2018 and 2020.
Improving operational efficiency
According to Loh, areas that SMEs have indicated interest in relate to tools that streamline payroll, accounting and digital marketing processes.
“These solutions help them manage their operational processes, reduces cost and improves efficiency,” he added.
The UOB SME app, which was launched in August, was developed based on the insights from the study.
For instance, the study found that cash flow remains a key concern for many SMEs (44 per cent), with more than half of businesses (54 per cent) indicating that their existing cash flow can sustain their operations for less than 6 months.
Using the app, SMEs can view their cash flow data, apply for loans, and set personalized foreign currency watchlists.
“One main feature that we see customers using the app for is cash flow analysis, which can be viewed on the interactive dashboard. They are also able to track their accounts receivable and accounts payable. The digitalization helps them to view their cash flow real time and manage their business more efficiently on the go,” he said.
Brando Tan, director of Band World (Asia), who tested the app during its soft launch, said he appreciated that the app offered him real-time view of his business transactions. He used the app to set up a personalized foreign currency watchlist and was able to receive alerts when his limits were reached.
The app also allows SMEs to manage their human resources, payroll, logistics and digital marketing needs. Additionally, the UOB SME app allows business owners the flexibility to transact on the go. Other products in the market are generally contained to desktops only.
The bank is aiming to have about 200,000 SME users onboard the app. It is currently available to customers in Singapore, Malaysia and Vietnam, and will be progressively launched in Indonesia and Thailand by the end of next year.
Looking ahead, Loh said one of the features they are currently implementing is enabling access to general insurance solutions, offered digitally through the app. Further down the road, other features that could potentially be implemented include cashflow comparisons for specific industry peer groups. This will be in addition to looking at how they can further simplify transactions via the app.
Meanwhile, even as the pandemic draws on and regional governments introduce reopening measures, business optimism is steadily returning to pre-pandemic levels, with 1 in 2 SMEs expecting an increase in revenue from 2022, according to the report.
That being said, they continue to look to the government for financing. Perhaps unsurprisingly, 74 per cent of the survey respondents highlighted government funding schemes as their preferred source of funding, up from 34 per cent in the 2020 survey.
This is likely attributed in part to the increased availability of support schemes during the pandemic, which has built a level of awareness among SMEs.
Specifically, respondents considered active support in the creation of digital infrastructures for SME banking (77 per cent) and funding for the adoption of digital technologies (77 per cent) as the most useful forms of government support initiatives.
But it is not just funding SMEs were keen on. They also indicated that they looked forward to receiving more diverse forms of support from their governments. Indeed, respondents from all markets agreed that offering a wider variety of non-financial government schemes, such as mentorship and peer support networks (56 per cent), is the preferred way for the government to be a better partner to businesses.
“SMEs expressed a strong need for tripartite collaboration between banks and the government. Essentially what they want is to have a strong network to tap on. From UOB’s perspective, we are now able to give provide SMEs with wider reach to a larger customer base, hence enabling growth,” said Loh.
They are also working with businesses to forge meaningful collaborations. For instance, through UOB’s BizSmart partnership with Exabytes, the bank is able to help its customers who do not have any digital experience build customized e-commerce websites in just 15 minutes, therefore helping them build increased online presence and distribution channels
On the supply chains front meanwhile, the study found that businesses are increasingly focusing their investments on digital tools that can make their supply chains more flexible.
“As business volatility continues for a protracted period, SMEs must build greater resilience in their supply chains. SMEs should keep themselves informed on supply chain enhancements and change trends during the pandemic, and develop new capabilities with the longer term in mind,” noted the study.
Logistics companies such as GKE Corporation, Pacific Logistics Group and Legend Logistics are examples of local companies that have successfully crowdsourced innovative solutions in data analysis and automation, thereby enabling them to enhance their end-to-end supply chain visibility and operations.
Lee Pak Sing, assistant chief executive officer, trade, connectivity and business services at Enterprise Singapore, also highlighted that companies have realized the importance of tapping on digital solutions, such as data analytics.
This, he told The Business Times, allows them to detect and implement informed countermeasures quickly in response to unexpected events such as port congestion and tightened border controls.