Digital solutions have proven essential to banking continuity during the pandemic. They will also help drive the recovery.
Covid-19 is accelerating global trends that were in motion long before the pandemic. Working remotely, for example, was a burgeoning prospect available to office workers in a modest but increasing number of industries during the 2010s. In the age of Covid-19, it has become the norm. Analysts are also expecting trend acceleration through the recovery. In manufacturing, for instance, businesses have long been trying to diversify their supply chain. Lockdown disruptions have reenergised these ambitions, highlighting that diversification is not just desirable for profitability but essential for continuity.
Digitisation began to emerge in the 1990s, which included the shift to offering online and digital banking activities. Money transfers, loan applications and other banking services have experienced growing consumer acceptance.
“In order to remain relevant, we need to reimagine banking,” said Soh Siew Choo, DBS Bank’s managing director and group head of consumer banking, big data and AI technology, while discussing the bank’s digital transformation with CIO Magazine.
At the turn of the pandemic, financial institutions are rising to the challenge of necessary reinvention. For example, DBS Bank, expedited their digital transformation, including deploying solutions that give businesses contact-free banking options like fully digitalised banker’s guarantees, sales invoice financing, and import letters of credit. When financial institutions act innovatively to solve specific problems, they see success in their broader mission, such as expanding financial inclusion for underserved communities, enabling opportunities for businesses to take the next step, and increasing access to financing.
Financial inclusion for people
The World Bank sees financial inclusion – the process of giving individuals and businesses access to useful and affordable banking services – as key to alleviating poverty and boosting prosperity. Yet even in affluent societies, the most impoverished members, such as low-skilled migrant workers, face access challenges.
Singapore is one of the world’s largest net importers of migrant labour. Many are essential to the construction, hospitality, and domestic service industries. Singapore also has one of Asia’s most sophisticated banking systems designed for the needs of migrant workers, which harnesses digital services powered by POSB Bank, a subsidiary of DBS Bank. The POSB Jolly mobile application was developed specifically to provide migrant workers access to a suite of internet and mobile banking services, including SMS banking. Since the release of the application, POSB Jolly has been downloaded 520,000 times, serving a sizeable chunk of the migrant worker community.
Covid-19 outbreaks disproportionately affected these communities, and many migrant worker neighbourhoods experienced stricter lockdowns than the rest of the country as a result. The situation reinforced the need for digital banking services, as workers could not physically collect their salaries. POSB Bank responded by fast-tracking the online banking registrations from migrant workers that enabled the much-needed payment of salaries. POSB Bank aims to serve digital contactless banking services to all migrant workers in Singapore by the end of 2020.
Leveling up for business
Digitalisation also creates more opportunities for business. Hong Kong has a strong ecosystem of family-owned businesses that have been serving the territory for decades. Chun Au Knitting Factory Limited (CHICKS) began as a small garment export and manufacturing business in the 1930s; today, they are a chain of apparel stores with tens of locations across the territory. CHICKS has survived for almost a century by embracing new ideas, including digital solutions for their customers. They participated in the pilot program for DBS MAX, a mobile application and QR collection solution that enables in-store customers to pay using their cellphones. Jennifer Tam, fourth generation and managing director at CHICKS, sees this as “the trend going forward”. Innovations such as these have helped Ms Tam transform CHICK’s brand from traditional to cutting edge, attracting younger customers, and increasing their competitiveness.
Covid-19 poses particular problems for small businesses, but digitalisation can provide innovative solutions. Wong Hing Kong, director of Unidbox Hardware, a hardware store group with three retail locations in Singapore, began selling online before the pandemic. The move online proved essential for business continuity, especially when Singapore went into lockdown. After experiencing the benefits, Mr Wong is keen to digitalise further and is currently developing an application for his business. “We are also going to go on Facebook Live, so that we can interact more with our customers,” he says. “This is what it means to do business. No matter the situation, we remain decisive, and we move accordingly.”
Rapid access to financing
Access to financing has proven especially important for interdependent business networks during times of crisis. If one business goes down, the entire network will suffer. For consumer electronics and home appliance giant, Haier Group (Haier), supplying a market the size of China requires a countrywide network of distributors – and Covid-19 is the crisis wreaking havoc on the ecosystem.
Haier recognised the problems facing its distributors, many of which are small and medium enterprises (SMEs) with limited access to financing. Haier utilised its digital supply chain platform and leveraged DBS Bank’s APIs to provide same-day financing for its distributors, tiding the businesses over until the crisis subsides. “With DBS [Bank]’s digital financing facility, Haier’s distribution partners can access low-cost financing with just a few clicks of the mouse,” says Yang Hongxing, Head of Supply Chain Finance, Haier. During the first week after the initial launch in early 2020, DBS Bank facilitated the digital onboarding of close to 30 distributors nationwide.
Innovative financial institutions will continue to digitalise their services, not just because it's good for banks but also because it's good for people.
This content is produced in partnership with CNN International Commercial.