UOB: Asian SMEs, Large Enterprises Are Embracing Digitalizationby Fintech News Singapore June 19, 2023
In Southeast Asia and Greater China, small-, medium- and large-sized enterprises are embracing digital tools to adapt to the rapidly changing business landscape, expand internationally and address supply chain challenges, a new study by the United Overseas Bank (UOB) found.
The UOB Business Outlook Study 2023, which surveyed more than 4,000 small and medium-sized enterprises (SMEs) and large businesses in markets covering members of the Association of Southeast Asian Nations (ASEAN) and the Greater China region, found that digital adoption is increasing steadily in the region.
Of the 4,000+ businesses polled, nearly 90% have adopted digitalization in at least one department with businesses in Indonesia (93%), Thailand (92%) and China (90%) found to be leading the trend.
The study found that these efforts are already bearing fruit, with seven in ten businesses stating that their digitalization efforts have led to “considerable or complete success”.
Asian businesses are also turning to digitalization to reach customers beyond their local markets and expand internationally. About four in five companies said they valued having a cross-border digital trade platform for their overseas expansion.
A digital powerhouse
The rise of e-commerce, digital infrastructure initiatives such as the India Stack, and booming adoption of digital solutions by young populations in countries such as Bangladesh, Indonesia and Vietnam have helped accelerate the region’s digitalization trend.
Today, Asia accounts for nearly 60% of the world’s online retail sales, with e-commerce revenues growing by 40-60% in Indonesia, Singapore, Vietnam and India in 2020, according to the IMF.
Governments in the region have also accelerated the deployment of fintech and scaled up their support of digitalization.
Cambodia introduced in 2020 Bakong, a new payment system operated by the National Bank of Cambodia that uses blockchain technology and which provides real-time-gross settlement. The system provides e-wallets, mobile payments, online banking, and financial applications in a single interface. The effort aims to promote digitalization, cashless payment, and financial inclusion.
Vietnam released in 2021 the National Digital Transformation Programme by 2025, an initiative focusing on helping accelerate digital transformation through changes in awareness, enterprise strategies, and incentives towards the digitalization of businesses, administration, and production activities. Ambitions under the strategy include the strengthening of online public services and the acceleration of non-cash payments.
India, meanwhile, accelerated digitalization through increased digital payments, contactless payments and digital education. India’s digital infrastructure, commonly known as the India Stack, is a key driver in the country’s digital transformation. The infrastructure is bringing together digital payments and identification services, among other things, and is allowing innovators to build additional services and applications.
Asia-Pacific (APAC) is leading the global digital payment market, accounting for nearly 50% of all cashless transactions in 2020, according to PwC data. The region is projected to maintain its leadership, forecasted to account for 55% of the market by 2025 and for 60% by 2030.
Between 2020 and 2030, the number of cashless transactions in APAC is expected to grow nearly fourfold, soaring from 494 billion transactions to 1.8 trillion.
Featured image credit: edited from Freepik