The global systemic shocks brought on by the pandemic have compelled everyone to live in an increasingly virtual world. For small- and medium-sized enterprises (SMEs) in Asean, the need to stay agile and to adapt to the new normal is critical. 

For SMEs to stay relevant and to achieve growth, they must transform. Those that fail to do so risk falling further behind, especially in a digital-first economy.

Prior to 2020, consumers were already going online and transacting albeit not at current volumes. Online consumption spiked significantly last year due to pure necessity following lockdowns. When the pandemic is over, few may choose to return to the old ways of getting things done physically. 

As we enter the endemic Covid-19 phase, digitalisation will enable SMEs to seize more opportunities to power up their growth in this new era. 

Working smarter from home

Remote working is now the preferred mode of work. In fact, based on a recent EY Work Reimaged Employee Survey, only 15 per cent of the respondents from Southeast Asia would prefer to work full-time in the office, should circumstances allow. Not surprisingly, 29 per cent hope to work remotely full-time while 23 per cent want hybrid work arrangements. 

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It is more important than ever to improve the efficiency and reliability of the remote working experience through the use of digital solutions. The ASEAN SME Transformation Study 2020 by UOB, Accenture and Dun & Bradstreet also found that 64 per cent of SMEs across Asean ranked technology as their top investment priority amid the pandemic. 

Digital tools such as UOB BizSmart, an integrated suite of cloud-based business solutions, can help SMEs to operate digitally and effectively. During the pandemic, UOB saw a 29 per cent increment in SMEs actively using the BizSmart suite of solutions from August 2020 to August 2021. 

SMEs can have a real-time overview of their business processes, from resource and payroll management to procurement and invoicing, as well as their company financials at their fingertips. Their employees are also able to use such digital solutions to complete their daily tasks effectively when working from home.

Given the rapid shift towards digitalisation, SMEs that invest in growing their digital capabilities will stand a better chance of navigating the increasingly virtual and post-pandemic business environment. 

Buying everything, online 

Prolonged home confinement and work from home arrangements for most during Covid-19 lockdowns has produced a considerable demand for online shopping and food delivery. Asean, with its 660 million-strong population that adds about 124,000 new online consumers a day, is shifting away from brick-and-mortar stores. A study by Facebook and Bain & Company showed that across ASEAN, at least 44 per cent of all digital consumers are spending more of their household budgets on purchasing fresh produce and other staples online. At least 80 per cent plan to continue buying their essentials this way.

As more people turn to online shopping for their day-to-day needs, SMEs that adopt digital capabilities early will benefit from consumers’ preference for digital commerce. 

Carpo Fleuriste, an online floral boutique, decided to improve the way they ran their business. Owner Kumiko Ishii’s style of ‘omakase’ (which means ‘I leave it up to you’ in Japanese) bouquets were popular and customers would send their orders through Whatsapp or social media platforms. This meant that she sometimes lost track of payments. She was then introduced to Shopmatic, an e-commerce platform that offers easy-to-use web templates, for her business. Now, customers pay for their orders in advance and she has also been able to use that site to track the business’ growth. With Shopmatic taking away her administrative burdens and giving her a platform to showcase her products, she can now better focus on improving her craft and launching more products for her customers. 

Another key step for SMEs beginning their digital journey is a seamless online application for a bank account and instant visibility to their transactions. This is especially critical as more of their customers make transactions online. 

In April 2020, UOB launched an online account opening service for SMEs to open and obtain an account number instantaneously, as well as to keep tabs on their online transactions. Over the past year, there was a 28 per cent increase in businesses applying for an account through this online service. 

Seizing cross-border opportunities post-Covid-19

Emerging from the pandemic and moving into an endemic Covid-19 environment, digitally-savvy SMEs will be able to diversify their revenue streams through online and offline offerings, thus strengthening their business resilience for the long term. To grow their business, an alternative is to go beyond Singapore. 

While Asean continues to weather the impact of Covid-19, the region’s strong fundamentals – including a young population, rising consumption and increased infrastructure spending – ensure that its long-term growth potential remains intact.

The findings of the ASEAN SME Transformation Study 2020 back the region’s growth story. Among the SMEs surveyed, one in three said that they will expand into new markets when the pandemic ends, with the top three most attractive markets being Singapore (64 per cent), Malaysia (51 per cent) and Thailand (50 per cent) 

Asean remains a bright spot. The region’s internet connectivity and consumer purchasing power will continue to increase, resulting in a thriving digital economy. With digitalisation blurring physical and geographical boundaries, SMEs that have sharpened their tools and geared up for the recovery will find it easier to find and to seize cross-border opportunities in the region.

The shift to increasingly virtual living, coupled with a growing middle class in Asean and the purchasing power that brings, means fresh opportunities and greater revenue growth for businesses that are able to flex their operations effectively in the new normal.    

The writer is head of group business banking at UOB.