Business Informative & Scope Innovation WYN

Good Disruptions

by Su Aziz

Digital transformation will help build resilience for businesses badly hit by the pandemic. Bearing this in mind, WYN’s thinkTALK for 2021 kicked off with the topic Disruptive Innovations Impacting SMEs that guided SMEs to pivot through useful disruptions.

On 30 March 2021, WYN held a one-hour virtual session on Disruptive Innovations Impacting SMEs. The session which falls under WYN’s thinkTALK series serves as a recovery guide for small businesses through online discussions with experts. Its first session for 2021 featured speaker Joel Shen who is the vice chairman of Singapore Chamber of Commerce in Indonesia and partner in the corporate team at Withers KhattarWong. The moderator of the session was Charlotte Kan, London-based international print and broadcast journalist specialising in finance, tech, disruption, lifestyle and travel.

Charlotte Kan, moderator for the session

Digitalisation is not a trend but a necessary tool for digital transformation. Through it, businesses are able to create opportunities such as new revenue streams and thrive in a post-pandemic economy. Through it too, businesses can adapt to changing consumer behaviour and be resilient toward an evolving business environment. The attitude businesses have to adopt today is not to wait for recovery to happen. Instead, they should drive their own recovery to survive.

A Conversation on Creating Solutions through Digitalisation
Charlotte: The COVID-19 crisis has basically served as a call to action for further digitalisation with SMEs, having to capitalise on consumers digital footprint for business engagement. The main insight of this crisis is the fact that digitalisation is a must do.

Joel: The number of internet users in Southeast Asia had increased by 40 million. To put things in perspective for you, it was 360 million in 2019, 400 million in 2020 and last year, 70 per cent of residents in Southeast Asia were connected to the Internet. The pandemic, while it has been an extraordinarily challenging and difficult time for everyone globally, has accelerated the adoption of digital technologies by consumers and businesses alike in a permanent way. And that these changes are expected to last post pandemic, both in Southeast Asia (SEA) and I’d go as far as across the globe, generally.

The proliferation of digital technologies assumes the underlying infrastructure such as smartphones and digital telecommunication networks. There has been an extraordinary amount of private capital pouring in for the development of new and disruptive technologies, notably in the form of venture capital. SEA focused on venture capital investors.

Joel Shen, speaker for the session

Charlotte: The role of the private sector, whether it’s private equity investments, venture funds can’t be underplayed here. It’s very important, in order to speed up digitalisation, that they should also get involved.

Joel: The venture capitalists (VC) are out in force. They’re looking for the next big venture to back. Certainly [is the case] in my part of the world, SEA, given rise to a new generation of digital businesses from ride hailing applications, food delivery to online digital payments. It was quite an opportunity that the advent of the pandemic is at a time when these technologies are already in existence. Can you imagine how things would have panned out if the pandemic had come as recently as 20 years ago where perhaps some of these technologies didn’t exist? Students and office workers wouldn’t be able to study or work from home, the infirm wouldn’t be able to see the doctor via telemedicine or receive prescribed drugs and essential good such as food via delivery apps.

Charlotte: What does digitalisation look like for SMEs? How do you go about it and what should be the first steps?

Joel: An example is, when people ask me what digitalisation looks like, I say, look no further than your favourite food stall in Singapore. My personal favourite is this little stall in a basement of an office building in downtown Singapore. It’s run by a Singaporean Chinese lady and it sells fried bee hoon (vermicelli noodles), a favourite breakfast dish of Singaporeans. The stall has been around for a long time, perhaps 15 years or so and operates from early hours to around 10.30am each day. How she operates it, is very traditional. Customers pay by physical currency.

Today, I’m happy to report the stall vendor has leveraged on existing digital platforms and digital technologies. Thus, ensuring the longevity and revenue of her business during the pandemic as well as beyond. Digital payment is one of the bright spots in the economy at the moment. Cities such as London and Singapore are leading financial hubs where the fintech sector is well ahead of the curve. Indonesia, however, is a country of 217 million people and comprises 17,000 islands, many of which wouldn’t have even basic infrastructure.

52 per cent of Indonesian adults have no bank account, while the remaining have inadequate access and are under-banked – by which I mean, they have inadequate access to basic financial products and services such as insurance, credit and small business loans. So, fintech is bridging the gap and democratising the world of finance. Thus, ensuring the fat bottom of the demographic pyramid to have access to the basic financial services.

Charlotte: A lot of SMEs are involved in commerce generally trade via e-commerce in particular. The development of fintech solutions appropriate for them is key. However, you need the logistics and the infrastructure behind it, to make it work. So, when we’re talking about digitalisation and innovative technologies, let’s not forget the supporting infrastructure needed.

Now, will fintech eventually replace banks?

Joel: Well, it depends on your view of the world. I don’t think banks will ever be totally replaced simply because banks themselves are constantly evolving. I wouldn’t see fintech and banks as being on two ends of a competing spectrum. I’d see fintech as new technologies that are eventually either sold to banks or assimilated by banks or indeed developed by banks themselves. Some of the largest banks in SEA today are leading in fintech development. So, don’t think of fintech as disruptors but rather as an alternative.

Charlotte: What are the technologies that excite you about their potential to transform SMEs? There’s a lot of talk about blockchain and its potential to revolutionise transactions by enhancing traceability visibility and cooperation, what do you make of that, and how can it help SMEs?

Joel: I’d view blockchain as one of the new tools that are used by SMEs. Throughout the pandemic, it’s not just one technology responsible for making life comfortable but an accumulation of different technologies deployed in various functions that have led to this happy state of affairs.

Charlotte: There’s a lot of that today, indeed. What’s interesting is the fact that, like large corporations and big structures it’s much easier for SMEs to try new things, change their business models and adopt new technologies. They have that great advantage of agility.

Joel: I’d echo your views there. The Indonesian economy consists of SMEs and they have a distinct advantage in the flexibility their small size accords in terms of adapting to new technologies. Also, it’s far easier for these businesses to pivot when they when they come across ‘speed bumps’.

Charlotte: There’s a shortage of digital skills. A lot of mature economies are attracting talent from developing countries. What can we do to grow local talent, retain it and do it within SMEs?

Joel: There isn’t a simple solution. But education is one. However, it takes time to develop talent such as data scientist, for instance and well, the world might be a different place by the time they graduate. I think we do need to adopt new ways of looking at education. It needs to be a process over the productive lifetime of a typical employment. So, we need to constantly renew ourselves, constantly educate ourselves.

Charlotte: How can SMEs afford disruptive innovations in order to thrive? What can they do while operating on a tiny budget? What advice would you give them?

Joel: Consider what the alternative is to adapt. I’d encourage any SME today to really keep a finger on the pulse of new technologies as they become available and consider whether they’d be applicable to them to enhance the efficiency of their business.

Charlotte: Could cryptocurrency be legal payment in Indonesia?

Joel: Today, cryptocurrency is still not legal in Indonesia nor anywhere else. Indonesia regulates cryptocurrency, as they would any other commodity, such as gold, silver, nickel or crude oil. So, you get to invest in cryptocurrency in Indonesia, today, but you wouldn’t be able to use it as an instrument of payment.

Charlotte: What does the future of innovation look like and the future of innovation for SMEs?

Joel: Keep an open mind when it comes to the future of innovation for SMEs. I think it would be narrowing the scope of the debate, if we were to say, the future of SMEs is in digital or the future of SMEs isn’t blockchain or the future of SMEs is in cryptocurrency. Continue to be receptive to any new technologies that might come along, be ready to adapt to the new technologies when it suits them.

Charlotte: That’s a great conclusion. Before we talk about adopting disruptive innovations it’s important to have an open-minded agility, try something different and see if it works. I think that’s the key and to just explore when it comes to innovative technologies. That’s what disruption is all about, trying something new, something that has never been tried by others before and see if it works for you.

Main photo by Jim Wilson on Unsplash.

31 Mar 2021
Last modified: 31 Mar 2021
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