One in two corporates in India have a digital transformation strategy in place: Report

There has been a continued momentum in digitalisation efforts by businesses across the Asia-Pacific (APAC) region, according to the third edition of the DBS Digital Readiness survey.

The Covid-19 pandemic and the subsequent lockdown has accelerated the digital journey for corporates and small & medium enterprises in India, the report further added. However, room for further improvement remains.

According to the survey, one in two corporates in India have a digital transformation strategy in place. Forty-eight per cent of large corporates (companies with an annual turnover of over $1 billion equivalent) and middle-market companies (annual turnover of between $200 million and $1 billion equivalent) in India have a digital transformation strategy in place.

In terms of the APAC region, 70 per cent of large corporates and middle-market companies have a digital transformation strategy in place, with Taiwan leading the way at 95 per cent. This is an increase from 2020, when the proportion of APAC businesses with a digital strategy was 57 per cent.

There has also been a significant growth in the proportion of businesses with clearly defined digital strategies at 35 per cent, up from 26 per cent the year before.

In India, the survey reported that 62 per cent of the large corporates and middle-market companies are in the formative stages of digitalisation.

"They have so far developed their digital roadmaps and are rapidly ramping up their efforts," the report said.

Divyesh Dalal, Head - Global Transaction Services, DBS Bank India, said, "If there was any doubt about the key benefits of digitalisation, the pandemic has only eliminated it. Embracing digital transformation is no longer a 'good to have' but critical for corporate entities to maintain a competitive edge and improve business drivers."

"We are witnessing a rapid pace of technological innovation, which will come with its own challenges around adoption and implementation," Dalal added.

Small businesses making steady progress

As per the report, small and medium enterprises (SMEs) in India are making steady digital progress to match the pace set by their peers in other markets

To better understand their needs, the DBS Digital Readiness Survey was expanded this year to garner insights from more than 1,000 small and medium-sized enterprises (SMEs) across six APAC markets (including India), on where they are in terms of digitalisation.

In terms of digital progression, SMEs in Singapore are the pacesetters with 72 per cent having a digital transformation strategy in place, followed by Hong Kong (47 per cent), China (44 per cent), Taiwan (38 per cent), India (25 per cent) and Indonesia (20 per cent).

However, Indian SMEs have digitised 23 per cent of their payment collection volumes, up from 18 per cent a year ago.

"The figures reveal that digital channels are on the rise and suggest that SMEs are making progress in their digital journey in the face of the pandemic," it said.

Sudarshan Chari, Head – Business Banking, DBS Bank India, said, “A rise in the adoption of digitised payment collection amongst SMEs in India is an encouraging indicator of the value these businesses see in digitalisation."

"More than half of these SMEs identified banking relationships and apps as the function they would focus on during their digital transformation journey. This reliance on the banking provider for help and guidance highlights an immense opportunity for market education and bridging the resource gap," said Chari.

Barriers to digital adoption

"As the pandemic accelerates the demand for contact-free services and questions regarding the resiliency in supply chains, virtually all large corporates, middle-market companies and SMEs in India have indicated that they face external pressure to transform digitally," the report said.

The growing supply chain complexities (32 per cent) and customers and key market demand (28 per cent) were the key external challenges driving the need to change for large corporates and middle-market companies. 34 per cent of SMEs in India cited growing supply chain complexities as a source of digitisation pressure.

However, the challenges to digital adoption vary across large corporates and middle-market companies and SMEs in India. For large and middle market corporates, barriers include cybersecurity issues (54 per cent), availability of digital talent (53 per cent) and cost (51 per cent). For SMEs, the high costs of adopting new technology (80 per cent) was the leading challenge.

Amongst cybersecurity concerns, DDoS attacks (77 per cent), cloud infrastructure security (76 per cent) and theft of customer data (72 per cent) were the most concerning issues identified by more than half of the large corporates and middle-market companies here.

"The pandemic-induced supply chain disruptions and cash flow interruptions have highlighted the importance of digitising these core banking and finance operations," the report said.

In terms of digital spending, around half the large corporates and middle-market companies in India cited that trade and supply chain financing (82 per cent), ongoing cash management (58 per cent) and back-office operations (55 per cent) represent the three most significant digital investment areas. 63 per cent of Indian SMEs are investing in new technology solutions for cash management.

India is one of the bigger markets in APAC, where SMEs invest more in new tech solutions to develop cross-border payments and FX capabilities.

Moving forward, organisations in India will leverage smart contracts / digital ledger technology (DLT) and the use of APIs to embed banking products and services into key digital touchpoints.

Over the next 12 months, 39 per cent of SMEs and 80 per cent of large corporates and middle-market companies are looking to adopt APIs in their banking connections.

In terms of digital support, banks remain the preferred partner for businesses in India for keeping pace with fintech innovations and finding the right digital solutions, with 89 per cent large corporates and middle-market companies as well as 81 per cent SMEs citing this as a preference.

Business are also looking at investing in sustainability/ ESG-related new technology.

Previously known as the DBS Digital Treasurer Survey, the study was conducted in June 2021 and involved around 2,600 corporate treasurers, CEOs, CFOs and business owners across 13 markets in APAC - India, Australia, China, Indonesia, Japan, Hong Kong, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam- as well as the US and UK.

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