17 July 2020

Digital will only pay out if it spans the generations

Family-owned businesses risk being left behind if the preconceptions of digital payments aren’t overcome.

In a few short years, digital payments have become so tightly woven into the fabric of consumers’ everyday lives that it is hard to imagine life without them. Singapore has made a concerted effort to encourage adoption, with Government and industry-backed programmes such as SGQR and PayNow transforming the way we pay for the everyday; from chicken rice, a new pair of shoes to all forms of online shopping.

While there has been an inexorable push for businesses to go digital – and a good understanding amongst business leaders that going digital is a necessity – there are roadblocks when it comes to its adoption and implementation in treasury functions, and the first stumbling block lies close to home.

Many businesses in Asia remain family-run, privately owned enterprises; even as some of these have grown into multinational conglomerates. Often, these businesses have been built from the ground up and have succeeded by passing knowledge, expertise and fresh ideas between generations.

Many have taken the leap to digitise their consumer facing – or B2C - systems, and for obvious reason. The total value of Digital Payments1 in Singapore is expected to exceed US$21bn by 2024, growing by 9.2% annually2. The message for businesses is clear: customer impetus is the number one reason to go digital, because customers already expect it - and if they don’t get it - they will simply go elsewhere.

Yet evolving technology and a clear push towards a digital economy has made it possible to review and re-engineer long-held procurement and sales processes, alongside treasury operations. Family-run businesses are often missing out on this because there is a missing link of understanding between generations in the perception of digital when it comes to digging underneath the consumer benefits. Bridging this understanding gap is vital; without it, businesses may be left behind.

The current pandemic has lent urgency to this by forcing enterprises to take their business online with many forced to draw their shutters and conduct business remotely. Those who have not already enabled online transactions may have found themselves grinding to a halt. For these businesses, there is no better time than the present to harness the combined experience of the older generations with the digital savvy of the younger ones.

According to a PWC report3, ‘next-generation entrepreneurs’ see themselves as agents of change for digital transformation, even as many yearn for increased trust and support from the current generation of leaders.

Next-generation scions are often digital natives armed with business degrees, well-placed to identify and implement the benefits that digitisation brings and better navigate today’s business landscape. This may lead to new growth opportunities and even enable expansion into new markets.

Time to call cheque-mate

It may come as a surprise, but cheque payment is still a commonly used payment method in certain segments of the market. In 2018, Education Minister Ong Ye Kung said the government – as part of its efforts to go paperless – hoped to see Singapore cheque-free by 2025. Since then, cheque usage has fallen by 8% every year4 but remains a chosen payment method for many.

For decades, businesses became accustomed to the ease-of-use and universal acceptance of cheques, yet the hidden charges associated with manually sending and processing them can add up. By adopting digital payments, companies stand to reap the following benefits:

  1. Cost considerations – Digital payment system integration costs have become approachable to SMEs, one of the reasons for resistance in the past. Receipts being delivered electronically with automated accounts reconciliation capabilities can bring about significant cost savings over the long term
  2. Improved customer experience – Digitalising payments allows businesses to offer customers a round-the-clock, seamless and frictionless experience. For B2B customers who are upgrading their systems and processes can provide an improved customer experience, and assures them that their business is keeping up with the times
  3. Better overview of cash flow and management of working capital – Digitising payments and collections allow for real-time tracking of invoices and eliminates the need for manual updates, providing enhanced real time cash flow forecasting capabilities
  4. Improved security – The elimination of paperwork can help with manpower costs and eliminate manual errors. Having a digital audit trail improves security and transparency to reduce the possibility of fraud

Of course, switching to digital payments is not just about adopting new technologies. Business practices, workflows and manpower skill upgrading must also be assessed and reframed. Attention must also be given to identify the best solution and guidance given through the implementation process to ensure minimal disruption to the business.

Understanding the deeper benefits of going digital is crucial for business owners. Improved customer experience is possibly the most tangible benefit to comprehend, but the business efficiency and operational improvements that digital can bring are substantial, and it’s on the different generations to harness the opportunities together to secure the future prospects of their business.

Digital will not replace decades of human knowledge and experience, it will only go to enhance it.

A contribution piece by David Koh, Head of Liquidity and Cash Management, HSBC Singapore. A version of this piece was first published in Singapore Business Review on 17th July 2020.

Digital Payments refers to consumer transactions including payments for products and services which are made over the internet as well as mobile payments at point of sale.
This does not included transactions between businesses, bank transfers initiated online and payment transactions at the point of sale where mobile car readers are used.

Statista, Digital Payments, Singapore.


Digital Payments refers to consumer