Treasurers are facing an increasing amount of challenges when managing supply chains. We spoke with Raof Latiff, Group Head of Digital and Product Management, Institutional Banking Group at DBS to find out how digitalisation can help overcome these challenges and futureproof businesses.
Raof Latiff
Group Head of Digital and Product Management, Institutional Banking Group
What are some of the challenges that corporate clients are facing in the current business environment?
The challenges our clients face in managing their supply chains are multi-fold. Firstly, it’s important to have full transaction transparency but this tends to be taken for granted. In today’s environment, beyond the commercial contract, a supply chain comprises of an entire chain of stakeholders including shipping, customs, freight forwarders, couriers and more. Full transparency on the flow of goods, documents and money across the chain is vital. It’s something every corporate is still trying to get to a grip on.
Secondly, there are multiple supply chain layers. When a customer procures from a particular supplier, the customer may not have full knowledge of where the suppliers get their production materials from etc. Now, there’s a stronger need for all businesses to understand their supply chain layers, ensuring a better assessment of their procurement processes to automate processes, streamline cost, manage associated risks and evaluate how these fit into the overall business.
How well have clients been managing these challenges?
Over the past two years, we have started discussions on digital transformation with SMEs as well as large corporates. Some of the concepts have been realised by now, however, many of the ideas were not adopted because digitalisation wasn’t seen as an immediate business priority at that time. With the current environment, digital transformation has come to the fore; we’re seeing serious commitment and rapid acceleration of digital adoption from our clients.
One area that has been notably active for our clients has been contactless payments, i.e. how do we pay and collect, if we don’t physically see someone. There are further questions around handling regulatory documentation for cross-border payments; these have traditionally been paper-based, but there’s now a strong demand to be able to do that digitally.
And in trade finance, where there are instances of physical documents requiring wet signatures, our clients face challenges such as, how will these be signed and sent to the bank when branches are closed? Existing paper-based and manual processes are no longer feasible with government-imposed lockdowns due to the global pandemic, posing serious threats to global trade.
In the last 60 days, we have facilitated a lot of digital workflow capabilities that we had in the works and have brought the implementation forward to provide relief for our clients and minimise business disruption caused by the global pandemic. For instance, DBS DigiDocs enables our clients to digitally submit supporting documents for cross-border payments and collections, and automates the process of document validation with third party databases.
At DBS, we leverage our suite of API solutions to help our clients connect with the bank, as well as their suppliers. Through APIs, basic customers’ workflows are digitalised and automated, thereby facilitating the flow of information across their procurement and settlement processes and providing them with the essential visibility.
The use of APIS also enable DBS to provide our clients with valuable information on their procurement and settlement processes that give them essential visibility on their supply chain. Using data on behavioural patterns and transactional flows, DBS can help our clients create alternative funding opportunities for their suppliers to ensure business continuity. Treasurers also benefit from a greater ability to forecast the financial situation. In a recent example, DBS partnered with Chinese electronics manufacturer to launch a digital financing facility, enabled by RAPID (Real-time APIs with DBS), to offer its distributors online financing for their purchases thus helping these distributors optimise their working capital in the current situation.
Digitalisation is increasingly essential for businesses everywhere, even more so now. Post-pandemic, where should treasury begin to start unlocking the potential of digitalisation?
We always talk about real-time information, but now we need to emphasise on real-time transparency and visibility of the entire financial supply chain. The ability to settle instantaneously is going to be the norm; the importance of having full transparency for counterparties and others in participating in an ecosystem is also increasingly important.
Going forward, there’s going to be a shift towards ensuring that corporates have full visibility with their counterparties – working across the same framework, same document sets, and having more governance. Transparency of every transaction is going to be absolutely critical in ensuring that our clients know what is happening and who they’re dealing with. From a bank’s perspective, more governance around fraud and risk helps to ensure safe commerce.
At DBS, we offer a suite of solutions from digital onboarding of suppliers to the ability to submit or present digital documentation for trade exchanges. Via our online banking platform and proprietary API solutions, we support the ability to facilitate file exchanges of trade finance documents and relevant supporting information such as Letter of Credit applications, bills of lading, custom documents. APIs also facilitate immediate settlement of payments via Scan & Pay QR code solutions that debits directly from the customers’ bank account and help to automate reconciliation on the backend.
What long-term digital opportunities do you see treasurers leveraging post-pandemic? And what is the role of DBS in helping clients to explore those opportunities?
A number of companies that have undergone digitalisation – and now, more companies which are partially digital or looking to evolve from their traditional structures – are investing in digital transformation. Their transformation could start very simply, by eliminating cheques to adopting electronic versions of invoices, and implementing digital modes of payment and collections. At DBS, we’ve held several discovery workshops and co-created digital solutions with our clients as part of their transformation journeys in the last five years. While this is not a new process, going forward, we foresee a strong trend in this direction post-pandemic.
In terms of leveraging of opportunities, the importance of data cannot be overstated. Corporates will start to leverage data analytics, not just in their business strategy to develop products, but also for financial engagements with their banks and counterparties. Data drives better insights, helping corporates make more informed decisions for their transactions.
For me, post-pandemic, I believe we’re going to see corporates getting a lot more efficient as a result of direct digital transformation within their organisations. Digital will be a non-negotiable consideration for corporates when it comes to undertaking any sorts of business engagements; we’re looking forward to these exciting changes and seeing how the digital world will evolve.
