Welcome to the new era: It's the digital age, and aspects of our lives are being empowered by the speed of technological development.
Digital economies are opening up around the world. This includes the financial system that businesses abide by. Then there’s the rising demand for newer technologies, and the seemingly futile attempt at keeping up with the dynamic cycle of better, stronger innovation.
The pressure is increasingly felt more by Small and Medium Enterprises (SMEs) that have suffered tremendously amid the sudden appearance of this Covid-19 pandemic. SMEs in Singapore are being pushed towards a more digital approach to business development, but there are challenges along the way.
Singapore's push towards digital
It's no secret or surprise that many countries that can afford to are marching towards digitalization. On closer inspection, digital growth is rapidly transforming many economic landscapes, particularly those in the Asian region. Singapore's leadership has worked to take a holistic approach to digital development, and this tiny red dot is in a great position to be the “digital technology hub of Asia”.
According to the Digital Economy Framework for Action, Singapore's efforts for stronger digital infrastructures are based on four key pillars:
- To cultivate and harness the IP and capabilities of the research and innovation community. As seen with the thriving startup scenes in Asia, foreign investment and greater attention are often implemented at the innovation level, focusing on value derived from new, unique and effective solutions.
- Building sustainable and reliable regulatory structures around digital-friendly facilitation. With regard to this, order is just as important as progress, which means that the nation must be ready to moderate accelerated digital growth before honing its true power.
- Building the infrastructure necessary to help enable unhindered connectivity. With major aspects like 5G and components related to greater internet speed, the prospect of greater convenience and faster achievements are closer.
- Developing and supporting digital talent. There are up-skill and re-skill efforts in accordance with raising the digital capabilities of the workforce to keep up with the rest of the world and prepare workers for the future.
The government has made it clear that their administration intends to back businesses and their respective workforces up in preparation for better digital opportunities.
However, the push towards digitalization doesn't come without challenges. For one, SMEs in Singapore are feeling the heat, especially amid the Covid-19 crisis. Many businesses are walking the fine line between financial wellbeing and demise.
A sense of urgency amid the pandemic
With economic disruptions due to the Covid-19 pandemic, we see a greater emphasis being put on the digitalization of businesses in Singapore. Safe distancing measurements, demand for contactless payment, the closing of physical shops during the Circuit Breaker period, as well as a slowdown for businesses in terms of on-ground transactions are all pain points that combined on a massive level in just a short amount of time.
It's happening around the world, and nations are reacting differently to the situation. As progressive as Singapore is in its vision for a digital economy, SMEs are facing urgent financial issues and are struggling to cope with the new norm. The crisis has exposed many vulnerabilities such as the need to eliminate and replace manual processes as well as managing the condition of funds and capital at any given time.
SMEs comprise a hefty portion of the economy's driving engine, and to enable them digitally would mean that Singapore's business landscape will continue to thrive in the long run. It's not so easy though, especially when the fragile financial conditions of many businesses coupled with the lack of resources and direction for proper digitalization are taken into account.
There is also the age-old issue of SME support in terms of finances and other growth-driven initiatives. Singapore has taken good measures to solve these issues, including numerous relief efforts and programmes to help SMEs deal with difficult financial obstacles and combat the repercussions of the current pandemic.
Read also: COVID-19: 5 Mistakes Businesses Might Be Making With Their Finances
Read also: COVID-19: New Opportuinites for E-commerce Businesses to Grow During This Pandemic
Digital banks and government-backed support
Digitalization and SME financing in Singapore can complement each other.
Government grants, SME-friendly loan options and financing alternatives make up the fairly effective ensemble of support structures for SMEs.
At the end of May, the Infocomm Media Development Authority (IMDA) announced that a new SG Digital Office was to be formed as a comprehensive mobilization initiative to digitalize every aspect of Singapore's community and economy. This includes the adoption of digital solutions such as cashless payment components that could help prepare businesses for transactions in the new norm.
Digital banking could also be a key part of complete digitalization, catering to the continued development of online marketplaces, platforms that save time and money, and trading interfaces that are accessed via mobile apps (among other innovations). Lenders nationwide are beginning to open up to the idea of leveraging collaboration opportunities in order to develop a digital ecosystem that leads to better access to new technologies.
Digital banking also relies heavily on elements like hyper-personalization as well as the adoption of data-driven business models and smart systems that utilize Industrial Revolution 4.0 technologies like Artificial Intelligence and machine learning to optimize analytics and produce better decisions based on precision.
With the rise of digital banking and fintech solutions across Singapore's various business sectors, SMEs will be able to access a vast array of financial and non-financial products and services for a host of different aspects. Digital platforms help to meet business needs, measure risks and returns, evaluate financial positions and reinforce funds as seamlessly as possible.
Digital banks play a huge role in assisting SMEs as they cope to embrace digitalization. It goes both ways too, as SMEs need to focus on continued innovation and building a solid business model around digital empowerment as ingredients for growth moving forward.
Read also: COVID-19: What's Next For Singapore's SMEs After The Pandemic
Read also: COVID-19: 7 Government Support and Grants That Help SMEs Stay Afloat 2020
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