Knowledge is power. With each and every seminar organized by the YSEALI Academy at Fulbright, our young leaders (fellows) from 10 ASEAN countries and Timor Leste have come to expect the extraordinary opportunity to engage with esteemed scholars and high-profile industry leaders on critical issues facing the region. The Technology & Innovation seminar, YSEALI Academy’s second instalment in a series of 3 seminars delivered in 2021, successfully carries on that tradition, where a coterie of eminent speakers is invited to engage, advise and inspire.
“The world has changed.” Stephanie Davis, Vice President of Google Southeast Asia, began her keynote speech with this remark at the YSEALI Academy’s plenary session for its Technology & Innovation seminar. That the coronavirus pandemic has altered and reshaped our world in multifarious ways needs no further expounding – it’s a reality in which we have lived and experienced for the past year. In Southeast Asia in particular, the question remains on its impact and implications on digital transformation of the economy, and how digitalization is without doubt instrumental in the region’s economic recovery.
A catalyst for transformation
According to the e-Conomy SEA report 2020, there were 40 million people who joined the Internet for the first time over the past year in Southeast Asia. Compared to 100 million new users added between 2015 and 2019, it’s quite an astounding number. “What we’ve seen during the pandemic and particularly here in the region is a big acceleration,” Davis said. “The need for tech migration has been amplified dramatically, and what we thought would take at least 5 years in Southeast Asia happened within 10 months of 2020.”
Varying degrees of lockdown across nations have necessitated this boom in digital adoption. From online shopping to education to entertainment, people have come to rely on technology to maintain access to essential services, work from home or sustain their business: 36% of digital consumers are new to the service they whether purchased, registered or subscribed online. Whereas 94% of these new consumers gave a favorable response when asked if they would continue using digital services after the pandemic is under control. “People may have come online or consumed online for the first time because of Covid-19, but they found helpfulness and efficiency, so they are to stay,” said Davis.
With 400 million people, or 70% of Southeast Asia’s population, are now online, it goes without saying that digitalization presents huge potential for business growth. It is estimated that digital ecosystems could account for $60 trillion in 2025 (or 30% of global corporate revenue). 70% of new business value created over the next decade will be through digital enabled platforms. And the circular economy powered by digital technologies can unlock $4.5 trillion in economic benefits by 2030.
The key to accelerate
“Given the circumstances just described, digitalization should be at the heart of most business decisions,” Davis said. “Technology can increase productivity, strengthen operational excellence, and help businesses stay competitive.” She advised that companies should look for tech solutions that are intelligent, open and flexible, collaborative and inclusive. The fact that data privacy and security have in recent years become a focal point in our collective consciousness when it comes to online experience has highlighted the importance of first-party sources of data as a healthier alternative to third parties. “Nothing fuels productivity more than data,” she said. “It allows us to glean insights and to see what customers are thinking, how their needs are evolving.”
By using Google Analytics, REA Group, a property digital company currently operating in Malaysia and Thailand, can connect multiple data sources and run simulations based on historical data. Consequently, faster changes to product activation and automating, in this case property listings or prices, are brought about and allow the company to win more business. “The point here is to get different data components in your company to talk to one another,” she said.
Warung Pintar, a tech company in Indonesia, demonstrates the benefits of intelligent systems that deploy machine learning and advanced analytics to provide real-time insights. “The reason I chose this example is because even with the smallest and most local of companies, we have seen incredible evidence of what technology can do for them,” Davis said. Warung Pintar uses cloud technology to help family-owned stalls and small shops (warungs) keep track of inventory, record and manage point-of-sale transactions, and analyze supply chain performance to achieve efficiency. As a result, average delivery time is shortened by 3-5 hours, while inventory cost is lowered by 20% overall.
In the finance sector, fintech startups pose as digitally driven disruptors to retail banks by competing for the attention and spending power of young consumers. TPBank in Vietnam has embraced a digital-first approach alongside traditional bricks and mortar: an electronic know your customer (eKYC) feature was introduced in their app where users can take a selfie to conveniently and securely verify their identity. At the same time, a digital marketing campaign that promoted ease of use for online banking successfully grew new customers from 5% to 45%, and saw 1.5 times growth in the bank’s app transactions.
A necessity for everyone
62% of customers now expect companies to adapt based on their actions and behaviors, while companies that deploy at least one sophisticated activation see a revenue uplift by 1.5 times. That means digital transformation is absolutely vital for business. “We all know how things played out in the retail space, where bricks and mortar companies didn’t feel the need to compete with e-commerce. They thought playing to their strengths after many years of success would be all they needed to do. Sadly it has left people trying to play catch-up, and many just couldn’t compete and went out of business.” Davis continued: “If you’re in a space that doesn’t have a direct e-commerce competitor and think that you’re safe, you’re not. It’s because what you’re competing for is the overall digital experience of customers.”
The biggest challenge that Southeast Asia needs to resolve, according to Davis in response to Aye Hninn Khine, a fellow from Myanmar during the Q&A, lies in tech talent. Of the key 6 momentum drivers for the region’s digital economy to reach full potential, which include internet access, payments, consumer trust, funding and logistics, only talent hasn’t seen significant progress for the past 5 years. Tanyag John Paul Salvador from the Philippines and Sima Sanda Biondi from Indonesia also raised questions regarding workers’ fear of job loss and reskilling, and the role of the private sector to support governments with digital transformation.
The solution entails a greater focus on producing tech-driven talent out of universities, as well as attracting talents from other regions to fill in opportunities on the market and for Southeast Asia to play a role as an export economy. Companies should invest in training programs continually updated and available to either new graduates or mid-career employees. “All along the way, I have to be retrained every year, multiple times a year,” Davis said. “We should give people the confidence in knowing they have resources at their fingertips, and keep them motivated based on the optimism about opportunities that technology brings us.”
Finally, it’s not just up to universities to educate talents, not just the government to provide regulations or guidance, not just the private sector to ensure digital upskilling – all of us should work together to build for the region. “One of the things that fascinates me is the richness and diversity of this part of the world. But what I’d also like to think about in equal measure, when it comes to the opportunity of digital transformation, is the commonalities of this region,” she said. “One of course being the rapid pace of individuals coming online, and they’re doing so via mobile. It’s a region that prefers image, voice and video over text. And they see technology as an opportunity for economic recovery. That was something the governments in this region had identified even before the pandemic.”
To the 35 fellows participating in the YSEALI Academy’s seminar on Technology & Innovation, Davis entrusted: “At the end of the seminar, I hope you will be left with a sense of optimism, and a sense of responsibility. You are our future leaders, Southeast Asia and ASEAN depend on you and your leadership.”