How Thai SMEs can accelerate digitalization and sustainability in uncertain business environment

Businesses that stay resilient amid uncertainties and changing consumer behaviours need to adopt technology innovation and balance social responsibility and profitability so that they can achieve competitive advantages and sustain long term growth, said UOB Thai’s Country Head of Channels & Digitalisation, Piyaporn Ratanaprasartporn in recent World Fintech Festival Thailand : Banking for Businesses – a spotlight on SMEs.  This event is co-hosted by UOB Thai and Elevandi, a non-profit created by the Monetary of Singapore (MAS) aiming to widen FinTech community.

According to online survey from 1,500 SMEs in 5 key ASEAN markets ie Singapore, Indonesia, Malaysia, Thailand and Vietnam, 45% of the respondents are looking for business transformation, particularly in the areas of digitalization and sustainability.  This prompted  necessary actions following the pandemic recovery and uncertainties over geopolitical issues, high inflation, ongoing supply chain shortage, and workforce relocation.

Sathit Boonchalok, Senior Vice President, Head of Product Management, Business Banking, UOB Thai said that most companies also plan to continue digitalization and tapping digital economy opportunities.   Over 66% of the respondents expect to spend more on technology across 4 areas; digital marketing and social media, digital sales and servicing, technology and network management, and operational processes.

Sustainability is another priority of the respondents’ concerns based on the survey.  Only 35% of SMEs is in experimental mode where they introduce limited changes to their business.    They are developing new business models, products and services to tap new business opportunities across ASEAN.

Chonlawat Ruengpreechavech, CEO, Clinton Intertrade said his company has currently speed up digitalization and sustainability to meet the goals.  However, most SMEs are struggling to catch up and collaborate with relevant parties in digital technologies and green alternative solutions and finding trusted banking partners for financing.  Chonlawat said the recent success story of paperless program with cost saving encouraged the staffs to aware and take concrete actions in exchange of cash incentives.  

Chonlawat also realized how SMEs can go sustainable with profit by joining UOB FinLab program.  Using insights on design thinking to refine their business models and to identify what areas of business opportunities and improvement by using technology and innovation, the company can seek sustainable projects to be financed by allocating unused budget from other projects.

From the regulator’s point of view, Sopnendu Mohanty, Chairman of Elevandi and Chief FinTech Officer of MAS, said that, during this transition phase of sustainability, it necessitates to have the right models of building systems and processes to track performance, reasonable pricing incentives for SMEs to obtain or pay against the carbon emission, supports from banks to finance those green projects which can be measured and monitored.

Mohanty encouraged SMEs to think thoroughly from sourcing raw materials, goods or services are produced in sustainable ways, and how they are delivered to the markets.  Then, they can identify what to do, what requirements to achieve, disclosure rights, registry, what are the best practices of part of the processes.

Mohanty also shared his insights over both infrastructure and financing sides on how ASEAN markets are beneficial to expand credit markets across countries and support 60-70% SMEs which are now unbanked.  On infrastructure side, to gain interoperability in the digital world, we need to figure out national ID, payment rail, connecting data, and consents.    Given data resiliency, privacy protection, cross border data exchange, rights to consent SMEs to hold or share data, the regulators need to find constructive ways to solve the issues.

On financing side, ‘tokenizing intent to pay’ by verifying other social parameters and credentials will help expanding credit consideration, other than reviewing financial data.   This project is to help strengthen digital financing footprints across ASEAN countries and it is likely that Thailand to enter the sandbox as well.

Project Greenprint, launched in Dec 2020 by MAS, aims to promote a green finance ecosystem through helping to mobilise capital, monitor sustainability commitment, and measure impact.   This is to address the financial sector’s needs for good data on sustainability by building platform or common disclosure portal, ESG registry, data aggregation, incentives for SMEs to do better together.  Technologies eg AI, APIs, blockchain can facilitate the key ESG data challenges faced by financial institutions and enhancing their ability to make informed financing decisions.

Aung Kyaw Moe, 2C2P’s Founder & CEO, said today’s digital landscape and business environments facilitate and open new opportunity for SMEs to tap and expand globally, due mainly to the high adoption of digital payment.  The pandemic also accelerated people to embrace the digital economy through Thai government’s initiatives on ‘We travel together’ to promote hotels, airlines and restaurants and ‘Go halves’.  On sustainability issue, it is important to change the corporate culture in transforming sustainably.  Whether or not by their willingness with incentives or any mandate of forceful actions, it takes long journey time to align with the policies and financing capabilities.   At present, most large and SME corporates use sustainability as marketing tools to sell more products.

To help SMEs achieving their goals, UOB has continuously developed sustainability framework, applicable tools, sustainable financing solutions such as U-Energy, end-to-end financing solution that helps the clients save on energy costs and reduce their carbon footprint and meet their sustainability goals.  U-Solar, Asia’s first integrated and financing platform for solar energy under the UOB Smart City Sustainable Finance Framework.  U-Drive, an integrated sustainable financing solution for the electric vehicle (EV) ecosystem in Thailand, connecting the EV value chain – from auto brand owners, car dealers, EV charging infrastructure providers to end-users.

Nareerat Santhayati, Deputy VP, Sustainable Development Department, Stock Exchange of Thailand (SET) highlighted the importance of SMEs to expedite digital transformation and innovation so that they can gain competitive edge in the long run.   SET has developed and engaged listed and non-listed companies to attend trainings and workshops in relation to design thinking, business canvas, digital transformation.  Latest project called ‘Creating a culture of innovation’ organized by Microsoft and Mission to the Moon to be rolled out by 29 Sep is to promote Thai corporates to participate.

There are 4 key areas to be focused are people, process, data, and technology.  Some customers in Market for Alternative Investment (MAI) have proven to capture new business opportunities by using technologies in smart farming (using RFID animal tag to keep track of animal welfare and vaccination) and weather-related data to forecast availability of supply, farm yield performance and productivity.