Week in Review: SMEs gradually coming around to seeing value of digital

  • Most started with giving vouchers, some now moving to mobile payments
  • Digital not yet silver bullet to bridging trust gap between consumer & business


DESPITE the slow adoption of digital tools by Malaysian small and medium enterprises (SMEs) and even by large corporates, whose approach to digital was summed up as being “coy” and “cautious” by the Asean head of IDC, Sudev Bangah, I think we are seeing signs that SMEs are beginning to see the value of digital in running their business.

And for most, their journey starts with that most ancient of business tactics, the good old discount voucher. Tens of thousands of service oriented SMEs have collaborated with online players, starting with group buying sites likes Groupon, Mydeal, Milk a Deal etc to the current players like Fave, TableApp and eCommerce sites like Lazada and 11Street.

This exposure from a marketing angle starts their digital journey, whether they realise it or not. From seeing digital as just a marketing channel, a few natural will start seeing the value of adopting digital to other aspects of their business and here you start seeing them adopt digital in their payment systems, replacing/augmenting their traditional POS systems with mobile POS systems which banks like CIMB have been aggressively pushing since they tied up with Soft Space.

The value for the business is in getting paid quicker and paying less in transaction fees – a sure trigger for changing SME behavior but only once they get more comfortable with digital and I think that is happening.

For example, just Thursday afternoon, I was at auto workshop that I found through Carama.com, a workshop comparison site that has been running quietly since 2014. It likes to describe itself as a startup, but it is owned and operated by BP, a US$186 billion revenue behemoth in the oil and gas space.

The workshop was using a mobile POS from CIMB. Payment was done using their smart phone. Simple, fast and elegant with no clunky device or wires and no more excuse with “line down”. My regular mechanic meanwhile still has 3 or 4 traditional POS terminals and it’s just messy and takes up space. I plan to ask him why he hasn’t changed to a mobile POS.

In another example of the increasing adoption of digital, as I was waiting to make payment, in walked two other customers, one had a deal from Fave while another had a voucher from Lazada. Apparently customers, across age groups, are increasingly driven by deals they can get online, which means more workshops will have to start offering deals through their digital partners as well. Could this become a self-reinforcing loop until it becomes standard behavior in how most car owners pick workshops to service their cars or go in for repairs?  

Speaking of Fave, it has expanded its payment mobile payment service to Indonesia. As a recap, FavePay was inspired by the prevalence and convenience offered by mobile payments in China, which Fave co-founder Joel Neoh experienced first hand in late 2016. Realising that mobile payments was going to be a game changer to drive consumer behavior and therefore merchant behavior as well. But with the mobile payment space already fragmented in Southeast Asia, FavePay is being positioned as an aggregator for mobile payment solutions. But for now, payment is done via your debit/credit cards.

I’ll be watching to see when Fave starts integrating with the existing various mobile payment solutions, starting with Alipay as it has announced.

Finally, just a quick observation on Carama. The site design ok but more importantly I felt it had not achieved its mission of helping build trust between car owners and mechanics. My own experience showed me how wide the gap still was and made me wonder why Carama has not innovated to solve this, specifically in offering a second opinion to the option given to you by your mechanic. Can digital help close this gap? Will Carama be able to solve this or will someone else do so?

You have the festive Christmas weekend to ponder on that. Here’s wishing you a restful weekend and a productive week ahead, which I admit, will be hard to do with many of you already on leave and with those still at work, mentally, moving down a gear.

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