Singapore’s traditional businesses, deeply rooted in sectors like retail and manufacturing, are at a critical juncture. As the global economy shifts towards digitalisation, the need for transformation has never been more urgent.

Despite the accelerated adoption of digital payments by businesses and consumers in recent years, a study reveals that nearly one in two businesses in Singapore express a strong need for more innovative fintech solutions to tackle their pressing business concerns.

While payment infrastructure has improved dramatically with PayNow and SGQR widely adopted, there are still problems with reconciliation and integration with operational workflows. Many international businesses in Singapore continue to rely on expensive wire transfers and slow bank transfers for cross-border transactions, which significantly hinders their efficiency and competitiveness in the global market.

Fintech is not merely about flashy apps or cutting-edge technology; it’s about leveraging these tools to solve real business challenges, enhance efficiency, and open new avenues for growth. For Singapore’s traditional businesses, adopting Fintech solutions could be the key to remaining competitive and relevant in a rapidly evolving market.

The current state of traditional businesses in Singapore

Traditional businesses in Singapore are at a crossroads. On one hand, they carry the weight of legacy systems and processes that have served them well for years. On the other hand, they face the challenges of a digital economy where speed, efficiency, and customer centricity are critical to success. Many of these businesses are finding it increasingly difficult to keep pace with the demands of modern consumers and the global market.

According to a study, a significant portion of Singapore enterprises still lean on traditional wire and bank transfers for making and receiving payments. This reliance on long-standing banking practices is deeply rooted in established relationships with traditional financial institutions.

However, these outdated methods introduce delays that add complexities to business operations, impacting cash flow, supplier relationships, and overall business efficiency. The resulting inefficiencies underscore the critical need for more effective and reliable payment solutions to facilitate seamless cross-border transactions.

Moreover, Singaporean businesses themselves are displaying a strong commitment to digitisation, particularly for expediting payment processes. Approximately 38 per cent of these businesses consider it a top priority, with an additional 29 per cent identifying it as one of their primary objectives. This approach aligns with local government initiatives, which have introduced numerous schemes to encourage businesses to digitise and integrate financial technology into their operations.

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Resistance to change is often rooted in the comfort of familiarity, but the risks of falling behind are significant. Without adopting new technologies, traditional businesses risk losing their competitive edge, market share, and even their long-standing customer base. Yet, this challenge also presents a unique opportunity: the chance to embrace digital transformation and unlock new growth potential.

Why fintech?

Fintech, or financial technology, encompasses a wide range of digital solutions designed to improve and automate financial services. For traditional businesses, Fintech may sound scary and unapproachable, but today’s solutions can be easily implemented out of the box.

Key fintech solutions for traditional businesses

Customer payments

One of the most critical areas where Fintech can make a significant impact is in customer payments. Traditional businesses often rely on outdated payment methods, which can be slow, cumbersome, and costly.

Fintech offers a range of solutions that can modernise the payment process and improve the overall customer experience:

Payment gateways: These digital platforms facilitate seamless online transactions, enabling businesses to accept payments from customers quickly and securely. By integrating a payment gateway, businesses can offer a wider range of payment options, including credit cards, digital wallets, and even cryptocurrencies, potentially payment methods favoured by younger and tech-savvy customers. This can be a potential new growth avenue for B2C merchants to adopt Buy-Now-Pay-Later solutions to improve sales.
International collection: For businesses that operate across borders, managing payments from international customers can be challenging. Fintech solutions simplify cross-border payments, making it easier to collect funds locally in several countries and reduce the costs associated with foreign exchange.
Subscription management: Many traditional businesses are exploring subscription-based models to generate recurring revenue. Subscription management tools automate billing, payment collection, and customer retention, allowing businesses to monitor and manage customer renewals to scale their subscription services efficiently.

Spend management

Managing business expenses, especially international operations spanning multiple entities, can be complex and time-consuming. Fintech solutions in spend management provide businesses with the tools they need to streamline and control their spending.

International remittance: Cross-border payments can be expensive and slow, but Fintech solutions offer faster, more cost-effective ways to transfer funds internationally. These platforms typically offer better exchange rates and lower fees than traditional banks, making them an attractive option for businesses with global operations.
Corporate cards: Fintech-powered corporate cards such as Grof allow businesses to manage and track employee expenses with ease. These cards often come with real-time tracking and budgeting limits providing greater control and visibility over business spending. By leveraging such tools, businesses can not only monitor and manage expenses more effectively but also reduce the risks of overspending and ensure expense claims are compliant with internal financial policies.
Procurement process: Workflows can be set up for screening and approving new vendors by appropriate stakeholders to ensure compliance with credit and financial policies. New procurement orders can also be routed for the necessary approvals before business expenses are incurred. Fintech tools allow these workflows to be automated and managed on the go with significantly lower administrative costs.

Also Read: Overcoming fintech hurdles in Southeast Asia’s dynamic market

Treasury management

Effective treasury management is important for businesses looking to optimise their financial resources. Fintech solutions offer innovative ways to manage foreign currency holdings and maximise the yield on idle cash.

Foreign currency holdings: For international businesses dealing with multiple currencies, foreign exchange fluctuations are a key concern. Fintech platforms provide tools to monitor and optimise foreign currency holdings, helping businesses to forecast their foreign exchange requirements and take advantage of favourable exchange rates.
Cash yield enhancement: Idle cash sitting in business accounts represents a missed opportunity. Fintech solutions enable businesses to maximise returns on their cash holdings by investing in low-risk, high-yield financial products. These platforms offer easy access to money market funds, fixed-term deposits, and other investment options, allowing businesses to put their idle cash to work.

Benefits of implementing fintech improvements

Adopting Fintech solutions offers a multitude of benefits for traditional businesses, beyond just modernising their operations. Here are some of the key advantages:

Enhanced operational efficiency

Fintech solutions automate routine tasks, reducing the need for manual intervention and minimising the risk of errors. This automation streamlines business processes, leading to faster turnaround times and freeing up resources for more strategic activities.

Cost savings

By reducing transaction costs, eliminating inefficiencies, and automating repetitive workflows, Fintech can lead to significant cost savings. Businesses can also reduce the expenses associated with compliance and regulatory reporting through automated record keeping.

Improved customer experience

Today’s consumers expect fast, convenient, and secure payment options. By offering a wider range of payment methods and improving the overall transaction process, businesses can enhance the customer experience, leading to higher satisfaction and loyalty.

Better financial management

Fintech provides businesses with real-time insights into their financial performance, enabling more informed decision-making. By optimising cash flow and improving the management of foreign currency and other financial assets, businesses can achieve greater financial stability and growth.

Competitive advantage

In an increasingly competitive market, adopting Fintech can give traditional businesses a crucial edge. By staying ahead of the curve and embracing innovation, businesses can differentiate themselves from competitors and expand their market reach through global payment capabilities.

Conclusion

Fintech offers traditional businesses in Singapore a powerful toolkit to modernise their operations, improve efficiency, and unlock new growth opportunities. By embracing these digital solutions, businesses can stay competitive in a rapidly changing market and continue to thrive in the years to come.

The journey to digital transformation may be challenging, but the rewards—enhanced operational efficiency, cost savings, improved customer experience, better financial management, and a competitive edge—are well worth the effort.

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