The pandemic accelerated the digital transformation of all businesses, regardless of size. Companies that immediately embraced various digital solutions in their strategies performed well and were shielded from the devastating effects of the prolonged lockdowns. Digitalization ensured business continuity and jumpstarted the digital journey of traditional business operations.
As economies navigated the era of lockdowns and mobility restrictions, the consumer and enterprise business landscape turned to technology. Technology solutions provided platforms for consumers and large-scale sellers to meet their needs while cooped up in the comforts of their homes.
According to the data of investment management firm Morgan and Stanley, e-commerce rose to 21% of total retail sales in 2021 from 19% in 2019. Even if lockdown restrictions have been lifted, it still rose to 22% of sales in the first few months of 2022.
The Bangko Sentral ng Pilipinas recently reported that digital payments make up 30% of retail transactions in 2021 in the Philippines, which means that online payments are also gaining traction.
“The past two years set the pace for digital acceleration among small businesses and scaling up for large enterprises,” said Calvin Lim, President and Chief Executive Officer of listed company DFNN, Inc. (PSE:DFNN), a leading IT solutions provider and systems integrator. “The coming years will show how we have progressed in the digital space and how large and small businesses leveraged technology to get ahead.”
Lim believes enterprises must watch out for four key trends to future-proof their businesses. Lim hopes these trends will enable organizations to pursue decisions that will not only accelerate digital pivot but also set the pace in whatever industry they are in.
1. Further increase in cloud adoption
The cloud is one of the essential components for fintech and e-commerce to flourish. Market analyst firm International Data Corp. (IDC) forecasts that in 2022, cloud infrastructure spending will grow by 21.7% globally.
Organizations will look at a multi-cloud setup for their computing and storage services. Investment in the cloud is seen to increase as the need also rises. E-commerce is just one sector that spurred the use of the cloud not only for storage and platform but also for applications.
And as we enter the Metaverse era, there will be further demand for cloud technology. This alternate universe will need a platform to converge people’s alternate personas. With Web3, people will tread these digital platforms and share unified experiences.
2. Expansion of Data Centers
With the demand for the cloud increasing, there will be a need for more data centers. The Philippines is being groomed to become the hyperscaler hub in Southeast Asia.
Last year, Chinese firm Alibaba Cloud opened its data center in the country. Singapore-based data center operator Beeinfotech PH announced the general availability of The Hive, a telco-neutral facility located in Pasig. It boasts 3,000 server racks in its three-floor building. Telecommunications provider PLDT held a groundbreaking of its VITRO Sta. Rosa recently, which it said will specifically service high-profile hyperscalers. Even small-scale data center providers are looking at establishing or expanding their presence in the country.
DFNN has dipped its toes in this as it announced its intention to invest in building the country’s first green data center in the Freeport Area of Bataan in partnership with Nautilus Data Technologies, a global pioneer in data center technologies. This is a testament to DFNN’s vision of being a partner in nation-building and forging long-term commitments, not only to customers but to the planet as well, by investing in sustainable projects such as a green data center in Bataan.
3. The evolution of fintech
In the Philippines, fintech is evolving from contactless transactions to creating other products and services. We are now looking at cross-border payments not only on the consumer side but also on enterprises.
Financial institutions — including legacy and digital banks — will see that consumers will not have to leave their apps or platforms. They will build an ecosystem limited within the walls of their web or mobile applications. Some e-wallets have started offering various loans, investments, and even insurance within their apps, leaving possibilities virtually boundless as features and services may be expanded as demand is identified. Embedded finance is fast becoming mainstream, as further highlighted by the increasing popularity of the Buy Now, Pay Later scheme in the retail sector, which is immensely popular with young professionals who have yet to build a strong credit rating with traditional lending institutions. DFNN had these integration capabilities long before it became commercially in-demand.
Before online trading became the norm, our tech arm, subsidiary iWave, Inc., developed the NEXT-WAVE Interactive Broker Platforms and Systems. This stock trading platform enables brokers and retail investors to trade within the application. We have seen the Philippine Stock Exchange closing the trading floor as it realized that secure transactions could be done anywhere.
The NEXT-WAVE application provides brokers and traders with an end-to-end integrated system that ensures safe and inclusive market participation.
4. The rise of gaming
IDC said in a 2021 report that gaming, specifically mobile gaming, will thrive as the pandemic eases. Gaming is also one of the factors in the sharp increase in device shipments amid an ongoing health crisis. People resorted to gaming, with long-time gamers increasing their playtime and new gamers adding to the number of hours spent playing.
In the report “Gaming Market – Growth, Trends, COVID-19 Impact, and Forecasts” by ResearchAndMarkets.com, the gaming market is expected to reach a value of $339.95 billion by 2027.
With games and tournaments giving record-pool prizes, talents and game developers are thriving. Brands and companies have jumped on the bandwagon, a testament to the promise social gaming is expected to bring.
DFNN is in a position to provide a world-class gaming experience with IEST Inc., which is an owner and operator of multiple gaming licenses, providing betting and gaming technologies. With a solid and robust back end, IEST can quickly develop products depending on the demand. IEST developed the first legal online gaming platform InPlay, Instawin, and sports-betting platform Xchangebet.
InPlay is the first legal online gaming platform in the Philippines, aiming to legally bring domestic mobile gaming services. Instawin, on the other hand, is one of the earliest e-casino platforms and a key provider of a variety of games in nearly 200 locations across the country. It also operates Xchangebet, a sports betting platform.
Ultimately, technology will remain a catalyst as we navigate the future. The emergence of new technologies will also allow consumers and businesses to either accelerate or pivot. Depending on business objectives, solutions are there for the taking. We do not know what challenges lie ahead, so businesses must be a step ahead to avoid disruptions in operations. Businesses need to find the right fit that will future-proof their organizations.