Markets are ablaze with discussions on reinvention based upon the promise of digital transformation and its potential to allow for reworking of the products, processes and services we use in our daily lives. Keen to understand what is really driving the increased pace of this revolution in Asia-Pacific, I participated in a forum on “Digital Asia: Asia’s Digitally Transforming Economies”, hosted by The Economist Corporate Network in Hong Kong, where leaders and speakers from different industries came together to discuss the hot topic of how technology and innovation is changing the region’s economies.
Everyone is talking about digital transformation, but also looking at it from different perspectives. The forum was special as it allowed for a wider understanding to be developed by embracing and integrating the views of many cross-industry players. Part one of this two-part blog covers four key takeaways that stood out from the discussion at the event.
1. The internet is getting exponentially bigger
Asia-Pacific has 1.8 billion internet users, which accounts for 51% of the world’s total online population. Home to approximately 60% of the world’s 7.6 billion people, Asia-Pacific boasts an internet user base which still falls short of its share of the world’s population. The internet penetration rate in some developing and most populated countries in Asia-Pacific, such as China (under 60%) and India (under 40%), remains low but once the internet coverage is expanded in these areas, there will be a significant surge in data traffic. This implies challenges for enterprises such as internet service providers and content delivery network providers to deliver the same level of performance, speed and security with the same infrastructure they have today. Hence, businesses need to rethink their digital transformation strategy in order to respond to this change.
Equinix anticipates that as internet coverage expands, the data volume a network needs to deal with will soar. In order to keep up the network speed and performance amid the rapid surge of workloads and data traffic, businesses need to transform and rearchitect their IT infrastructure. One of the ways is to deliver their service via private data exchange to securely and quickly transmit and process data. This is shown in the second volume of our Global Interconnection Index that there is fast-growing demand for private data exchange in the region, with Interconnection Bandwidth expected to grow at a 51% CAGR to 2,200+ Tbps in Asia-Pacific by 2021.
2. Mobile data exchange is fundamentally driving regional growth in bandwidth demand
Rising incomes are allowing greater number of people in Asia-Pacific to afford more advanced handsets and devices, and therefore increasing numbers of Asians connect, browse and shop via mobile devices regardless of location.
Consumer and enterprise expectations of mobile services are rising, as they demand a better digital network experience. As a result, companies are forced to digitally transforming their businesses to satisfy these tech savvy consumers by offering transformative customer experiences and services. These include things such as mobile apps with advanced personalized features, e-commerce platforms, mobile banking and cloud storage services. In today’s fast-paced digital economy, businesses must be responsive and agile in order to stay competitive – and to deliver this, it would require more bandwidth, lower latency and ubiquitous availability.
3. Asia-Pacific is a leader in fintech adoption
According to Ernst & Young, China and India are far ahead the rest of the world when it comes to fintech integration. India has successfully introduced a Unified Payments Interface for transactions serving 200 million Indian citizens, and Chinese tech giants have also created consumer fintech solutions that have revolutionized the way people use and pay for goods and services – mobile wallets such as WeChat Pay and Alipay being obvious examples.
Real-time interaction is a key success factor for fintech innovations. For example, when a customer wants to complete a mobile payment transaction at a physical store, it requires real-time collaboration across mobile network operators, financial institutions, card networks, retailers and fraud protection services. Security is also no doubt a priority for businesses, as a Frost & Sullivan study commissioned by Microsoft revealed that the potential economic loss across Asia-Pacific due to cybersecurity incidents could hit a staggering US$1.745 trillion, more than 7% of regional GDP.
Companies need to move their IT approach from being siloed and fixed to integrated and dynamic to process data exchange, so they can deliver secure and responsive fintech applications. To achieve this, businesses need a comprehensive digital transformation strategy that enhances the flexibility of cloud deployment, interconnects with stakeholders via private data exchange, and rearchitects their IT infrastructure.
4. Generating value with “Big” Big Data
The value of personal and business data within Asia-Pacific is immense. Asian economies, in terms of GDP per person, produce an enormous amount of data and economies that are small in scale-Singapore, Hong Kong, New Zealand- rank near the top when data is factored in. Conversely, Mainland China, which The Economist Intelligence Unit estimates has per person GDP of only about US$10,000 for 2018, places towards the lower-middle end of Asia-Pacific’s 15 biggest economies.
It is often heard that Big Data is powerful in developing business strategy, but the reality is, the inherent power of Big Data is generated from how data is analyzed and correlated. Managing a tremendous amount of data without a systemic and intelligent approach is time-consuming and not efficient. Businesses need to adopt technologies, such as the Internet of Things and machine learning, to collect data from multiple sources, filter and analyze relevant data, and generate valuable insight for decision making and turn it into action.
Digital transformation is not just a buzz word but is actually happening, and growing fast, around Asia-Pacific. The dynamic that exists between the explosion of digital transformation and the sheer market size of untapped Asia makes it a very exciting time to unveil new opportunities in the region. It is all about improving the overall performance and gaining a competitive edge by leveraging the leading technology in the digital era. I’ll talk about how companies can respond and navigate these trends in part two.
Download the event summary paper, Digital Asia: Asia’s digitally transforming economies.