Innovation in APAC: Audience Insights

Asia is one of the fastest growing regions in the world, in digital adoption and benefiting from these opportunities.

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Digital Adoption

Businesses in Asia-Pacific are at the forefront of Digital Adoption. Here we examine how organizations are using these opportunities to create new models and drive growth. Learn how we enable innovation through the Applied Innovation Exchange.


 




 


Innovation in APAC

The Asia Pacific (APAC) market offers an array of technology opportunities for growth in multiple sectors. The adoption of digital technologies across many industries in the region has become a particularly important means of driving new revenues and decreasing costs.

As one of the fastest growing innovation centers in the world, companies and entrepreneurs around the globe are seeking to invest in the innovative APAC region. With the region’s market growth sitting around 4% and an ever-increasing culture of improvement in software and services, companies are increasing their innovation spend to keep up with competitors. Because of this growing spirit of innovation, Singapore, India and China are set to experience significant boosts in growth, with Japan and Australia set to grow half as fast.

"Singapore is investing 18x more into innovation than Australia." -Andrea Andric

Increasing thought leadership, continuing investment in R&D and a large talent base makes APAC a prime area for innovative technology.

Ranked as Asia’s top financial center by the Global Financial Centers Index 2016, Singapore boasts a highly developed financial system that is well integrated with the ASEAN region. In 2016, the World Bank classified Singapore as a place of rapid business incorporation, low startup costs, world-class infrastructure and a highly skilled workforce. Singapore stands out as a key area for technological innovation with its strong connections to the ASEAN region, high economic growth, and strong political support for entrepreneurship.

Speaking at the Singapore-France economic forum conference late last year, Singapore’s Deputy Prime Minister Tharman Shanmugaratnam outlined three key priorities to advance their economy of innovation: Improving public policies to cope with disruption, looking at the “innovation spread” to address widening gaps between high performing companies and others, and addressing productivity and skills with significant reinvestment in education and training.

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Industries Experiencing Strong Innovative Growth

Flexibility, speed, cost effectiveness- the opportunities offered by emerging APAC markets are many, as witnessed by the progress in technologies such as Digital Banking, Blockchain, Cloud Services, and IOT.

DIGITAL BANKING

The 2016 Asia–Pacific Digital and Multichannel Banking Benchmark examined digital consumer banking and found that the degree of digital maturity and growth differs for every country.

The Monetary Authority of Singapore (MaS) is investing heavily into globalizing the financial landscape in the country, and encouraging banks to focus on innovation towards APIs and the unbundling of financial services.

Singapore, for example, has the most highly developed infrastructure for digital commerce in the world, but still has opportunities to grow in terms of customer-oriented digital banking (where Australia and New Zealand are rated highest). In developed APAC markets, Singapore, Australia, New Zealand and Hong Kong, growth has been steady in the mobile banking sector. In emerging APAC markets, conversely, mobile banking still has the opportunity to grow despite the market’s limited mobile-network infrastructure. The challenge therein will be to overcome the limited infrastructure to bring financial services to those who still do not have a strong online capability.

 

BLOCKCHAIN GROWTH

The potential of blockchain-based businesses in APAC is promising, with the possibility of securing physical assets, including ledger technology, to transform the lifecycle of trade (clearing, settlement, collateral management, payments and reconciliation).

In November 2016, OCBC Bank became the first bank in Southeast Asia to use blockchain technology to make local and cross-border payment fund transfers. The first successful payment took place between OCBC Malaysia and the Bank of Singapore.

Once this payment solution is fully integrated, OCBC will be able to send inter-bank payments between banks in Singapore and overseas without requiring a payment intermediary. This technology also allows for greater security against fraud, faster funds transfers, and greater transparency. As a result, OCBC Bank is already planning to extend the use of blockchain technology to other financial products and service applications.

 

CLOUD SERVICES MARKET

Cloud services continue to invite external investment and company attention in Singapore and elsewhere in the APAC market as they offer flexibility, speed, and cost effectiveness. Singapore has seen extensive growth and consolidation of data centers. According to IDC’s Asia/Pacific Semiannual Public Cloud Services (PCS) Tracker, the PCS market in Asia/Pacific (excluding Japan) showed strong growth at 41.9 percent in 2015. Notable market changes include the exit of Verizon and HP from public cloud along with the continued dominance of the top three vendors: Amazon Web Services, Microsoft and Chinese Alicloud.

Localized changes in cloud at a country level will likely happen as new local vendors enter the APAC market. Overall, the cloud services market is expected to increase by 23.6 percent over the next three years.

 

THE INTERNET OF THINGS (IOT)

The IoT market is ripe for opportunities, with GE projecting a market value of $7.5 billion in 2020 and VMware projecting 8.6 billion ‘things’ connected by 2019. Both vendors and enterprise customers are seeking to bring together IT and OT technology in an attempt to drive IoT solutions.

There has been an explosion of smart device vendors in the region and vendors will seek to store, analyze and take action on IoT-generated data at the edge of their networks rather than centrally. Top challenges for manufacturers leveraging IoT include data security, legacy systems, skills gap, data quality, data privacy, poor collaboration, and insufficient budget.

It seems multinationals view the APAC region as a key driver of innovation for the Internet of Things. British tech giant Dyson has just invested some $412 million in a new research facility in Singapore, and views the venture as a key play in a future where “everything is automatic.” Likewise, in 2016 DHL launched a €90m advanced regional center in Singapore to work on IoT technologies.

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Research & Development in the APAC Region

Investment money may talk. But who is walking the walk? Let’s dig into some of the very real development happening right now.

VIRTUAL, AUGMENTED AND MIXED REALITY

VR/AR/MR technology has developed to be the future of not only entertainment, but to have real-world applications in a range of industries.

From surgeons practicing advanced operations from halfway across the globe to architects giving potential clients virtual walkthroughs of their proposals before building foundations have even been laid, Virtual, Augmented, and Mixed Reality is garnering a lot of interest. Singapore saw corporate investment in VR/AR/MR as early as 2015 when Flight Center introduced virtual walkthroughs of its flagship stores while the Shangri-La Group produced immersive 360-degree videos for more than a quarter of its 94 hotels and resorts around the world. In January 2017, VR entertainment was front-and-center in Singapore, as the country’s (and one of the world’s) first VR arcade opened its doors.

 

AI/CHATBOTS

Many businesses in APAC countries are already using Artificial Intelligence (AI) to improve their business interactions. In Beijing, KFC debuted a facial recognition ordering system. Powered by Baidu, the system scans your face and then factors an algorithm of perceived age, gender, and facial expression. The KFC Baidu may recommend “porridge and soybean milk for breakfast” for a female in her 50s, for example. The collaboration is the first effort to offer restaurant services enabled by AI, however privacy concerns continue to provoke earnest debate.

In a recent blog post, San Francisco- and Singapore-based AI company KeyReply chronicled the development of the Singapore government’s first Facebook messenger chatbot. The chatbot is used to push out regular news alerts and government announcements from the government information portal Gov.sg to subscribers. Initiatives such as this and continued innovation in AI have had a positive effect on recruitment in the APAC region - organizations are now harnessing these capabilities, using search optimization tools, data analytics, and talent mapping to reach out to the right talent for crucial job roles.

 

CYBERSECURITY

Like blockchain and IoT, Cybersecurity opportunities are ripe as digital technology leaps forward. As one example, Cylance, a company revolutionizing cybersecurity by leveraging AI in Singapore, recently announced a new distribution partnership with a video security conferencing company, Westcon Solutions. Westcon Solutions will distribute Cylance’s advanced endpoint security solutions through its reseller network in Asia. With Cylance’s machine learning and AI–powered threat detection services, Westcon Solutions can offer innovative technology to defend against modern attacks.

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Opportunities

One of the most exciting things about the Applied Innovation methodology is that it leads to future cycles of breakthroughs. Now that we’ve seen an investment and the research it has yielded, what’s next on the horizon?

INVESTMENT IN FINTECH

Investors are eager to invest in Singapore, especially in FinTech or Financial Solutions.

When entering the APAC market, it is common practice to use Singapore as a concept testbed before moving to other Asian countries, as it offers startup promotional help and multi-lingual business help.
As such, Singapore offers ample investment opportunities, especially in the financial sector. Mohammad Hassan, a senior analyst at the Singapore-based Eurekahedge, states that traditional investors, up to now, have chosen to go with larger, more established companies, typically with assets of at least $500 million.
Startups, therefore, should focus on innovation and in bringing their product to the market as soon as possible to secure growth in future funding. Singapore remains the best location for a startup in terms of infrastructure, government support, and market potential.

 

CREATIVE TALENT

A traditional barrier to innovation in APAC countries is the high rate of labor-market retention with companies in the region, especially China and Singapore, using global retention strategies sourced from Europe where people are used to staying longer in their jobs than their US counterparts. In an extremely fast market of innovation, companies need to do things differently in order to capture fierce moving and competitive talent.

With big gaps in creative employment, 65 percent of employers said they would consider employing or sponsoring an expatriate candidate. Zhang Jiangou, director of the State Administration of Foreign Expert Affairs in China, said that both the supply and demand sides are positive, however many employers can’t find the right candidates.

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