The past four years have brought numerous changes in the business sector. The transformation led by the new normal became both a blessing and a challenge for business owners. They had to cope with the evolving market needs while considering macroeconomic volatility. It became more challenging in 2022 as inflation caused a massive drop in economic activities.
The global economy is recovering as inflation and interest rates stabilize, opening more investment opportunities. It coincides with the digital revolution’s peak, causing a shift in consumer behavior.
As such, technology has become a tool to ensure survival and success in the still-recovering market. It helps address the changing demands while improving productivity and efficiency.
In this post, we will uncover the digital revolution’s integral role in the global economic recovery. In addition, we will give some tips to help your business boost its performance by leveraging technology.
The Digital Revolution and Economic Recovery
In today’s interconnected environment, digitalization continues transforming economies globally.
Even Third World Countries with underdeveloped infrastructures and access to resources have embraced the digital revolution. This is paramount to tap into the immense potential of the global economy and sustain its growth. These are the integral roles of the digital revolution in global economic recovery.
Innovation and entrepreneurship
A thriving digital economy may bolster growth through innovation and entrepreneurship. SMBs and startups can capitalize on digital platforms to capture a wider audience and increase access to funds.
This creates a more active ecosystem driving economic diversification through increased job creation, employment, and wages. These will increase purchasing power, business production, and economic growth.
Financial inclusion and freedom
Many people in underdeveloped and emerging economies remain unbanked or underbanked. The digital revolution may offer many solutions through cashless payments, such as mobile banking, e-wallets, and other digital payment systems. These increase the accessibility of financial services to remote areas.
Financial inclusion can bolster economic growth by helping people to save and invest even without bank accounts. Many e-wallets and digital payment systems have this feature. Financial inclusion may also encourage people to participate in formal economic activities.
It can have positive spillovers on business and trading activities. With cashless payment methods, businesses can enhance efficiency and ensure transaction accuracy. It is no wonder that online stores are becoming ubiquitous and driving the e-commerce boom globally. Customers and entrepreneurs can also make cross-border transactions, which, in turn, also raises export volumes.
Increased capital market inflows
In connection to the previous item, financial inclusion through digitalization may encourage investments from people in remote areas. Crypto, forex, and stock trading are now accessible on mobile phones. Many platforms allow individuals to open a trading account without a bank account.
By partnering with digital platforms like PayPal (PYPL), Google Pay (GOOG), and Apple Pay (AAPL), anyone with valid IDs can top up their trading accounts to make different transactions.
The crypto market remains popular today as it is more lenient than other financial markets. Also, it is decentralized, so it remains unregulated by the government. That is why crypto exchanges try to enhance transaction transparency while maintaining anonymity.
This promotes a sense of security among crypto traders. Making effortless crypto portfolio management for seamless and secure transactions is essential as a crypto exchange.
Efficient delivery of government services
Digital transformation can improve government services worldwide. E-government platforms can streamline bureaucratic processes, increasing transparency and mitigating corruption.
Additionally, it can improve the quality and timeliness of public service delivery, especially in education, healthcare, public security, and transportation.
Accessibility of information
Asymmetric information is one of the common causes of market failure and unfairness. With digitalization, everyone will have equal access to information in the market and government services.
A reliable and affordable internet connection helps bridge the information gap to increase awareness of global market trends, emerging technologies, and educational advancements.
They can also make informed decisions, creating innovation and economic development avenues.
How Businesses Can Capitalize on Digital Transformation
As digital transformation peaks, businesses must cope to meet the evolving market needs. Plenty of opportunities lie ahead as more business owners invest in technologies. It can enhance efficiency and execute cost-reduction strategies. It can also increase customer engagement to generate more sales.
These are some ways businesses can leverage digitalization.
Hybrid work
Hybrid work is the new normal. The pandemic may have disrupted business operations, but it became an eye-opener for many businesses. Realizing that businesses could function even if employees and owners were away from the office opened new opportunities for many.
For instance, hybrid and remote work allowed businesses to meet the market demand despite the restrictions in 2020. They were also able to save money as remote work did not require leasing office spaces. Third, businesses did not have to bother providing transportation allowance. The lower expenses helped offset the impact of lower sales.
Today, hybrid work persists as many businesses implement return-to-office (RTO) orders. It is also favorable for employees and employers to maintain a work-life balance. There are plenty of apps to use to ensure uninterrupted workflow and communication. MS Teams, Zoom, and Slack are some examples. Businesses can also use employee monitoring software to ensure productivity.
Cashless transactions
As more people turn to e-wallets, credit cards, and virtual cards, entrepreneurs must digitize payment methods. Cashless payments are the preferred method today as more people find these more secure and convenient.
Also, the rise of e-commerce and stores without brick-and-mortar drove the increase of people joining the cashless society.
From 2016 to 2022, the portion of cash payments in the US plummeted from 31% to 18%. On the other hand, the share of credit and credit card payments increased from 18% to 31% and 27% to 29%, respectively.
A separate study supports the data provided as more Americans abandon cash payments. From 2018 to 2022, the number of Americans not using cash in all purchases rose from 29% to 31%.
Meanwhile, those using cash in all purchases dropped from 18% to 14%. By utilizing cash payment methods, businesses may raise their demand and revenues.
Even better, digitizing financial transactions can make tracing all financial obligations and purchases faster. Cashless payments generate electronic invoices and are recorded in the transaction history.
That way, the accounting team will not have to rush into their tables digging into piles of invoices. It will also avoid delayed payments of accounts payables and collection of account receivables.
Tracking cash flows will also be easier, especially if the business replenishes inventory and fixed assets. Business representatives can also use credit cards during business travels to make tracking expenses easier. Overall, digitizing transactions will enhance financial data accuracy.
Workflow optimization
Businesses can utilize technology through software and solutions to optimize and automate workflows. Investing in the right tools can help track business transactions and streamline processes. This can enhance productivity and efficiency, allowing businesses to cater to more clients.
In addition, it reduces task redundancy, which may lead to employee burnout. This is an essential area to consider as the specter of the Great Resignation still looms over the business sector. Through various solutions, businesses can lower employee turnover and avoid spending on hiring and training new ones.
Businesses can invest in human capital management (HCM) solutions, especially if they intend to make hybrid work setups permanent. These will help management connect with employees even if they are working away from the office. It also improves payroll management to speed up processes, improve accuracy, and lower employee complaints and taxation errors.
Increased online presence
Businesses can enhance their online presence by creating websites and social media pages. Online marketing is more efficient and straightforward than magazine ads and television commercials.
It is more essential today since more individuals are doing various transactions online. The increased time spent on the internet and the larger number of social media accounts allow businesses to engage customers at a lower marketing expense.
Websites and social media pages also make it easier for customers to learn about the business, what it offers, and how to reach out to the contact persons. Also, business transactions may be simpler and faster, although companies must beware of scams and fraudulent transactions.
Crypto payments
Businesses can invest in various financial markets to increase funds and valuation. However, a more straightforward way is to accept crypto payments.
Although skepticism and controversies still surround the market, more and more traders enter. Even government agencies are seeing its advantages. For instance, government agencies in Singapore are now accepting Ethereum (ETH) contracts as payments for their services.
Many business establishments already accept crypto payments, particularly Bitcoin (BTC) and ETH, to attract customers.
Note that there are over 420 million digital currency owners worldwide. The US has 48 million cryptocurrency owners, or 16% of the population.
With the increasing price predictability relative to inflation, the value may skyrocket as the market heats up. Crypto transactions are possible even if the business is not into crypto trading since these can be done using mobile apps.
Key Takeaways
Digital transformation is integral to global economic recovery and rebound as more people embrace it daily. It offers various opportunities to stimulate business activities and derive capital inflows.
As such, businesses must capitalize on it to enhance their processes and increase resilience to cope with macroeconomic volatility. This will help them expand to generate more sales and contribute to economic development.
