Surfing Southeast Asia’s Powerful Digital Wave

New research from Accenture suggests that Southeast Asia is adopting digital communications, driven largely by mobile, with astonishing speed.

The research outlines how consumers in each of the countries studied (Thailand, Vietnam, Singapore, Indonesia, the Philippines and Malaysia) are adopting these technologies and what they are using them for. The report concludes with a brief examination of how some leading local companies are using digital channels to gain competitive advantage.

Few regions are adopting “digital everything” as quickly, enthusiastically, and deliberately as Southeast Asia. In particular, social media is seeing enormous uptake, reflecting the long-standing importance of community ties within the region. Brand-new research by Accenture tracks the strength and momentum of Southeast Asia’s digital acceleration, details the specifics of its consumers’ online behavior and purchasing modes, and touches on what these trends imply for businesses—local and multinational—that are planning for significant growth in the region.

Digital is no longer defined by the hardware, the software, or the platforms we use. It is a medium that enables us to connect, interact, and engage virtually with individuals, groups, communities, and now brands.

Leveraging data from a TNS Digital Life study completed in late 2011, Accenture launched an in-depth study to determine the extent to which the digital wave is impacting Southeast Asia and to identify the characteristics and pace of consumers’ adoption of digital activities. The study may not be representative of the population as a whole depending on levels of Internet penetration. Fieldwork is carried out in urban cities only, not the entire country (except in Singapore, a country that is entirely urban). Research was conducted in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

• Southeast Asia is witnessing an unprecedented digital transformation, driven by sustained economic growth, improving affordability, evolving demographics and underpinned by strong government ICT agendas.

• Growth in internet users, smartphone ownership and social media usage across the region has been astonishing and is expected to increase in significance and complexity over the five years.

• Many Southeast Asian consumers in less developed markets are all–too ready for digital adoption and would be happy to do all their Internet surfing on their mobile devices.

• Already, online Southeast Asian consumers show stronger interest in almost all new online services than their global counterparts. And the longer they are online, the more they tend to spend on more online activities.

• The entire Southeast Asian region is rapidly connected through social media. Southeast Asians place more emphasis on digital connection and sharing than the global norm. In fact for nations such as Thailand and Indonesia, the Internet translates as “social networking”.

The Southeast Asian region is a hotbed of digital adoption. Surging economic growth is making Internet access more affordable, and advances in mobile technology are allowing users to leapfrog fixed-line channels. In fact, a lack of fixed infrastructure has meant that mobile has become the connection channel of choice. In addition, a region-wide infrastructure plan is helping spur digitization.

Although digital Southeast Asia is still very much a work in progress, Accenture research suggests that a coiled spring of pent-up digital demand will release as digital access improved in developing markets. Driven by overwhelming consumer demands, expectations and aspirations, this will happen soon – probably sooner than expected.

Clearly, digital consumers in each of the six major Southeast Asia markets are very keen on leveraging the social aspect of the Internet, reflecting their societies’ social and collective cultures in years gone by. Indeed, social networking is the primary fascination of all Southeast Asian consumers when they’re online— and thus a very influential channel for businesses.

It is important to note the differences between the countries within the region: this is not a homogenous, single market. However, a fundamental commonality is the tight-knit community culture. While outward manifestations of this kind of life have disappeared, social networking is helping people recapture many of the more positive aspects of community life online.

If there were a single watchword—one guiding principle with which to tackle Southeast Asian markets—it would be agility. Given the pace of change as the forces described above buffet the region, many multinationals and most local businesses will have to adapt if they are to keep up.

Some of the region’s leading businesses show the way forward:

AirAsia uses digital channels to engage consumers more actively, integrating its activities (including customer service) into its core social-media strategy on Facebook and Twitter. Its mobile app has been downloaded more than 2 million times. As a result, it enjoys strong engagement with its customers, with 1.4 million fans on Facebook and more than 324,000 followers on Twitter. It has cut 40 percent from its contact center costs, and has won numerous awards.

In the banking sector, mobile apps have become central to the digital offering and increased functionality drive competitiveness. Leading banks are also using partnerships to elevate themselves. For example, Bank of the Philippine Islands has partnered with Globe, a telecommunications company, to offer Globe BanKO—the first mobile microfinance-focused savings bank in the Philippines. This initiative allows banks to dispense with costly brick-and-mortar branches and to reach out to new market segments, fully realizing the digital opportunity.

The more businesses understand the degree of latent demand in the region and the factors that can release that demand, the more confidently they will initiate additional services and build out broader markets. And the more Southeast Asia’s governments understand the benefits of a digitally enabled society—not to mention their citizens’ wishes—the more likely they are to support infrastructure build-outs and digital enablement. These are the factors that may soon push the region past a digital tipping point.