Spend management, the process of optimizing a business' finances by consolidating disparate financial workflows into a single platform, has become a critical issue for fast-growing businesses in Southeast Asia. This approach provides business leaders with enhanced visibility into their organization's finances, empowering them to make better data-backed decisions. However, many businesses face challenges due to siloed data and lack of real-time visibility into business finances, leading to ineffective cost management that impacts competitiveness and market expansion capabilities. Rising costs, especially in utilities, have been a significant concern for global SMEs, underscoring the need for innovative financial strategies. These challenges are particularly pronounced for smaller companies, which form the foundation of Southeast Asia's economy.
In Southeast Asia, many businesses lack an integrated finance system, leading to mounting costs from engaging multiple service providers for finance functions like payroll, payments, and corporate cards. This results in extra time and workload for the finance team, as they must ensure each transaction is accounted for through manual processes. Furthermore, managing employee spending across the company is challenging, as expenses are often made on personal cards, making it difficult for finance teams to monitor overall spending.
The lack of real-time visibility on expenses and budgeting contributes to companies being unable to adjust their budgets in real-time. These challenges will likely intensify as Southeast Asia's digital economy grows, with digital payments already making up more than 50% of the region's transactions, according to research from Google, Bain, and Temasek.
To better understand the issues, we spoke to Andrea Baronchelli, co-founder and CEO, Aspire, about the current issues facing the region. Aspire, with its experience serving over 15,000 customers, plays a crucial role in addressing these challenges and shaping the future of fintech development in Southeast Asia. From the fragmented data sources to data consolidation and integration, we explore what are the challenges facing businesses here..
Could you start by explaining what spend management entails and why it has become a critical issue for fast-growing businesses in Southeast Asia?
In a nutshell, spend management involves optimizing a business' finances by consolidating disparate financial workflows into a single platform. This empowers business leaders with enhanced visibility into their organization's finances, allowing them to make better data-backed decisions.
One common challenge among businesses is siloed data when it comes to business finances, which leads to highly manual and cumbersome processes to consolidate and generate a full view of their cash flow. This fragmented data and lack of real-time visibility into business finance leads to ineffective cost management which impacts competitiveness and market expansion capabilities.
In today's volatile business climate, rising costs continue to be a top concern for businesses. A survey by the Association of Chartered Certified Accountants (ACCA) identified increased costs as a top concern among global SMEs in 2024. A quarter of respondents said utility prices alone have increased by over 20%, underscoring the need for innovative financial strategies. These challenges are likely to have an outsized impact on smaller companies, who often have limited resources to manage operations, drive R&D, and grow their customer base. Illustrating the scale of the issue, micro, small to medium-sized enterprises (MSMEs) make up the foundation of Southeast Asia's economy.
This is why it is imperative for businesses to adopt a tech-first approach to spend management. By leveraging financial tools and unifying workflows related to international payments, expense management, payable management, and receivable management solutions, businesses gain a bird's eye view across their business finances, reduce costs and time spent, and enable them to make more accurate, data-driven decisions.
Based on Aspire's experience with over 15,000 customers, what are some of the most common financial management pain points that businesses in Southeast Asia face today? How has it changed over the last few years?
We observed that many businesses in Southeast Asia lacked an integrated finance system and were dealing with mounting costs from engaging multiple service providers to managing finance functions ranging from payroll, and payments, to corporate cards. With each provider charging individual fees, the costs can quickly add up for companies, in addition to the considerable resources required to manage these separate platforms.
Besides costs, the lack of integration between payments and business workflows causes extra time and workload for the finance team. Extra steps had to be taken to ensure each transaction was accounted for through manual processes, and the extra man-hours impacted the company's agility across the board.
Another pain point is effectively managing employee spending across the company. For example, employee expenses are not always restricted, and company purchases are typically made on personal cards. This makes it difficult for finance teams to monitor overall spending as a company. The lack of real-time visibility on expenses and budgeting also contributes to companies being unable to adjust their budgets in real-time.
Overall, utilising separate platforms and tools also results in data silos that in turn, create visibility issues into company finances. By collecting and using connected data, companies can automate their financial processes, lower human error, and analyse financial data for business forecasting which in turn, helps manage their overhead costs that can otherwise be reinvested into scaling the business.
These challenges will only become more pronounced as Southeast Asia's digital economy continues to grow, with the region's consumers adopting digital financial services at a rapid pace. According to research from Google, Bain, and Temasek, digital payments now make up more than 50% of the region's transactions. The most successful businesses in the digital-first era will be those with the capabilities to fully harness financial data for better decision making.
What role do you see Aspire playing in the future of fintech development in Southeast Asia?
We believe in the transformational power of technology to drive growth in the fintech industry. Aspire remains committed to the growth of the local fintech ecosystem, contributing to the continued growth of the local fintech ecosystem through our efforts in fintech R&D and innovation. Late last year, we jointly published a whitepaper with PwC Singapore outlining the opportunities and practical implications of Artificial Intelligence (AI) for finance. These findings will be especially relevant for CFOs in Southeast Asia looking to enhance financial workflows for their organizations. Our efforts also include the sharing of networking and best practices among ecosystem partners. One initiative that Aspire is spearheading is the CFOXchange, which we have envisioned as a platform to engage and build networks among finance leaders who are actively shaping the next wave of tech-enabled finance transformation in Asia.
On a broader scale, we are also actively supporting the growth of Asia's startup ecosystem through partnerships, knowledge sharing and community engagement initiatives. To date, we have collaborated with VCs such as Antler and Iterative to share our growth experiences and best practices on building a business with aspiring entrepreneurs. We have recently launched the Aspire for Startups programme, created as a way for Aspire to give back to the local startup community. The program will serve as a conduit for entrepreneurs to network, in addition to connecting them with essential stakeholders such as investors and industry experts that can provide them with the right advice to support their entrepreneurial journey.
More specifically, how do you envision the evolution of spend management solutions in the next five years, and what role will Aspire play in shaping this landscape?
AI has emerged as a critical driver of fintech innovation and progress, and this is particularly true for Southeast Asia, where the region's governments have continued to provide high levels of support to AI development and adoption on a national scale. AI's transformative influence is reshaping the delivery and consumption of financial services, including spend management. Its key advantage lies in its ability to empower finance teams by extracting strategic insights from the extensive pool of available data, enabling a deeper understanding of market dynamics and trends. The role of AI will only become more pronounced in the near future, with increasing volumes of data from digital transactions best served by an AI-augmented approach to spend management.
Today, implementing AI is no longer an option, but a necessity for businesses to remain competitive. While larger companies have been quick to adapt to integrate AI to streamline their processes, many SMEs are finding themselves at a crossroads. Despite the enthusiasm, we're well aware that implementation of AI into existing workflows, and ensuring its effective integration, remains a challenge for many CFOs.
We view fintech providers such as Aspire as key players to help unlock the transformative power of AI for organizations. By developing user-friendly, AI-integrated tools that bridge the gap between fragmented data sources, we can enable seamless data consolidation and integration across finance workflows. This forms the basis of one of our key business objectives at Aspire.
We are constantly engaged in AI-focused R&D, developing more advanced and intelligent solutions to help organizations thrive in the digital economy. An example is an AI-powered assistant that we are currently developing that will help users automate and execute finance workflows simply by activating commands through a chat interface.
What advice would you give to other aspiring entrepreneurs looking to innovate in financial services?
The first step for every aspiring entrepreneur should be to identify a significant gap or customer pain point in the financial services sector that indicates a potential market opportunity. This doesn't always require creating something new but can also involve innovating on existing solutions in the market for improved outcomes or simply to expand use cases to a previously underserved segment of the market.
By identifying and targeting an unmet need, entrepreneurs ensure their product not only has a differentiated value proposition, but also face less competition. This allows them to fully develop their product with a robust customer base before going toe-to-toe with established incumbents.
Collaboration with other industry players, research institutions, or business associations is also a critical factor for success, especially for highly competitive sectors like fintech. Doing so empowers aspiring entrepreneurs with access to diverse perspectives and skillsets, as well as to resources that can often be limited for startups.
In markets such as Singapore or Hong Kong with booming startup ecosystems, there may also be startup specific initiatives led by the government that entrepreneurs could leverage to accelerate growth. An example is the FinTech Sandbox established by the MAS, aimed at enabling fintech players to experiment with related innovations in a live environment. Alongside the MAS, we also work in close collaboration with business associations such as the Singapore Fintech Association To ensure our offerings remain relevant to local organizations.
Last but not least, building a team of the right talents is also essential for success. Hiring is never easy, not to mention being something founders have to learn without any proper schooling or course. There is no one-size-fits-all answer, but beyond talents possessing the right experience and skill sets, entrepreneurs should look for candidates who are genuinely passionate about the company's product, demonstrate complementary values in line with the broader team, and most importantly, demonstrate an aptitude for change. The latter is especially important with technologies such as AI accelerating change across a myriad of industries, and the most successful organizations will be those with the right talents and skill sets to effectively leverage these digital solutions.
What's next for Aspire?
2023 was a year of growth for Aspire, with key highlights being our oversubscribed Series C, which was followed by the launch of our regional headquarters in Singapore in November 2023. This office serves as the epicenter of our regional operations from which we will continue to serve more than 15,000 clients across Asia that includes leading brands such as Endowus, Love Bonito, Aftershock, Tech In Asia, and Multiplier among others. This growth momentum has continued well into 2024, with Aspire ranked among the top 500 high-growth Asia-Pacific companies this year by the Financial Times and Statista.
We recognize that the future of financial services in Southeast Asia will be driven by organizations capable of leveraging the potential of transformative technologies. Thus, our Singapore office is also home to our financial technology excellence hub that will guide our R&D efforts and investment into strategic technologies. To ensure we're able to remain at the forefront of fintech innovation, our immediate plans are to double our workforce of skilled fintech talent in Singapore to 300 by 2025. This enables us to capitalise on growth opportunities within fast-growing digital economies in SEA and broader APAC, leveraging advancements in complementary technologies such as AI to optimize business finance outcomes.
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