Digital tools will determine who survives the new economy

The Importance of Digital Tools Willingness to Survive in the New Economy

In the Philippines, a new wave of business closures is looming, not brought about by pandemics, typhoons, or stock market crashes, but rather through lost sales, missed opportunities, and digital exclusion. This silent crisis is already unfolding across the country.

To understand why this matters, we must identify who will be most affected. Who will struggle to survive in the new economy?

The answer lies with small and medium enterprises (SMEs), which make up the majority of businesses in the Philippines. According to the Philippine Statistics Authority, SMEs account for 99.63 percent of all business establishments, employing over six million people or almost 67 percent of the country's workforce. If SMEs fail to adapt to the rapidly changing digital environment, they will not cease to exist overnight but instead fade away gradually, one lost customer at a time.

Not all SMEs are equipped to keep pace with the digital economy. While many businesses in urban areas like Greater Metro Manila and Metro Cebu have adopted digital payment options, such as QR codes for e-wallet payments, rural areas still rely on cash transactions and handwritten notebooks to monitor sales.

This geographic divide has significant consequences for Philippine SMEs, determining who will survive and thrive in the transition to the digital economy. Consumers, particularly younger individuals, increasingly demand a seamless digital experience and choose businesses that offer digital payment options.

SMEs that refuse to adapt to digital transformation risk losing customers gradually over time. Moreover, financing will become more challenging without digital footprints, as fintech lending and banks rely on transaction histories to assess creditworthiness. The threat facing SMEs is not the sudden collapse of the economy but rather the slow decline of sales that will eventually force businesses to close.

So, why are Philippine SMEs still falling behind in digital transformation? Systemic and deeply rooted causes contribute to this issue. Government initiatives, such as the Bangko Sentral ng Pilipinas' Digital Payments Transformation Road Map 2020-2023, have great potential but require better implementation. While major cities benefit from awareness campaigns and improved digital infrastructure, many rural barangays (villages) lack the training capacity and reliable internet connections necessary to make digital tools practical.

Additionally, fintech platforms often cater to tech-savvy users, leaving traditional SMEs excluded. The fear of scams and lack of cybersecurity also deter small businesses from adopting digital platforms.

The problem is not the speed of digitalization but rather the reach and inclusivity of our digital platforms. We should prioritize capacity building in small businesses, especially in rural areas, to develop skills in digital finance, online selling, and cybersecurity. Affordable infrastructure, including reliable internet providers and low-cost smartphones or other digital devices, is also essential. Fintech companies must design tools that are simple, affordable, and tailored to the needs of microenterprises.

Fintech and digital tools are no longer a luxury but a necessity in the new economy. SMEs without access to these tools will miss one sale at a time until they close down. The future of the Philippine economy will not be determined by the largest corporations but by whether SMEs are given the means to survive the transition to the digital economy.

Digital exclusion is not just a small issue; it is an economic emergency. Without digital access, thousands of small businesses risk losing opportunities to grow and access finance. The government must prioritize digital empowerment as a national priority before SMEs start to disappear quietly one by one in a world that refuses to slow down.

Conclusion

In conclusion, the importance of digital tools cannot be overstated. It is crucial for SMEs to adapt to the rapidly changing digital environment to survive and thrive in the new economy. The government should prioritize capacity building in small businesses, especially in rural areas, and provide affordable infrastructure to ensure that all SMEs have access to digital tools.

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Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.