Pandemic accelerates shift to digital operations: survey

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While COVID-19 has caused unprecedented disruption and an uncertain future for business leaders, recent survey data indicate it’s accelerating an inevitable paradigm shift to the digital sphere across industries.

That’s according to the latest survey of 520 executives from U.S. middle market companies with annual revenues from $20 million to $100 million by JPMorgan Chase & Co. as part of the financial services institution’s midyear outlook.

The survey suggests executives are more confident in their industry, and even more so in their own company than their regional economies. The survey indicates they have even less confidence in the country’s and global economy.

For the vast majority of business leaders surveyed, 70%, economic uncertainty, domestic and global, is the leading challenge facing their company. Nearly nine in ten of the business leaders surveyed said they have already built up cash reserves or plan to do so in the coming months, and 71% said they have reduced their capital expenditures.

The survey indicates warp-speed digitization of industries, as business leaders install technological infrastructure to offer remote working capabilities and respond to shifting consumer habits. Innovations that companies would have made to their operations over the course of years for the sake of competition are taking place in a matter of months out of necessity.

“From speaking with business leaders across the country, it’s clear that some of the most agile companies are gaining market share, particularly in industries like technology and e-commerce,” said Jim Glassman, head economist with JPMorgan Chase Commercial Banking.

Halfway through 2020, more than 50% of respondents to the survey said they’re implementing permanent changes to their operating model to provide virtual working capabilities. Respondents also said they were making their operating models more online as a result of shifting consumer habits.

The majority of business leaders, 59%, have either already increased or plan to increase use of digital banking and treasury management tools to manage cash flow, send and receive payments and streamline operations, the survey found.

The paradigm shift to digital operations comes with its own set of security challenges that companies need to be aware of, said Dan Kravitz, executive director of middle market and specialized industries for JPMorgan Chase. Kravitz said companies are becoming more vigilant and installing more sophisticated internal control systems to flag any suspicious activity as digital operations become an industry standard.

Kravitz said his company’s filter system recently stopped more than $1 million from being stolen from a customer through one of the more sophisticated email hacks he has seen.

“Typically we are able to sniff them out based on spelling errors or logo errors, but this was one of the best-looking email hacks I’ve seen,” he said.