Business Desk
Fueled by the growth of the digital economy and consumer demand, companies in Asia Pacific are increasingly tapping into the potential of a subscription-based business model, a new Citi study shows.
This means companies in the region are increasingly considering and moving towards a recurring fee model where customers subscribe to consistent access to product and services, instead of making one-time purchases of goods and services.
Close to half or 46% of the 580 executives polled in Citi’s latest study believe that subscription-based models will be widespread in their respective industries in three years’ time and nearly a third – 31% – envision that 100% of their organization’s revenues will come from these models in the future.
Commissioned by Citi’s Treasury and Trade Solutions business in partnership with Longitude, a Financial Times Company, the study titled 'Signing up to the subscription economy: The race for recurring revenue in Asia Pacific' polled executives across 14 markets in the region.
The findings were first released at Citi Asia Pacific Treasury and Trade Solutions’ annual flagship Treasury and Finance Conference held in Shanghai in mid-September. Themed ‘Growth Through Disruption’, the conference brought together over 160 senior clients representing 115 multinational and Chinese corporates.
Respondents polled for the study comprised C-suite leaders and executives in digital transformation and technology, and finance and treasury roles across the following sectors - Insurance; Energy and power; Consumer goods and healthcare; Technology, Media and telecommunications (TMT); and Industrial.
The surveyed executives work in businesses that are at various stages of implementing a subscription-based model and over half, or 54%, work in firms earning annual revenue of US$2 billion or more. The remainder represented firms with between US$500 million and US$1.99 billion in annual revenue.
Asia Pacific Corporate and Public Sector Sales Head, Treasury and Trade Solutions, Citi, Ernesto Pittaluga said, “Disruption has given consumers abundant choice, making customer retention a critical priority for companies. As a result, businesses are evolving their models to be direct and customer facing”
In the consumer goods and healthcare sector, 50% of respondents believe the subscription-based model will be widespread in three years’ time. In TMT, 55% of respondents indicate that the model will be widespread within that timeframe while 44%, 40% and 42% echoed similar sentiments in the energy and power, industrial and insurance sectors respectively.
