For small business digitalization, coronavirus might have a big impact. Will it push them to become digital faster? Find out from our digitalisation expert

Our lives have changed with the coronavirus crisis. But have they changed forever? In Does This Change Everything? European Investment Bank experts examine the implications of the COVID-19 crisis for sectors from education and digitalisation to urban mobility and medicineand for your everyday life.

To find out what coronavirus means for the public sector, we spoke to Aris Pofantis, lead engineer in the Digitalisation and Small Businesses division at the European Investment Bank, the EU bank.


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How will this crisis affect the pace of digitalisation among small businesses? Does this change everything?

Digitalisation goes across all types of sectors and activities. And it is everywhere. Over recent years, we have been seeing digital transformation to different degrees in all areas and sectors, and the coronavirus is not going to change this, but it could have a dual effect (on digitalisation). On one hand, it will most likely accelerate adoptions, for example, in certain more traditional areas, where the public is more hesitant to use digital solutions or industrial remote applications. But at the same time, the problem is that this crisis may—and most likely will—delay the investment needed to develop digital solutions or to push digital transformation projects.

Small business are often called the lifeblood of the European economy. They represent 99% of all businesses in the EU. Small businesses also often rely on people coming through the door. Will some become digital as a result of the coronavirus crisis?

Now, the digitalisation for an SME also has to be in the context of what is the service they are offering. Some services are completely physical and need this interaction. Some services can be offered remotely and through digital channels. Probably during the crisis there is going to be a higher use of more digital channels. Users and customers are also going to be more accepting of these solutions, and more ready to adopt them. After the crisis…a digital seed will have been planted . Things that the consumers see as viable and useful are going to continue. Things that were only due to necessity will maybe scale back a bit.

So you think the crisis will push some small businesses to become digital, at least those that can?

Yes, it is an opportunity for everybody. And, opportunities are going to be explored. What can we be doing that we were not doing? Is there a different way in which we can be offering our product of which we haven’t thought? It will depend on what do you have and what do you need.

A big part of digitalisation is on the backend. This means digitalising your inventory, or connecting it with your supply chain, making things a bit more automated. But the backend is not something I see being pushed by the crisis. The crisis will have more of an impact on the front-facing interactions. Where there is an opportunity, companies will have to exploit it. Otherwise, things will not dramatically change.

Some people, if not exposed, are more at ease using traditional ways. Here is where the crisis can help the adoption because if you are forced to use some solutions that you disregarded before then you can be more open afterwards and you will use them.

Some might be a little pushed by the crisis and others are pushed by the need of increasing efficiency of your work, which I think is the biggest part of digitalisation. Increasing the efficiency of what and how you do it. And not only how you deliver it.

Can we look at it as an opportunity as well?

There will be opportunities enhanced by this crisis. Whether this will be sustained afterwards, it will depend on how good and efficient these solutions were, and if they were just an emergency measure or a valid option. It will have to be seen.

But as I said before, the seed will have been planted. More and more of these solutions will come in place. Maybe we will have a little bit of a reduction of their use just after the crisis because people will be eager to go out and do things as before. But eventually they will grow because they will have become known to people.

Will customers change their habits? Will they become more reliant on digital services?

If it has increased by fivefold or tenfold compared to before, maybe it will not stay at these levels. But once people have seen the opportunities, it will grow for sure. People will have seen the benefits of these “click and collect” services. This will be driven by efficiency gains for both sides, the consumer, who can avoid peak hours, and the shops that can plan their work more efficiently.

It’s already quite clear that small business will suffer as a result of the crisis. What can the EIB do to help?

Small and large are likely to suffer; If I start with existing customers, one could think that we could accommodate changing priorities by extending implementation periods for digitalisation projects, or extending our financing from 50% to higher levels (maybe 75%) to make sure that these investments take place. Especially when it comes to SMEs. we can temporarily cover the working capital needs , or we can blend our loans with other instruments, particularly subsidy type of assistance, from states or Europe.

We could also support sovereign and state investment in digitalisation, because this mobilise the activity and the investments of smaller players. If we support for example the digital transformation investment of municipalities and governments that means that there is going to be more work for smaller and bigger players.

We will have a role to play. I know that there is a huge discussion about what are the optimal solutions, but I can compare it to the last crisis. Although the needs were different, we were asked and we stepped up our investment. We went out and we forged some very strong relationships with companies that wouldn’t have considered us as their primary financing partner, but because we were out helping them, when other banks wouldn’t, then relationships were forged. Now we have little bit of the same thing. Maybe the biggest priority is the SMEs so we need to put our focus there. But at the same time, we shouldn’t lose sight that we should take care of our existing and usual customers because the relationships that we forged before, we shouldn’t let them break.

What can we do as citizens to help our local small businesses?

It would be a pity to have small companies disappear because Amazon delivers and hey can’t keep their clients. We have to support as much as we can. If you are living in a place in lockdown, how can you support your local business, if you can’t go anywhere or even worse when they are closed? Maybe this problem is accentuated now, but it is more about how willing we are to support the local businesses and the local services even when there’s no crisis. If we start from there, maybe it will become more important for us to contribute after the crisis.

Read Does This Change Everything? from the European Investment Bank, the EU bank. Subscribe to the podcast on iTunesAcast and Spotify.