Cake Vietnam digital bank aims for profitability by end 2024

Quang Nguyen, CEO of Cake Vietnam, is confident that the bank will be among the top 5% of profitable digital-only banks globally by the end of 2024. It is transforming the country’s digital banking services through advanced artificial intelligence (AI). The bank, a joint venture between VP Bank and Be Financial and launched in January 2021, has attracted Gen Z and millennial customers, increasing its user base from nearly three million to 4.2 million between 2022 and 2023.

Agility as a competitive advantage

Nguyen emphasised that Cake’s ability to rapidly customise and deploy AI solutions enables it to respond quickly to market demands and regulatory changes, giving it a competitive advantage in Vietnam’s dynamic financial sector.

Vietnam’s financial ecosystem has undergone a significant digital transformation. By 2023, more than 60% of the population had formal bank accounts, up from 56% in 2022, 40% in 2019, and 31% in 2017. E-wallet adoption increased from nine million in 2018 to over 40 million by 2023. The State Bank of Vietnam reported that the number of digital payment transactions increased from 21 billion in 2019 to 24 billion in 2023.

Digital-native DNA

Cake stands out in this competitive landscape because it is a stand-alone digital bank built from the ground up on technology and AI. Unlike many competitors that act as digital extensions of traditional banks, Cake has created proprietary AI technologies that power everything from customer onboarding to credit decisions.

Nguyen emphasised the bank’s unique approach that has allowed it to integrate AI into all business operations, including front, middle, and back office functions. The bank uses over 40 AI models in a variety of functions, including seven for electronic know-your-customer (eKYC) and biometric verification, 11 for credit scoring and fraud prevention, and five for marketing and customer interactions.

Cake has also implemented four generative AI models to support customer service chatbots and video KYC processes, resulting in significant increases in operational efficiency and customer experience.

Nguyen said that the bank’s streamlined account opening process takes no more than 18 clicks and about two minutes to complete, making it the fastest among digital-only banks in Vietnam.

Cake’s ability to offer instant credit approvals and comprehensive digital lending services sets it apart from competitors in the Vietnamese market. Its market reach is far beyond its immediate ecosystem, with 95% of its customers coming from outside the parent company’s user base.

To broaden its reach, the bank formed alliances with key figures and businesses in Vietnam. In 2023, it collaborated with top Vietnamese singers to sell exclusive tickets and partnered with Be Group, VinFast, and Viettel Money to provide financial support.

According to the bank, these efforts have increased Cake’s appeal while also resulting in highly efficient customer acquisition. The bank’s AI-powered processes have cut customer acquisition costs. The bank plans to expand its use of AI in fraud detection, credit scoring, and customer verification processes.

Vietnam’s current regulatory environment, which lacks specific guidelines for AI use in banking, has given Cake more leeway in implementing advanced technologies directly to customers. As the financial landscape changes, Cake’s strategic use of AI positions it to adapt and thrive, setting a standard for digital banking innovation in Vietnam and potentially the rest of the region.