Vietcombank aims to become number one bank in Vietnam

Joint Stock Commercial Bank for Foreign Trade of Vietnam, more commonly known as Vietcombank, is one Vietnam’s four largest state-run commercial banks.  Established in 1955, it was spun off from the State Bank of Vietnam and is the leading provider of international trade payment settlement and retail lending.

In 2021, Vietcombank recorded the highest credit growth rates among big banks of 15% and lowest nonperforming loan (NPL) ratios among financial institutions in the country. The bank’s total assets reached VND 1,463 trillion ($62 billion) and market capitalisation hit $17 billion. It is one of the most operationally efficient banks in Vietnam. In 2020, it became the first bank in the country to report $1 billion in profits. It continued the momentum in 2021, with  profits of $1,2 billion, a growth of 19%.

Vision and mission 2030

To reinforce its market leadership, Vietcombank has set for itself a year 2030 mission, by when, it will not only become the top bank in Vietnam, but also one of the 100 largest banks in Asia, a top 300 largest banking and financial group in the world, and one of the 1,000 largest global listed companies. All part of its grand vision is to help make Vietnam a preeminent economy in the region and globally.

To achieve this vision and mission, the bank has set out four key business pillars for development, including: retail banking, services, treasury and investment banking.

Fee income generation is the bank’s main focus in coming years. It continues to upgrade its service quality with focus on payments, trade finance, and beyond banking services. Development of new foreign exchange and structured products to meet customer needs as well as applying modern technology in online trading of foreign currency products.

The successful implementation of a recent strategic bancassurance agreement with pan-Asia digital insurer, FWD, is also the bank’s major focus over the next couple of years.

Vietcombank also plans to issue additional shares to institutional investors in order to further strengthen its capital buffer.

Leading the digital transformation of Vietnamese banks

Over the past decade, the Vietnamese banking and financial system has witnessed rapid, unprecedented and dramatic changes in risk culture, transformation in income structure, lending portfolio and improvement in corporate governance. However, the most important trend amid the current COVID-19 pandemic is the digital transformation of Vietnamese banks. The application of new technologies has allowed the industry to completely change the way it provides products and services, from the traditional physical channels to a new digital environment. Branchless and paperless operating models allow customers to perform all transactions through digital devices connected to the internet without having to visit a physical location. The electronic voucher system also allows customers to perform all transactions without the need for paper, thereby reducing transaction time and costs.

Vietcombank has reportedly invested enormous resources into improving its digital platform. In 2020, the bank launched a new core banking system, one of the most advanced in Vietnam, that allows it to better serve and manage customer relationships and portfolios. Moreover, its new Digibank service leverages an omni-channel platform that combines mobile and internet functionalities to provide a unified experience to customers.

The bank also developed an IT masterplan that involves hundreds of subprojects and schemes to strengthen its technical capabilities. Traditional banking services are gradually brought into the digital space, while the branch network is finetuned and optimised to deliver a seamless online to offline customer experience.

Transforming digital banking

The unprecedented impacts of COVID-19 and its containment measures, such as social distancing and lockdowns, have permanently shifted customer behaviours. The most obvious change has been the effective transition to online and remote operations. Vietcombank has seen an incredible transformation as it moved customer interactions and transactions to digital channels.

In order to respond effectively and expeditiously to the pandemic, it implemented the "transforming digital banking" initiative - an important strategic project to make it the leading bank in digital transformation in Vietnam. The launch of Digibank in July 2020 was part of the overall digital transformation strategy.

Vietcombank found that investment in building an effective digital capability would be critical to not only reduce operating costs but also improve operational resilience in the long run. Investments would be made to accelerate adoption of digital technologies, such as big data analytics and artificial intelligence, to enable the bank to become a more customer centric and data driven organisation.

COVID-19 has also significantly stimulated customers to adopt and use digital products and services, for example, the number of new customers who registered for Digibank grew substantially through the course of the pandemic, regularly hitting record highs.

An electronic know your customer (eKYC) platform was successfully implemented to enable customers to open banking accounts online and to register for online banking services, 50,000 new accounts were opened in the first month of launch, in June 2021.

Customer transaction preferences have also changed markedly, for example from preferring card over cash for payments, as well as performing remittance and bill payment transactions on Digibank. In the first half of 2021, the total number of remittance and bill payment transactions on Digibank and card spending increased sharply over the same period previously.

COVID-19 has redefined the customer experience, putting customers and their needs at the forefront of the design and delivery of products and services. In this regard, Vietcombank frequently co-creates solutions with customers, taking a mobile-first view, from contactless banking to accessing accounts.

Supporting customers amid COVID-19

The COVID-19 outbreak has had considerable impact on the Vietnamese economy, disrupting supply chains, production, businesses, commerce and consumption. It was also exacerbated by unusually severe natural disasters, such as flooding and landslides in the central part of the country.

To support customers through the challenging condition, the banking industry launched a number of interest lowering programmes. The State Bank of Vietnam issued circulars number one and three to allow banks to restructure loans granted to affected customers without downgrading their loan grouping. Therefore, NPLs of the whole system were kept well controlled, at under 3%.

Amid all this, Vietcombank shifted business focus to prioritise safety and efficiency while reducing operating expenses, actively leading efforts to support businesses and people. It cut fees, interest rates and restructured loan. Through unprecedented interest rate reduction campaigns, this took a total of VND 3,700 billion ($161 million) in 2020 and VND 7,100 billion ($309 million) in 2021 out of its bottom line to contribute to the economy.

In 2022, as the vaccination rate in Vietnam is high, the Government has loosened COVID-19 restrictions and much of the economy actitivies have been back to normal. The bank is expected to reduce the size of its supporting package, this will have a positive impact on the bank’s profitability.

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