Vietnam’s banks accelerate digital transformation and customer experience post-pandemic

The banking industry in Vietnam has seen significant growth and transformation over the past year, with institutions embracing digitalisation and customer-centric approaches. By focusing on risk management and innovation, these banks have not only improved customer acquisition and service, but also maintained strong financial performance.

Banks are boosting their digital capabilities to cater to the evolving needs of affluent and younger generations, while providing creative solutions in the retail finance market. Partnerships further improve customer experiences and expand bank reach.

Leading banks investing in digital technology makes for intuitive offerings for customers and progressive solutions across various segments.

Key players are adopting forward-thinking strategies to attract new customers, offer differentiated experiences, and drive growth.

Prudent risk management and customer experience strategies drive growth

Vietnamese banks such as Asia Commercial Bank (ACB) have seen rapid growth due to their focus on prudent risk management and customer experience. By leveraging its mobile banking app, ACB One, and electronic know-your-customer (eKYC) capabilities, this bank has successfully expanded its customer base while maintaining low non-performing loans (NPLs) and high loan-loss provisions.

Hien Tran, head of the finance division at ACB, attributes the bank’s growth over the past 12 months to risk management and attention to customer experience. In the third quarter of 2022, ACB saw its net profits grow by nearly 51% year-on-year. The bank added about 700,000 new customers, bringing its total to 5.2 million.

Hien Tran, head of the finance division, Asia Commercial Bank

ACB is also the first bank to move all its systems and applications to a private multi-cloud environment in partnership with Microsoft. The bank has successfully kept its NPLs at 1% and has one of the highest loan-loss provisions at over 138%.

The bank has avoided exposure to the current corporate bond crackdown resulting from alleged fraud involving property developer Van Thinh Phat that has affected liquidity of a number of real estate developers and banks.

The government has also recently issued revised regulations on corporate bonds to support the real sector during the current credit and liquidity crunch.

Private banking services to cater to high-net-worth customers

Banks like BIDV have launched private banking services to cater to their high-net-worth (HNW) customers. By enhancing their digital offerings, such as the Smart Banking app, and focusing on customer experience, these banks have maintained leading shares in retail deposits and loans despite challenging operating conditions.

BIDV is the first large, state-owned commercial bank in Vietnam to launch a private banking service. It has 3,000 HNW customers. Bui Thi Hoa, head of retail banking, says that the private banking service, along with the revamped Premier priority banking service, will target Vietnam’s 200,000-strong high-end customer segment.

Bui Thi Hoa, Head of Retail Banking, BIDV

The bank has also enhanced its Smart Banking app to streamline services such as mortgage and personal loan approvals, insurance product purchases, and card reward point management. BIDV continues to maintain its leading share in retail deposits and loans.

Super-apps to facilitate financial inclusion and integrated services

Platforms like MoMo, an e-wallet created by M Service, experienced exponential growth during the COVID-19 pandemic. By partnering with banks and non-bank financial institutions, MoMo provides a full suite of microfinance services to millions of users, promoting financial inclusion.

Co-founder Diep Nguyen says that MoMo’s target customers are the medium and low-income segment of Vietnam’s banked population, estimated at 35 million people. The platform has partnered with over 70 banks and non-bank financial institutions to provide microfinance services to its 31 million users.

Diep Nguyen, Co-founder, MoMo

Leveraging future technologies for seamless customer experiences

Sacombank is an example of a bank adopting future technologies to innovate and improve customer experience. Anh Tu Bui, deputy director of its digital transformation centre, explained that the bank’s adoption of future technologies includes an omnichannel banking platform and third-party applications using Temenos’ Infinity solution, integrating different channels and ecosystems to create a seamless experience for its 10 million business and retail customers.

Anh Tu Bui, Deputy Director of Digital Transformation Centre, Sacombank

Transforming digital capabilities to meet evolving customer needs

Banks like Techcombank, TNEX, TPBank, and UOB Vietnam are focusing on investing in technology, digital capabilities and data, and redefining customer engagement and growth in the fast-moving Vietnamese retail finance market.

Techcombank is transforming its digital capabilities for the affluent and the ‘Why Not’ generation. Darren Buckley, the bank’s chief retail banking group officer highlighted the enormous potential in the here. He said: “Vietnam is a very dynamic market, changing fast over the last few years. The digitalisation that’s been happening in this market—it’s been incredible.”

Darren Buckley, Chief Retail Banking Group Officer, Techcombank

Techcombank has made significant investments in technology, digital capabilities, and data to enable specific segments of affluent and younger generation of customers to be redefined, engaged, and served.

TNEX is empowering underserved customers with financial education and tools. Digital-only bank TNEX, with 1.5 million customers in just two years, plans to provide micro-lending and investment products and services in 2023 and beyond.

Chief experience officer and deputy chief executive officer (CEO), David Jimenez Maireles, emphasised the need to engage underserved customer segments sustainably. He said: “We’re working on launching our micro lending propositions to launch savings, micro investment and keep working on our mission to lower the barriers for people in Vietnam to get access to financial services.”

David Jimenez Maireles, Chief Experience Officer and Deputy CEO, TNEX

TPBank builds its digital transformation on four pillars. James Tran, head of TPBank’s digital bank center, shared that the bank’s digital transformation is built on four pillars: a new digital business model, a full suite of digital products and services, redesigned end-to-end digitalised operations and automated processes, and risk management.

TPBank has introduced open banking and convenient banking services to consumers through its various online-to-offline (OTO) ecosystem platforms and claims to be the first in Vietnam to do so.

UOB Vietnam has to innovate to compete with the local banks. As a new player in the retail banking market, UOB Vietnam has to outpace more than 40 local commercial banks. Fred Lim, head of retail banking at UOB Vietnam, said that digitalisation has enabled the bank to go faster and become more competitive.

The bank is investing up to SGD 500 million ($370 million) in digital innovation initiatives across ASEAN, including Vietnam, to drive speed-to-market and elevate the digital banking experience for customers.

Digital transformation and innovation reshape landscape

Key players such as Vietcombank, VietCredit and VPBank are adopting pioneering strategies to attract new customers, offer differentiated experiences, and drive growth. The efforts of Vietnamese banks and financial institutions to enhance their digital capabilities and customer experiences demonstrate the potential for growth and success in the industry.

Vietcombank emphasises a customer-centric approach to digital transformation. Deputy CEO of Vietcombank Nguyen Thi Kim Oanh emphasised the ongoing digital transformation and reorganisation of the retail banking group with a focus on a data-driven and customer-centric operating model.

Nguyen Thi Kim Oanh, Deputy CEO, Vietcombank

Oanh highlighted the importance of customer data, experience, and value proposition, supported by product development, marketing, and distribution management across both physical and digital channels.

It has seen impressive growth in its customer base and app usage. With more than 22 million customers and 10 million active users of its VCB Digibank and VCB DigiBiz apps, the bank’s decision to eliminate remittance fees on digital channels has been a game-changer for Vietcombank.

New branch designs are being introduced to integrate retail, business, and priority banking customer needs. These designs offer differentiated experiences based on a new sales and service delivery concept. As part of a major transformation action plan, Vietcombank is working towards becoming a leading commercial bank in Vietnam and one of the top 100 banks worldwide by 2030.

VietCredit is focused on its vision for financial inclusion and growth. The finance company that was reconstituted in 2017, has been focusing on offering accessible credit card products and innovative partnerships to expand its customer base.

Hai Au, a director of VietCredit, and Tran Viet Phuong, head of its supervisory board, explained that their first domestic NAPAS credit card product, launched in 2018, targets low- and middle-income groups with a minimum monthly income of VND 4 million ($168).

The company aims to make credit cards more accessible and encourage their use by offering a no-fee feature on card membership and transactions. VietCredit reported profit after-tax of VND 42 billion ($1.7 million) for the first three quarters of 2022 and aims to issue three million cards by 2025.

VPBank follows a digital-only banking strategy. It has been a pioneer in digital banking in Vietnam, with its digital banking service centre director, Giang Pham, explaining the bank’s strategy of partnering with fintechs and platform players and launching its own digital-only banks. VPBank has introduced several digital-only banking propositions such as YOLO, Cake by VPBank, and Übank, catering to different customer segments and ecosystem partners. Its NEO digital banking app, launched in July 2021, targets the mass market and emerging affluent-customer segment.

By leveraging eKYC capability and the newly-implemented digital identity system, VPBank has been able to onboard millions of users swiftly.

As transformation and innovation continue to reshape the banking landscape in Vietnam, these institutions are committed to creating value and drive success in a post-pandemic world.