VPBank differentiates with segment-based digital bank propositions

VPBank has been actively testing the digital banking space in Vietnam. The bank’s digital banking service centre director, Giang Pham, explained its three-prong digital banking strategy. He shared that the bank has at different times partnered with fintechs and platform players to introduce digital banking apps, as well as launched its own digital-only banks. All while undergoing its own digitalisation and digital transformation journey.

In 2015, it was the first bank to launch a digital-only bank, TIMO, in Vietnam with fintech, Global Online Financial Solution, and Vina Capital, which it has since divested to Viet Capital Bank. In 2018, VPBank launched its own digital-only banking proposition, YOLO, aimed at the younger and digital-savvy generation of consumers.

As YOLO evolved, VPBank introduced two other digital-only bank offerings, CAKE and UBank, in 2021, working with cloud-based technology providers such as AWS, Backbase and Mambu. It launched CAKE with ride-hailing start-up Be Group to cater to its ecosystem of 10 million app users and drivers, joined later by another ecosystem partner Viettel Money which has 20 million users. UBank on on the other hand aims to support the 20 million financially underserved customer segments of its consumer finance subsidiary, FE Credit. 

VPBank’s digital-only bank implementation reflects its “business by segment” strategy, said Giang. For its mass market and emerging affluent customer segment, VPBank launched its NEO digital banking app in July 2021 and was one of the first banks to leverage electronic know-your-customer (eKYC) capability to onboard customers.

VPBank is also able to tap into the newly implemented digital identity system by the ministry of public security and NEC, which has issued 50 million ID cards so far, to speed up the registration and onboarding of customers. To date, Giang reported that NEO has about five million registered users, of which about four and a half million are active, and two million are new-to-bank users, out of a total of seven million bank customers. It signs up about 12 thousand users daily, with an average conversion rate of about 62%. The bank also aims to reach one million logins every day by the end of 2022.

The relatively high level of digital usage helps to make VPBank a more efficient bank with a cost-to-income ratio under 21%, at a low 20.6%. It was one of the most profitable banks in Vietnam in the first nine months of 2022, second only to Techcombank, with a pre-tax profit of VND 19.8 trillion ($833.5 million), and return-on-assets and return-on-equity of 3.5% and 23.4% respectively.  The bank also has the highest chartered capital and capital adequacy ratio in the country at VND 98.5 trillion ($4.1 billion) and 14.6%.

VPBank is focused on improving its proposition to affluent customers, beyond payments and transactional services. Giang emphasised that the bank would invest in digital capabilities that will help to improve the sales productivity of relationship managers and the overall experience of customers. It is investing in artificial intelligence and machine learning technology providers, such as Insider, to better understand customer behaviours and meet their needs, using smart banners that can nudge them to complete a transaction or choose the next best course of action.