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BANKING & FINANCE

Working in tandem

Bancassurance has proven to be a strategic growth driver for both
banks and insurers and has found even more favor in recent times.

T HONG NHUNG REPORTS

able through an app, also helped OCB establish
itself as a successful bancassurance service
provider in Vietnam.”
Exclusive partnerships between banks and
insurance companies have become more preva-
lent in Vietnam over recent years and been a
crucial growth driver for banks. “The two
most recent prominent deals were the Asia
Commercial Joint Stock Bank (ACB) - Sunlife
and Vietinbank - Manulife,” said Ms. Nguyen
Thu Ha, Research Manager at SSI Research.
“While these strategic alliances helped life
insurers leverage growth through banks’ sales
networks and client database, banks benefited
from new income streams. A well-delivered
insurance experience can also help the bank
enhance its brand as well as increase customer
loyalty and lifetime value.”
PHOTO: VIET TUAN Growth momentum

It’s long been agreed that Vietnam’s life
insurance market has huge growth potential,
s he goes about depositing some of Director of Bancassurance at Sacombank. but product distribution was never straight-
his savings into his bank account, “We turned the challenge of the pandemic forward before, Ms. Ha noted. It was especially
A Mr. Hoang Son, an auditor working into an opportunity, with breakthroughs in challenging for foreign insurers to build
in Ho Chi Minh City’s District 1, is regularly thinking, responses, and strategies,” he told nationwide branch networks and penetrate
introduced to other deposit packages with VET. “Last year was the first year that insur- deeply into remote residential areas. Local
more attractive interest rates when combined ance premiums at Sacombank reached more banks, meanwhile, had advantages in networks
with life insurance products. The rate could than 100 per cent of the plan, increasing and better penetration in rural areas. Now,
be as much as 0.5-1 per cent higher, depending nearly 120 per cent year-on-year. Bancas- with bancassurance, they can diversify their
on the value of the life insurance policy surance revenue reached roughly 120 per product pool and increase the potential for
selected. Likewise, Ms. Thu Huyen from Dis- cent of the plan and contributed around 30 attractive income growth.
trict 2, was told she would receive a lower per cent of the bank’s total service revenue.” Bancassurance is clearly a tempting propo-
home loan rate, of up to 1 per cent, if she also Similarly, the Orient Commercial Joint sition for both life insurers and banks, and the
took out a bancassurance product. Stock Bank (OCB) also posted significant market has thrived in recent years, especially
Given the declining credit growth seen growth in bancassurance last year, with new since 2015. Bancassurance premiums have
since Covid-19 first struck at the beginning life insurance premium sales standing at $12.1 grown by more than 70 per cent during the
of last year, banks in Vietnam are now pro- million, an increase of 122 per cent compared last five years. Its contribution to new business
moting the sale of bancassurance products to 2018 and 36 per cent compared to 2019. It premiums has increased from 10 per cent in
with attractive conditions whenever customers reached the life insurance target for the first 2016 to 30 per cent in the first three quarters
make transactions. Bancassurance has become financial year with Generali Vietnam a month of 2020. In terms of total premiums, bancas-
popular in recent years, with banks and insur- earlier than planned. surance’s contribution has grown from 5.8 per
ance companies increasing their cooperation “The bank entered into an exclusive part- cent in 2016 to 18.3 per cent in the third quarter
to tap into the potential of this profitable, nership with Generali Vietnam in November of 2020, according to figures from SSI.
low-risk business segment. 2019 that has proven successful,” said Ms. Techcombank (TCB), Vietnam International
Thai Thi Anh Thu, Head of Bancassurance Commercial Joint Stock Bank (VIB), Military
Solid performance at OCB. “It achieved its targets for 2020 Commercial Joint Stock Bank (MBB), ACB,
From the outset, when Sacombank first despite the difficulties posed by the pandemic and Sai Gon Joint Stock Commercial Bank
offered bancassurance products three years and natural disasters. This has increased the (SCB) hold the highest market share in the
ago, it recognized it was a high-end financial demand for health insurance products and bancassurance market, but the highest growth
service requiring professional levels of consul- our alliance with Generali Vietnam helped is being posted by smaller banks like Dong A
tancy and systematic and methodical operations. us harness its strong product offerings, which Bank, MSB, and PVComBank. Bancassurance’s
“We therefore exceeded our premium revenue are customized to suit the different needs of contribution to total service income varies
plans every year, to the delight of our partner, each banks’ customers. Strong after-sales among institutions, from 14 per cent at TCB to
Dai-ichi Life Vietnam,” said Mr. Tran Bao Thinh, services, with almost all requests being avail- as high as 71 per cent at MBB, the report noted.

34 | VIETNAM ECONOMIC TIMES | MARCH 2021