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COVER STORY

their end-to-end business operations, taining strong low-cost current account
according to Mr. Le Xuan Dong, Head of savings account (CASA) sources, healthy
FiinResearch at consultants FiinGroup. net interest margins (NIM), and significant
“The transformation process has also sig- improvements to operational efficiency in
nificantly changed the mindsets of bank term of cost to income ratios (CIR).
leaders and senior management on digital For instance, transactions on MBBank’s
banking strategies, digital business models digital channel account for 94 per cent of
and culture, product innovation, customer the total, in which the number on the
experience, and acquisition, helping them MBBank App has increased 2.6-fold year-
sharpen and maintain their competitive on-year (210 million transactions) and
edge in the long term,” he said. transaction value 2.2-fold. As of the end
of the third quarter, the bank boasted
CHANGING LANDSCAPE nearly 8 million users of its app while
Banks and fintech innovators in Vietnam around 60,000 businesses were using its
have launched an impressive array of digital BIZ MBBank app. The number of users
tools in recent years, ranging from mobile has increased 120 per cent compared to
payment solutions to banking and wealth the end of 2020, accounting for 75 per
management platforms and e-commerce cent of individual customers. “These figures Digital transformation
ecosystems, according to Mr. Bruce Delteil, are testament to the bank’s outstanding has been the backbone
Managing Partner at McKinsey & Co. Viet- and convenient ecosystem, which allows of most local banks’ long-term
nam. Some of these digital propositions MBBank to move ahead in the digital
have scaled rapidly, he added, making Viet- transformation ‘marathon’ in Vietnam,” strategies to increase their
nam one of Asia-Pacific’s fastest-growing said Mr. Vu Thanh Trung, Head of the target customer base, improve
markets for digital banking. McKinsey’s Digital Banking Division at MBBank. the customer experience, and
new survey also revealed that the penetration optimize their end-to-end
rate of fintech and e-wallets in Vietnam DIGITALIZATION PRIORITIES
increased from 16 per cent in 2017 to 56 per The negative impact of Covid-19 in business operations.”
cent in 2021. Such trends show the rising terms of social distancing and business
consumer interest in digital banking. continuity has been an important catalyst MR. LE XUAN DONG,
The survey also determined that 71 per accelerating the digital transformation Head of FiinResearch, FiinGroup
cent of Vietnamese bank customers are journey in Vietnam’s banking sector. In
open to purchasing banking products and line with the government’s “National digital
services through digital channels, but only transformation to 2025, orientation to
23 per cent have actually completed a pur- 2030” program, which gives priority to least three strategies for Vietnamese banks
chase of a bank product online or through digitalization, fintech innovation, non- to consider during digitalization. First,
its mobile app. “We found that a large cash payment methods, and financial serv- they should re-think multi-channel strate-
majority of customers in Vietnam, approx- ices, local banks enjoy huge opportunities gies to cater to different consumer prefer-
imately 70 per cent, are also multi-channel for continued digital transformation in ences and needs. Eighty-two per cent of
users across digital, bank branches, and the years to come. Vietnamese consumers use digital banking
ATMs,” he said. “Vietnamese internet In order to seize the opportunities and at least once a month, with digital banking
banking customers cite security, speed of ensure the success of their digital trans- driving around 68 per cent of consumers’
service, and remote advisory capabilities formation efforts, local banks need to interactions with their banks, but mostly
as the top 3 areas of improvement they address certain key priorities, according for simple activities. This presents oppor-
would like to see.” to Mr. Dong. “Digital banking transfor- tunities to leverage data and analytics to
With increasing interest among Viet- mation involves the integration of data, better understand this segment and offer
namese customers in using digital banking advanced analytics, and digital technology them personalized digital services beyond
services, Mr. Dong observed that local into all areas of a financial institution, those simple activities. Moreover, 56 per
banks have actively developed their own changing the way work is done, how pri- cent of consumers are already using other
digital infrastructure and solutions, covering orities are set, and how services are deliv- digital solutions from fintechs or e-wallets.
the automation of their business operations, ered,” he said. “Beyond just a technological After banks, consumers trust e-wallets for
data collection and analytics, development upgrade, digital transformation requires their payments.
of omni-channel distribution networks, a cultural change that challenges legacy Secondly, local banks need to re-imagine
and comprehensive applications. They processes, encourages innovation, and digital sales channels. “Vietnamese con-
have also established strong partnerships rethinks all aspects of risk and reward.” sumers have a high level of openness to
with various stakeholders, for example fin- Partnerships also need to be accelerated digital sales, and report a willingness to
techs providing intermediate payment with key stakeholders in various ecosystems purchase digitally, even for complex prod-
services like e-wallets and payment gate- to quickly expand the customer base and ucts such as mortgages, investments, and
ways, telcos, retailers, and e-commerce enhance the customer experience in a insurance,” he explained. “However, the
platforms, among others, to enlarge the digital environment. Frequent customer mismatch between intent versus actual
target customer base, cross-sell basic bank- education campaigns are also necessary, purchase still exists. Digital education,
ing services, and improve the customer he added, to help them understand the awareness, marketing, and incentives can
experience. The active participation of advantages of using digital banking services make the difference in encouraging con-
leading banks such as Vietcombank, Tech- compared to traditional practices and thus sumers to adopt digital channels.”
combank, VPBank, ACB, and MBBank in encourage them to change. And thirdly, banks should re-train their
digital transformation has helped improve Based on an analysis of Vietnamese frontline staff and enhance the digital
their transaction banking platforms, main- consumer trends, Mr. Delteil identified at experience to retain and attract consumers. -

www.en.vneconomy.vn NOVEMBER 2021 | VIETNAM ECONOMIC TIMES | 9