Digitalisation of Banks and Financial Institutions: Takeaways from AIBP Insights

AIBP Insights Vietnam Digitalisation of banks and financial institutions

In our final AIBP Insights Vietnam session, we had the opportunity to gather stakeholders leading digital initiatives within the banking and financial sector, along with technology solution providers with regional experience within the industry. 

Co-hosted by Allan Soong, Senior Country Manager of Vietnam and Philippines, ASEAN Systems, Oracle, and Irza Suprapto, CEO, Industry Platform, the session featured an intense discussion on some of the challenges banks face in the digital transformation process, such as the regulatory landscape of Vietnam. We also learned about some key aspects they should focus on along the digital transformation journey, such as securing data infrastructure, protecting the data, Customer Acquisition Costs (CAC)-Customer Lifetime Value (CLV) ratio, and last but not least, understand what consumers want.

Digital Banking vs Digital Brand?


Setting the tone, Irza shared an outlook of the current financial landscape in the industry, where newer fintech, digital only financial firms such as Ant Financial are growing at a breakneck speed in comparison to their traditional peers.

Allan followed up by looking at how different forces (economics, incumbents, regulations and changing customer expectations, etc.) are forcing the banking industry to adapt. He started the discussion by posing a question to the panel – are we heading towards Digital Banks or Digital Brands?

Bryan, CEO of TNEX, a digital only bank, said that there’s a clear difference between digitization, digital optimization and digital transformation. He likened digitization to what’s been done years ago – trying to replicate banking services on a website, whereas digital transformation is the process by which companies are able to execute on innovative business models. Bryan spoke about how the business of TNEX is vastly different from the traditional banking model – everything from cost structure to operational and profitability metrics – and believes that this will provide a democratization of banking services within Vietnam. 

Arnab, Vietnam Managing Partner of Rainbow Financial, said that in Vietnam, and other emerging countries, an evolution, not a revolution, is needed. He believes that the regulatory landscape of Vietnam hinders banks from accelerating their digital journey and that Vietnam Banks are not ready to transform into digital only banks. He also threw an interesting question, while he agrees data is a crucial asset, what can banks do with the data if they don’t have the right environment to utilise it.

Derrick, VP of Channel Activity Management, Operations & Shared Services Group of Union Bank Philippines, believes it’s not either a digital bank or a digital brand, but that they complement each other to create synergy. For Unionbank, he believes that the core , in creating the digital transformation journey, is to focus on the customer experience. From the failures along the way, he believes banks can learn from the mistakes and progress.

Allan then added that he believes that for traditional banks, it’s really about accelerating the branding and transforming the marketplace to engage with the new segment of digital savvy consumers, but not changing the entire current business model.

Customer Experience at the Core

Bryan believes that the revolution within banking has already happened in Vietnam – “people are focusing on banking, not banks”. Digitalisation is democratization, social change, that improves people’s lives by enabling them to create bank accounts. Their business is based on two key metrics, CAC and CLV. The traditional metrics can remain but in digitalisation, he believes that for the digital banking model to work, CAC and CLV have to hit a 1:1 ratio. He highlighted it’s harder for traditional banks to pivot and find the right way to hit the ratio as traditional banks are typically not as agile as a digital only bank.

Mr. Huy, former Chief Officer, Cards & Digital Bank, Saigon Commercial Bank agreed with Bryan whereby they were also trying to go with the digital bank, and not a digital brand. The model that was built aimed to provide financial solutions/services for all client segments . From banking services, insurance and investments, they try to put the client first and understand what their needs and preferences are. He also believes each country has a different culture and it should be taken into account when you are building a business model. 

Mr. Giang Pham, Director of Partnership Development and Digitalisation Center of VP Bank, mentioned that Fintech partnerships will play a very important role in the future and he already sees it happening now. It is very attractive for banks to work with fintech firms, such as Grab, as there is a high volume of transactions which results in a lot more data being generated and collected. Once the banks have captured the data, they can then make data driven decisions on next steps for the business. 

Secured Infrastructure for Data Management and New Initiatives

Mr. Dinh, Head of Engineering of ACB, elaborated on the work put in behind the scenes by the banks to provide a seamless experience for their customers’ digital banking journey. They have to build a strong infrastructure that can handle a lot of transactions. He also mentioned that the security of the infrastructure is as important as building a resilient system for secure transactions.

Mr. Young Choi, Director of International Sales of MarkAny – a leading data security, e-certificate forgery prevention, content distribution and media security solution company in South Korea, shared how Korea has advanced in the digitalisation journey. He shared that with digitalisation, everything is connected, and a lot of things that could only be done by visiting a bank branch can now be done easily at home. He also agreed with Allan that data is one of the most important assets for banks, and from his observation of Korean banks, he highlighted that protecting the data is also crucial along with accumulating and utilizing the data.

Mr. Phong, VP & Head of Fintech Partnership and Project Management of OCB, shared how they are trying to expand their services and that they’ve been engaging with other cashback or loyalty programs like Shopback. He agreed with Mr Young that there is a decrease in people going to physical branches and therefore banks have to move things online. 

Mr. Dzung, Vietnam General Manager of Vertiv, highlighted the importance of smooth transaction of online digital bank apps, and that Vertiv makes sure that banking applications run smoothly and runs every time when customers need it. He believes more banks are focusing on the business in the future, and they are demanding availability of the system, reliability of the application, flexibility, scalability and services, especially during times like COVID 19.

Moving Forward

Oracle x AIBP Insights

In closing, Allan summarized the session stating that ultimately, the discussion was about how banks and financial institutions can better serve their customers. There will be successes and failures along the way and they will learn as they press on with the digital transformation process. Vietnam has a lively Fintech ecosystem which can be integrated in the process of digitization. He also said that we will observe a lot of changes in the next few years in the banking industry, but one thing that will remain is that everybody needs a bank, but is it a bank in a traditional sense? 

“What’s really important is how to integrate the new business model into what the consumer really wants.”

Watch Full Discussion:

Feel free to drop us a note at [email protected] if you are interested to discuss the development of enterprise digitalisation in Vietnam as well as other countries in ASEAN.

Asia IoT Business Platform

10 November 2020

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