Collaboration is key to digital transformation strategies

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CEOs and decision makers of banks and financial institutions across Asia Pacific discussed the trends transforming Vietnam’s financial services industry at The Asian Banker Finance Vietnam 2022.

Bryan Carroll of TNEX Digital Bank, Nguyen Ngoc Nhu Uyen of Asia Commercial Bank, Colin Dinn of Vietcombank, Dinh Van Chien of TPBank, Gunneet Singh of UBank, Kanishk Upadhyay of Techcombank, Jonas Eichhorst of Timo Vietnam and  Kalidas Ghose of FE Credit discussed Vietnam’s digital transformation journey. They also exchanged views on the emergence of the digital economy and an expanding start-up ecosystem.

Carroll talked about APIs being an enabler, providing an infrastructure for banks to digitally connect and offer a more tailored customer experience. Nguyen said that digital experience is more than just bringing in technology; it is also about providing a new business model and solutions.

Dinn talked about cloud enablement and described it as a critical component of the digital transformation process and that without cloud-based technologies, banks would not be able to scale. Dinh added that the COVID-19 pandemic has influenced customer behaviour and engagement, while expediting Vietnam's digitisation journey. 

Singh mentioned that the most profitable areas for banks are lending, investments and insurance and not necessarily payments. Upadhyay discussed how banks are making their processes smooth, automated and consumer friendly. 

Eichhorst compared valuing client partnerships to striking a balance between moving quickly to service customer needs, while also generating value and remaining relevant in the marketplace. Ghose described Vietnam's transformation journey as exciting because of the country's progress in digitising, citing the government's clear vision and programme execution. 

The following key points were discussed:


The following is the edited transcript of the dialogue: 

Foo Boon Ping (FBP):  Xin Chao, good afternoon ladies and gentlemen and to our special guests, Dr. Nguyen Quoc Hung, Secretary General of the Vietnam Banks’ Association (VNBA), our keynote speakers, Ms. Loan Chau Pham, Deputy Director of Digital Channel and Partnership at Vietcombank and Mr. Barbaros Uygun, CEO of HK based digital-only bank, MOX.  

Welcome everyone to Finance Vietnam 2022. I am very pleased to be your host today and to chair the Vietnam Leadership Dialogue.

I am very happy and it is our honour to partner with the Vietnam Banks’ Association again to hold this year’s virtual event. Thank you Dr. Hung and VNBA for your support and partnership over the years.

We are very excited to have all our conference guests join us via Zoom and I am happy to inform that we have simultaneous interpretation available for you to follow the event in Vietnamese as well.

Just look for the language option at the task bar at the bottom of the screen.

We are into the third year of living with COVID-19, and we hope you are continuing to keep safe as we turn the corner on the pandemic. The situation worldwide appears to be have improved considerably, especially in the West, in Europe and the US where most restrictions have been lifted and borders are open again as vaccination rates have increased and we seem to be dealing with what appears to be a highly infectious but less deadly strain of the virus.

Asia has been comparatively more cautious and conservative in our approach, restrictions and borders are taking more time to come down. Vietnam is one of the highest vaccinated countries in the world, with over 200 million doses of the vaccines administered to-date, and almost 300,000 doses are administered daily, more than enough to completely vaccinate everyone of your 97 million people.

And we know the leaders and people of Vietnam have responded exceptionally well to the outbreak which have allowed your economy, lives and livelihood of your people to get back to normal as much as possible. And the new normal has become increasingly digital as the pandemic has accelerated the adoption of online activities and transactions.

Since the approval and launch of the National Digital Transformation 2025 programme, the Vietnamese government has set the ambitious target of the digital economy accounting for 25% of total gross domestic product or GDP by 2025 and 30% by 2030. And, of course, it will guide the country to becoming a high-income economy by 2045.

The World Bank is confident that this rapid digital transformation envisioned by the government can and will be achieved.

Based on its analysis, if digital sectors expand by about 10% every year, the financial gains for the economy will exceed $200 billion over 2021 to 2045, or about the size of the country’s current GDP of $270 billion.

The digital sectors will become a more important part of the economy, and the use of digital platforms will create productivity gains for the rest of the economy. These gains would exceed the investment costs required to achieve this rapid expansion, which are estimated in the range of $35 billion over the next two decades.

It is very exciting indeed and we know that the financial services industry in Vietnam will be one of the important sectors that will lead this digital transformation.

Take for example, the financial technology or fintech sector has been growing rapidly and last year, in 2021, saw total transaction value grow more than 60% to over $18 billion, and is expected to continue this pace of growth well beyond 2025.

Meanwhile, despite the disruption of the pandemic, the financial services industry continues to be resilient, strong, and leading the digital charge. This is a strong testimony of the government’s measures to provide relief to important parts of the economy that have been hit hard as well as the digitalisation of important economic sectors that have allowed businesses and commerce to continue.

In the Vietnam Awards 2022 ceremony that we will be holding later today, we will also be recognising many of the industry’s achievements in providing new digital services to customers. We received over 26 submissions and assessed more than 15 banks and non-bank retail financial services players in Vietnam for over 12 awards in 12 different categories across retail financial services and financial technology.

This evening, we will be presenting 12 awards to six institutions. With the growing focus on digital services, the industry has already started the process to rethink the pace and effect of digitalisation and its impact on commerce, trade and supply chains.

Beyond Vietnam, economies worldwide are also pursuing a wider and more diverse range of policies towards digitalisation, sustainable development, as well as integration and cooperation with each other. 

And as part of the Virtual Leadership Dialogue, we will discuss the challenges that leaders face in achieving sustainable digital growth post-pandemic and how to compete in the current waves of uncertainties, especially now with the outbreak of fighting between Russia and Ukraine.

We know that Vietnam has close ties with these two nations and will be in some way impacted as well.

How are your institutions redefining leadership in the digital world and navigating ways to build strategies to deliver stronger and more resilient operations? For now, I would like to invite Dr. Hung, the secretary general of VNBA to give his welcome note. Dr. Hung is a former General Director in the Credit for Economic Sectors Department at State Bank of Vietnam and held many senior management positions in different banking and financial institutions in Vietnam.

He has more than 35 years of banking industry experience and was appointed Secretary General of VNBA for a seventh term in December 2020. He also holds a PhD in Economics.

Let me welcome Dr. Hung for his welcome note.

Nguyen Quoc Hung: Ladies and gentlemen, on behalf of Vietnam Banks Association, may I send my warmest greetings to all participants of the Vietnam Finance 2022 with the theme of “Vietnam’s digital transformation journey – rethinking disruption in a hyper-connected world”.  

We wish you good health and we wish for a successful event. 

Ladies and gentlemen, digital transformation is one of the burning topics over the last decade because of its inevitability for the sustainable development of each country.

In the context of the volatile world economy, Vietnam is considered as one of the countries with timely actions in formulating and perfecting legal regulations, shaping the development strategy in the digital transformation of the economy.

On September 27, 2019, the Politburo issued Resolution 52-NQ/TW, "On a number of orientations and policies to actively participate in the Industry 4.0", aiming that, digital economy will account for about 20% and over 30% of GDP by 2025 and 2030, respectively, and 50% and 80% of the population will have an e-payment account by 2025 and 2030, respectively.

By 2045, Vietnam aims to become one of Asia's leading smart manufacturing and services, start-up and innovation hubs.

To achieve that goal, the government has issued Decision No. 749/QD-TTg dated June 3, 2020 approving the "National Digital Transformation Program until 2025, with orientation to 2030".

Moreover, Vietnam is among the top 20 countries with the highest internet penetration rate in the world, with 68.17 million users, accounting for 70% of the population, with affordable internet service charge and the lowest broadband internet charge in the Asia-Pacific region.

Besides e-commerce, non-cash transactions have been increasingly developed, creating opportunities for businesses to leverage digital economy tools in their operation.

E-government has been deployed faster and more drastically.

Besides, the COVID-19 pandemic has partly accelerated the digital economy development.

According to data from the State Bank of Vietnam, in quarter three, 2021, the number of internet-based transactions reached 167.3 million with a value of VND8.4 million billion; the number of mobile-based transactions reached 506.6 million with a value of more than VND 4.9 million billion. 

It can be said that, in the past time, under the management of the State Bank of Vietnam, commercial banks have proactively invested in advanced technologies for their services, creating a  solid foundation in the context of developing digital economy, and the rising trend of e-payment. However, the rapid development of new technologies such as blockchain, big data, intelligence. Artificial intelligence (AI) requires the banking industry to change in terms of management model, product structure, as well as management of cyber security risks.

Recently, the State Bank of Vietnam has issued relevant mechanisms and policies to support digital transformation and promote non-cash payments; improved technology infrastructure, digital payment infrastructure; accelerated the application of digital  solutions for the banking and financial sectors; and key technology solutions to adapt to the context of Industry 4.0.

The regulation allowing individuals to open payment accounts at credit institutions via eKYC has helped commercial banks get one step closer to digital banking.

In addition, the State Bank of Vietnam has coordinated with relevant ministries and sectors to study, formulate and submit to the government a Decree on Regulatory Sandbox for Fintech in banking sector to encourage cooperation in a healthy competitive relationship between banks and Fintech.

Digital transformation has been paid with high attention and actively implemented by credit institutions. 

Up to now, up to 95% of credit institutions have been developing and implementing digital transformation strategies. All of them have applied new technical solutions and technologies in operation and services, of which nine out of 19 operations have been completely digitized by  me banks (such as savings, term deposits; opening and using payment accounts; bank cards; e-wallets; bank transfer; HRM; financial accounting.

Many banks have al  applied AI (artificial intelligence), ML (machine learning) and Big Data technologies to assess, classify customers and to make decision on disbursement, etc. to simplify procedures and shorten disbursement and lending TAT (turn around time).

However, in reality, digital transformation in Vietnamese banks is still not comprehensive.

On-premises infrastructure investment is still dominant, thus technology capacity has not been able to meet the requirements of digital technology application.

Some banks have used cloud computing, but there are still controversial arguments related to this new technology.

The ecosystem has been established but is still incomplete due to asynchronous connection technology, open (application program interface) API. 

Digital transformation is mainly limited in the digitalization of distribution channels, traditional banking products such as lending and deposit are still under a semi-automatic process.

To improve competitiveness and successfully implement digital transformation, banks need to be dynamic, innovate business models, strengthen cooperation, develop and expand the digital banking ecosystem to provide customers with diverse innovative digital financial products and services to meet their needs and engage customers.

Ladies and gentlemen, in order to promote sustainable innovation in digital transformation not only among financial, credit institutions but al  stakeholders, this annual event held by The Asian Banker is of great significance in the context of the digitalization acceleration of the Vietnamese banking sector. 

I think this is an opportunity for banks, financial institutions, fintech and technology companies to discuss trends that are reshaping the financial industry, as well as learn from each other the practical experiences of digital transformation   that we can exchange and share information and to identify development orientations for the next period.

On behalf of the Vietnam Banks Association, once again I wish you good health and success.

I wish for a successful event.

Thank you very much!

FBP: Thank you Dr. Hung for that welcome note and for opening today’s event and setting out the priorities and the direct activities that the Vietnamese Banks Association and the industry are working on.

Next, we will start our Leadership Dialogue. We are very excited to have with us three outstanding leaders in digital, retail and consumer finance in the Vietnamese banking sector to discuss and debate the future of the industry as we make the transition to a new digital and post-COVID-19 era and reimagine the future of retail and finance in Vietnam, with the vision towards 2030. 

We will explore how both traditional and new players embrace the inevitable change to be fully functioning digital players and equip themselves with the right strategies and capabilities to win. 

Now, let me introduce our guests:

We are very to have Mr. Kalidas Ghose, CEO of FE Credit. 

Kalidas is a global retail banking and consumer finance veteran with more than 25 years of experience. He is the CEO of FE Credit, the largest consumer finance company in Vietnam, and a subsidiary of VP Bank, one of largest and fastest growing in the ASEAN region, with more than 10 million customers and a dominant market position. 

Next we have Mr. Dinh Van Chien, Deputy CEO & Head of Retail, TP Bank. Mr. Chien is a retail banking and marketing expert with over 18 years of experience,  and joined TP Bank in 2013 as head of retail banking. He has held multiple management positions both in local and overseas organisations including deputy director of Vietcombank Card Centre, senior manager at Singapore’s OCBC Global Personal Financial Services, and also director of product development centre for retail banking at VPBank previously. 

And we have al  Mr. Jonas Eichhorst, Director and CFO at Timo Digital Bank. Jonas is a senior board and management executive with over 15 years of experience in investing and building technology businesses in various countries in Asia. He joined the board of Timo, one of Vietnam’s leading digital banks in 2020 and became CFO in the summer of 2021. He is also  the chairman of Bykea, one of Pakistan’s largest online mobility and commerce companies. 

Today we will be talking about a few topics: 

What is the influence of the National Digital Transformation Programme which I alluded to in my introduction and how is it driving your institution’s digital strategies and leadership priorities?

One initiative that the State Bank of Vietnam mentioned, although it’s very preliminary now, is the creation of a central bank digital currency. Digital money and CBDCs, as they are now called—How will banks leverage them to optimise the customer journey, delivering a seamless experience and a more customer-centric ecosystem?

Digital-only banks – How are they accelerating innovations and improving customer experience? How do you compete or collaborate? 

And finally, how are next-gen technologies creating opportunities for collaboration using APIs and open banking?

We will start with our first topic: What is the influence of the National Digital Transformation Programme” and how is it driving your institution’s digital strategy and leadership priorities? I’d like to start with Kalidas. How important is it to have an overarching national digital programme to drive the industry and institution’s transformation agenda? 

Kalidas Ghose (KG): Good afternoon everyone, it’s a pleasure and privilege to be here. An overarching national program for digital transformation is obviously very important and is crucial for driving the digital transformation journey of the country as a whole and specific industries as well.   if you look at the Vietnam program and the vision of the government which is outlined as part of the program, then you can see there is obviously high-level vision in terms of digitalising the databases which banks and financial institutions can benefit a great deal from. 

But there are also specific targets about online transactions, percentage of online approvals for lending, and for banking transactions. All of these provide guidelines to us but it also  helps us to move ahead in our journey of digital transformation because the country is moving as a whole and various agencies and stakeholders are aligned with the same vision. We find the whole digitalisation of the identity cards in Vietnam is now adding greatly to our customer processes and making them more streamlined, making the whole eKYC process more secure and more robust, and helping us serve our customers better. 

If we are to look at similar examples around, digitalising the other databases like land reports is going to make the home mortage process much less cumber me that it is now. With respect to digital payments, I think there is tremendous stride that the market in Vietnam is making both from the institutional as well as from the usual point of view in digitizing the payments and transactions. Overall, the excitement, the progress that we see in digitizing the society as a whole in Vietnam and specific industries is a direct result of a very clear vision outlined in this programme that you mentioned.

FBP: Very clear vision forward and, along the way, very clear milestones to achieve by certain dates. That kind of galvanized the industry to move forward. As the government set out the goal, the world is also hit by COVID.  And COVID kind of accelerated the whole program as well. For individual institutions, as a matter of survival, to be able to interact with your customers, you need to go digital. 

Mr. Chien and Jonas, tell us in terms of digitalising amid this great uncertainty. First we have COVID, now we have greater geopolitical uncertainty from Europe. How do you factor all of these in your own digital transformation journey? Starting with you, Mr. Chien. 

Dinh Van Chien (DVC): Good afternoon ladies and gentlemen, it's my pleasure to be part of this panel discussion. We also look forward to a lot of discussion from the other panelists and the guests as well. For us, even if COVID is happening recently, it's also  in line with what we have in terms of the national digital transformation and  me of the influences Mr. Kalidas mentioned very clearly. Those will have a lot of impact and influence in the digitalization of the financial services, especially for the legal framework. I think with that, it will be a foundation for us to grow faster and accelerate the proper process. Specifically, with COVID happening, the most benefit that we can observe is the change in consumer behaviour. 

In the last time when we do a lot of digital validation, whether these are payment products or services, it takes a lot of effort, and al  investment, to educate, to get customers to adopt it, and then feel comfortable and trust to do business. But nowadays, after COVID, it changed a lot. 

And we can see a lot of things out here now in terms of the business. We have over 92% of the transactions digital, online. so we see a massive change like that. And, also the kind of adoption in terms of behaviour. Like in the past,  if you ask people to scan the QR code, it's not easy. But now we come to every point when you have to scan the QR. It becomes a routine, isn't it? People do it easily.

And then what people want to do remotely, a lot of that is in terms of e-commerce, that also has a lot influence on the whole digitalization and transformation that we're doing right now in the bank, especially for TPbank. 

And I think for us, it's good that we started this transformation or digitalization a few years back. The good thing is that we laid out all the foundation, the infrastructure, the readiness of the products and services, the platform, the way we serve customers. 

We see a lot of a lot of benefit from there and it’s really a motivation to accelerate the whole process. 

FBP: These uncertain events have actually moved consumers along  in terms of changing their behaviour, accelerated it.  

Jonas, we want to hear from you in terms of how you feel about the overarching programme plus this coincidental uncertain events that are happening. And we have a question also  from the audience. And since you are the only digital virtual only bank, what's the cost advantage of a digital only bank versus the traditional banks?  me quantification will help. And how do you address collection issues in digital banks?

Jonas Eichhorst (JE): First of all, thanks everybody for your time this afternoon, having us. Thanks also  to the Asian Banker for putting together this great conference and event. I guess our story is a little bit different because we're still essentially a startup. We're still in the early days. And it's funny, we're talking a lot about digital transformation in this event but for us, it's not transformation, it’s creation.

It’s digital creation, of creating a new banking experience. And essentially, our advantage, you alluded slightly towards that, of course, our cost structure is very different. Of course, our cultural DNA is very different. 

Our tech stack is very different. It's not a question of how do you go from a legacy set up to more modern setup? It is how do you go from nothing to  something. I guess our journey is a little bit different from  me of the other players. But of course, in the end game for a customer, we very strongly believe that the customer will decide what is most relevant for them. And the customer doesn't even necessarily care about whether you're a digital bank, or a challenger bank, or a neobank, or digitised bank, or whatever it is. The customer want a safe place to store their money, they want to move their money easily.

They want to grow their money, they want to borrow money, they want to protect their money. That's the language that the customer speaks. And that's what we all of us need to figure out how do we, in different environments and circumstances provide the best possible services for those needs.

And this may come as a surprise to  me people, but even if you just look at our logo, and it says explicitly digital bank, but we see ourselves very much as a digital first bank, but we are not dogmatic about that as saying we have to be digital only. Because at the end of the day, banking is al  about trust.

And trust comes from seeing  something not just online, but al  offline. You mentioned in your introduction that I'm al  chairman of Bykea, which for those of you who are more  Southeast Asia focused is like the Grab or Gojek equivalent in Pakistan.

If you go out in the streets, in any city in  Southeast Asia, and you see the green helmets of Grab or GoJek constantly in front of you that builds trust. That means that the brand becomes far more tangible, that's just human nature. The same is true in banking. 

If we talk about Timo or whatever brand it is, if it's a pure virtual brand, it becomes much more difficult to build that trust. For us, the real question is, how do you serve customers better? How do you not get stuck in dogma? And how do you use that advantage of both technology and start-up culture and the DNA mindset? Somebody was mentioning design thinking early on in order to redesign and recreate those experiences?

FBP: What’s the biggest kind of mindset difference between a start-up bank like yourself and more traditional incumbent banks? 

Earlier we heard about this unique partnership, working with over 200 technology partners, over 17 retail partners. How does that approach or how that openness to collaboration differentiate you? You're very good example. You have different sponsor bank right at one point, and now you're with a different bank. 

JE: You hit the nail straight on the head. I think for a lot of digital companies, the question is how do you co-create value? And how do you figure out how to play to each other's strengths. I'm not Vietnamese by origin. I was born in Germany. There is in Europe a saying that you're more likely to change your life and your bank. 

That statistically was true in the old world. But nowadays, everybody has multiple bank accounts. In a country like Vietnam, you've got roughly 100 million people, you've got roughly 107 million bank accounts, but eventually a banking penetration of 30%. That only works obviously, if everybody has multiple bank accounts. Co-creating and figuring out with different partnerships, how to be more relevant is very, very important, very early on.

Nobody wakes up in the morning saying: today I dream of applying for a mortgage or today I want to consume a structured credit product or whatever. What they wake up to is: I really wish I can buy this new phone or I really wish I can go on this holiday. I really wish that when I'm old, I can retire without worrying. And that is only possible through partnerships. 

Now maybe one thing that I would also  point out where the true all classic startup way of moving things, however, also  is not necessarily correct. 

And I think there's a lot for us to learn from the more established part of the industry. Your usual startup mantra is move fast and break things. That's literally the motto on Facebook's wall. Now, if you do that in FinTech or in finance as our CEO like saying, in FinTech, it would be move fast, break things and go to jail. For very good reason because regulations are not there to just stifle innovation.

They're there to protect the consumer, to protect the industry. I think what's very important for us, talking about partnerships is figuring out how you balance those worlds of moving faster and creating value while remaining relevant.

FBP: In the area of safety and security of transactions and money, you cannot play with that. And one area which is very open to collaboration, moving money around is payments. Digital payments. State Bank of Vietnam has announced its intention to create at some point a central bank digital currency. 

How will institutions leverage them? They already exist, digital payments, to optimise customer journey, delivering a more seamless experience and a more customer-centric ecosystem. Kalidas, back to you. How do you think customer behaviour through COVID? Has behaviour and expectation changed in relation to digital payments? And how are you responding to it? This whole area of embedded finance?

KG: I think COVID really forced us to think differently. Because we cater to a different segment of people, we have more than 12 million customers, we receive almost six to seven million monthly payments regularly through our payment channels on an average in a month. 

And we had set up close to 40,000 cash points because when we started 10 years back, cash was king. And we had to obviously make sure that our customers are able to access their account or make a repayment through the channels or through the means that they are familiar with. 

But when COVID hit in our first one or two months, we saw repayments reduced significantly, and that, for a business like consumer finance is obviously catastrophic, because it has P&L (profit and loss) implications not just from a transactional point of view like a bank. As they say necessity is the mother of invention.   we started talking to our customers to figure out that it is not only onboarding because a large part of our effort till then was actually focused on onboarding customers digitally. 

And today, 100% of our customers ultimately come on to a digital platform, even if their journey started from a physical or traditional point of sale. They are ultimately onboarded through a digital process or through a discount to a digital platform. But the repayment part of it was actually not focused that much as it should have and then we were caught by surprise by this crisis. 

And today, our repayments through digital means have increased. In fact, it increased over a brief span of three to four months between the third and the fourth quarter of last year. Increased from 20% to close to 65%- 70% in the span of just three to four months. And what we find interesting is that once these customers migrated to a digital means of making a payment they never transferred back. It's not like when COVID got over, they were going back to their cash means.

For us, it was, as  somebody mentioned, I think earlier,  something that would have happened over maybe two to three years got compressed in a timeframe of two to three months. Customer behaviour can change, the digital adoption in Vietnam is a good indicator of how quickly customers adopt to new technology in a market like this, of course, driven by the young demographics of the market. And for institutions like us, it's a great opportunity, because if you really focus hard, it does look like we can create miracles even in a short span of time. 

And ultimately, because customers are using these digital payments, we are creating data and profile about the customers, which will help us design better products and services for them.  So that we can offer through our digital channels in future. And the future relationship is going to be purely digital because the customer is getting used to the convenience.

And we are getting used to collecting more data and giving them better products and services. It's a symbiotic, beneficial, synergistic cycle that we are now a part of as a result of COVID.

FBP: And then the mode of payments is also different, non-traditional, even if they are digital payments. It is not like your more traditional credit card or a debit transfer, more and more, they are using digital wallets which they don't necessarily need to have a bank account for.

KG: Wallets do have started becoming a significant portion of the payment pie. But bank accounts still do occupy a large space and we see that space becoming bigger and bigger as well. It's not like wallets are taking a share out of the bank accounts, especially for larger payments like loan repayment. But wallets having a more influential sway over retail transactions, especially the small ticket, regular daily purchases, where the wallets have more presence compared to maybe in larger payments, like a loan or banking transaction.

FBP: Mr. Chien. Talking about wallets, where do you see the opportunities and the challenges that they present to a more traditional bank?

DVC: For us at TPBank, we are looking at wallets from the very beginning that it’s not a competitor. Why do we look at it that way? Because we look at the customer, who makes a decision about making a payment. They don’t have to go to the bank; they can do that through a wallet. And if the same customer of the bank uses a wallet and we (wallet) are not working together, being partners, then we are not going to provide the best services to our customer, whether they do it mobile, wallet or our bank. That’s why I look at the opportunity to collaborate with wallets   we can provide better services. I think more and more digital payment and processes for consumer.

FBP: You mentioned a few examples. They themselves are not just a payment mode. They are a platform, a digital platform and they bring together a big customer-centred ecosystem. And one of the things to be successful to play this ecosystem game so to speak. Jonas?

JE: It's an interesting question because the landscape is also evolving very quickly. There's a regulatory constraint for wallets of whether they're allowed to take deposits or not, there are transacting limits, there are ecosystem sizes. But there's al  consumer psychology. And   we see that, for example, similar to what Mr. Chien was mentioning. Wallets are not necessarily competition, they take a different space in the consumer’s head. But if you think about it, whether it is online or offline, usually in your wallet, you want to keep the money that you use for maybe a week or two weeks, but you would not keep your wealth in your wallet, you would not keep your wealth under your mattress. You would keep your wealth in the bank account. 

And   therefore, what we see for example happening a lot is that what used to be an ATM withdrawal now becomes a top up into a wallet. But it's a similar kind of shift from that perspective. But, likewise, just like CDM machines for people to take cash that is surplus in their wallet and park it in their bank account, we see people withdrawing from their wallets and putting into their bank account if they have surplus.   I think the real question is figuring out what is the real use case for the customer and what is the right mode. Is it payment through a wallet? VietQR is something very interesting that was recently rolled out in Vietnam, which makes bank transfers even more accessible. 

I just came back to Vietnam about six weeks ago. During COVID, I was mostly outside of the country. But I was amazed even in taxis. The other day was in a taxi where the driver had a small print out of his TPBank account number. Not even a VietQR code yet, but his bank account number. For VND20,000 to VND30,000 or $1- $2 transaction, very happy to take even bank transfers there.

I think it's a very fluid and exciting landscape where it goes more and more towards what you were mentioning earlier. Partnerships and creating the right value propositions. Right product, right place, right time, it's the basics of business, just about our tool set. 

FBP: And many of these wallet players, are merchant partners. They go out be partners with merchants, they put them together, they put deals together, promotions, and they encourage consumers to spend. And now it's more convenient to just pick up a phone and look at what is interesting and what you can buy off your mobile phone. Now as a digital bank, how are you accelerating in the region? And improving customer experience? And how are you? Are you doing it for Timo itself? Are you bringing the industry along as you break grounds?

JE: It’s a loaded question, a couple minutes to the moderator for forcing me to put the rest of the industry on a spot. A previous speaker was mentioning around how their mission is to be the global benchmark, because I believe the way we like to think about it at Timo is we are aspiring to set the benchmark for modern banking. And we do believe also  that we're still a small player, we're very quickly growing. But of course, where we are the underdog against Goliath, whoever it is. We all know in this group who the big guys are and Timo is the small one. But we do feel, with certain initiatives, like when we started with a fee-free banking six years ago, nobody in Vietnam was offering fee-free banking. And for better or worse, the industry has moved towards fee-free banking.   I guess we do feel a little bit proud that we may have managed to push the industry a little bit in that direction first. But of course, that's just one step in the overall journey. I do think I would come back to what I was mentioning in the beginning that taking this consumer mindset and the startup and tech DNA, if all of us remember 15 years ago, when the first iPhone came out 12 years ago, whenever it was us, nobody believed that this could be an enterprise product.

I remember I was working at Lufthansa, the German airline at that point in time, everybody only accepted blackberries for security rea ns. But when one of the board members insisted on getting the ease and use of an iPhone. His consumer experience, he wanted also  to have for his business needs. And suddenly, the whole industry set up new benchmarks. This is what it should look like. And  now that's become the new norm. And that's how we think about it. Same way, what is the Apple of banking, what creates those delightful experiences, but then pulls the overall experience sector forward? 

And to be clear, I would love to believe that Timo is the only one who can do that. But that's never going to be the story. It is always going to be different players, whoever it is: traditional players innovating with startups introducing new services on products. But the great news as a consumer is the consumer benefits tremendously from that because that's what kind of keeps all of us honest and keeps pushing that benchmark. 

FBP: And for FE Credit you're kind of a startup in the consumer finance space you have a customer base that’s often bigger than  me of the banks. My question is, as kind of a consumer finance company that will get a different segment of the consumers, do you see open banking in the Vietnamese banking industry? Are banks willing to share data   that you can deliver a more complete experience for the customers? How are banks and non-banks, approaching open banking in Vietnam?

KG: Just to recap a little bit of our experience, we started as a traditional finance company. And then along the way, we realised the importance of maintaining ongoing engagement with a customer introduced credit card. We were the first one to introduce among finance companies. But we also happen to be among the largest issuers of credit card, even today including banks. We've evolved a relationship with customers over time. And for last one and half years, actually, we've been building a banking platform, in collaboration with our parent on the parent’s legal vehicle, but aimed at catering to the customer segments that we've been serving all this while. Now, we are actually transforming our business model to a more banking orientation, and offering banking services as a whole and not just lending products to our customer base.

Creating data and customer profile helps design better products and services for customers

And in that process, obviously, our discovery is the need of a new segment, the mid to low-income segment, which is difficult for banks to serve from an economical point of view. And therefore, that's where our focus is in terms of building a model which caters to that segment, and also  enhances our business model, obviously for future growth.   that's what we've been doing and in that process, we do find that as we mentioned, in the beginning, in the digital transformation programme of Vietnam as a nation that there are facilities which are opening up. More and more direct connections to origin of  source of data for building customer profile for taking lending decisions, or even for facilitating transactions are coming up. 

But open banking in the true sense of the term of the customers entire banking relationship beyond credit, credit of course, is available in the form of credit bureau. But beyond credit, transactional history, or other forms of data from a banking relationship being available across the board for offering better services to the customer is obviously a little distance away. 

And that will probably require some degree of regulatory changes for making organisations possible, which can act as intermediaries like it's happening in India, for example, with the data aggregators, unless there is a reliable source or reliable intermediary who can handle that data, that exchange, it is unlikely that financial institutions among themselves would take the risk of sharing data or take the initiative to share data because obviously, everybody would be protective of what they have got. 

We would probably have to wait for a little while. But what we find, even though it may not be very evolved from open banking, as organisations like us, who are more focused on creating a digital poll on the cloud, in fact, we believe we are one of the very few organisations if among the highly rare, who've got their entire technology platform on the cloud now, including all the crucial systems, not just a peripheral or satellite systems, but the entire technology platform is in the cloud, that gives us opportunities to connect with our partners on through API's.

Open banking is one of the greatest advantages of a cloud-based technology platform

And that has really revolutionised our model, because now we are able to connect both on the customer side in embedding our finance our products in their life, where by connecting with e-commerce players, by connecting with utility supply companies, or even retail products and supplies. On the other hand, we are able to access technology and even bespoke business models where we are connecting with those models with the help of API's, and then using our balance sheet to access new customer segments or offer new products that organically we would not have been able to build within our company. If you look at the advantage of a cloud-based technology platform, of which open banking is probably the greatest one, we may not be there yet on open banking, but we are obviously deriving benefits for connecting with technology services, with online business models. And by embedding our products in the customer's life by connecting with providers. 

FBP: And giving greater agility to provide that to consumer with greater flexibility and offering them choice as well.  , which kind of was a very nice segue into our final topic on next generation technology like cloud API's and even blockchain. We talked about Web 3.0. Mr. Chien, customers are increasingly seen as part of an ecosystem. How is that transforming the user experience with the data? We've been in the cloud and tell us about TPBank itself. How are you leveraging all these technology?

DVC: New technology is changing   fast and I see the industry benefit a lot from this. Kalidas just mentioned that something you could not do five to 10 years back you can do now. From Timo as well. For TPBank those like API, micro services, new technologies, and AI are really applied  not just for our operation but also  into building the digital ecosystem. 

In the past, it took maybe two to three months for us to connect or integrate with a partner   that we can co-create the product and services to offer. But nowadays, because in the way we set up, we do a kind of a sandbox, we call it the digital portal.  Every partner can really have an experience on that, experimental. And then after that, just plug in and play. 

The process to build a digital ecosystem is much faster. And we can do it with more partners. There are a lot of things we can do for internal digital and digital ecosystem, but dependent on the data. And like you just asking about open banking, it is  mething still distant but we are expecting that coming very fast as what happened over the last two years with the COVID. And the other question here, when we have a digital ecosystem is open data. Because right now, if we're talking about open banking, the bank shares transaction history to other partners, same thing when we work with other partners in the digital ecosystem right now. They also very reluctant in terms of sharing the data, because the legal framework for this is not available yet. We are also  expecting that this national digital transformation will allow us to have much faster the legal framework for us to leverage whatever we can have with new technology. And then with all of that, the customer, whether it's individual, or micro, SME will be the one who will benefit most. Because those will be the best services that we can offer to the customer.

FBP: I like what Kalidas mentioned earlier in the cost of running the consumer finance business in a traditional way, targeting the lower end of the consumer segments that have the opportunity to transform the business model and to move up the segment ladder,   to speak. And on that note, I also  want to hear from Mr. Chien and Jonas, what other opportunity is your organisation looking at? What kind of business model changes are you exploring now? Obviously, for Jonas you’re a startup, right? There's   much space in terms of forming that business model,   maybe to hear from you on how you're pivoting, because of all the facts that we are going through.

JE: It's an interesting question. And like you say, there's so much opportunity for somebody like Timo, but it's almost we need to be careful that we don't get stuck by not doing anything with it   much. But I think one of our big advantages, and this goes back to even the question that I think through the audience, you mentioned a very beginning, what is your cost base to serve a customer and for us at Timo it’s very low. It's much, much lower because we don't have big branch networks.  Obviously, we don't have any legacy systems, our entire cost structure is much cheaper.  For us, what we primarily are focusing on at this point is high quality growth. Of course, somebody like FECredit, we heard more than 12 million customers. Timo still is a couple of years away from that. But as we keep growing, I think the other thing that is exciting and fantastic about Vietnam, is we recently spoke with investors, and we're showing just the 20 year kind of Vietnam trajectory. And it's  simple mathematics. But if you grow 7%, every year, you're doubling every 10 years. And that's what happened from 2000 to 2010. That's what happened in 2010 to 2020. And that's what's going to happen the next 10 years again. To a certain extent, the great thing for us, everybody on this call, is actually in the next 10 years, there's another economy of the entire size of the country today being generated. And the real question is who's going to be providing banking services for that because without taking a single dollar or customer from any other competitors, there's a number up for grabs. And   that's, that's really what excites us. 

FBP: The pie is getting bigger, right? It's always getting bigger. A bigger slice of the bigger pie. Exactly. And Mr. Chien.

DVC: To be honest, at this time, we don't know yet, but we always believe that in the market, there are a lot of things that can happen and can be explored to find a new business model, new things to do. Like the coming of digital only banks like Timo and others in the market right now. New players provide new ways of thinking and looking at things and doing banking. And we can learn from them. 

And it’s not just learning. Maybe in the near future, Kalidas, Jonas, and I will sit down and do something combined. And that's something that we don’t have at this moment, but it with the right intention, and the willingness to provide the best of  services and experience to our consumer, definitely there are lots of things we can look into.

FBP: And on that note, we want to end this segment, looking at the future of Vietnam. The market has great potential, right? We mentioned you have a vision of 2045 being a high income economy, you have 2030, where 30% of your GDP will be from a digital economy. The government has set the vision and what is interesting is every player has your back against that. And you're pushing towards meeting that goal. And that is very interesting. And now collaboration, I guess, is the key. What you can develop together and create together is much more than what you can individually achieve. And I think that is very exciting going forward. And I would like to be in that conversation as well. On that note, I want to thank all our three guests for your insightful comments and the examples that you've given us and I hope that we all have benefited from your exchange of insights and your sharing of experiences. Thank you   much. 

Voiceover: Thank you to our speaker and moderator. Now, ladies and gentlemen, our next session is on frictionless customer journey in an emerging market. Please welcome Mr. Namir Kaissi, Senior Research Manager at The Asian Banker.

Namir Kaissi (NK): Good afternoon, ladies and gentlemen. And welcome to this session of Finance Vietnam 2022 on frictionless customer journey in an emerging market. We have assembled a distinguished group of senior executives from business and technology across leading institutions in Vietnam to assess the next step in the digital transformation and customer journey and evolution of traditional and non-traditional banks in the country and how it is redefining the customer experience in the digital age. I am Namir Kaissi, senior research manager at the Asian Banker and I will be your host for the upcoming 30 minutes. I am happy to moderate this panel discussion with our esteemed guests from the Vietnamese leading institutions, and discuss topics on digital engagements from  retail and technology perspectives. 

Vietnamese institutions have been digitising at great speed to survive and thrive in an increasingly complex, competitive environment. The rise of digital only banks and fintech services has pushed traditional players to design a frictionless digital customer journey by utilising technologies such as RPA, AI and machine learning to empower customer engagement and loyalty. While digitally native organisations are using their direct to customer channels to deliver highly- personalised experiences at scale. The incumbents are collaborating with new market entrants to speed up the process towards creating an open banking ecosystem, which will lead to more operational efficiency and profitability through generating data driven customer insights. In this session, we will discuss how Vietnam's traditional players and digital banks are mapping their frictionless customer journey to better position themselves in the coming decade. These are  me of the topics that we will discuss today. Reassessing collaboration with fintechs by using API's and open banking, leveraging AI RPAS, and API's to enable operation resilience and deliver a personalised digital engagement. Integrating a seamless user experience in mapping the customer journey, and finally, strengthening fintech and collaboration to speed up the digital transformation. I would now like to take this opportunity to introduce our guests. Nhu Uyen, executive vice president digital banking and data analytics of Asia Commercial Bank, and Brian Carroll, CEO of TNEX Digital Bank. Let's start with the first topic for today. The most promising solution in digital customer engagement is open API integration. By leveraging pre-existing data routes, financial institutions can capitalise on innovation, while optimising implementation and cost to deliver modern customer experiences.

Hello, Brian, what has been the experience at TNEX Digital in regards to the use of API and open banking to enhance customer experience and maybe share any obstacles or challenges that you faced in the Vietnamese market?

Bryan Carroll  (BC):  Thank you. It's a pleasure to have the opportunity to speak.  I suppose let me do a little bit of a runway into the answer on that. API's are an enabler, we know that. They provide an infrastructure for parties to better digitally integrate. And of course, that leads to fueling opportunities for innovation, and fundamentally towards a more personalised customer experience. Now, the adoption of API's is growing exponentially. TNEX, for example, is internally and externally API. We speak API.   externally, we're similar to a bass platform, internally we interact, coordinate and synchronise with API's. When I sat down to design this bank, with my team, it was important to look at the evolution of API's.   you have to see where we could go. Like, if we look at the first stage, the first stage was data interchange, as demonstrated by open banking. 

But simply put, it's the way the bank share information on their customers transactions, typically with third parties, typically fintechs  so that third parties can better develop newer or more customer-centric experiences. We saw stage two, these things are moving so quickly, was with more complete data interchange. And we see the emergence of open finance, where financial institutions share data such as mortgages, savings, pensions, insurance, consumer credit.  Basically, you're getting a more entire picture or footprint of a customer. Now we come to where we are. We're now in connected experience world connected API experience, or beyond banking. 

It's a world where financial experiences are embedded into our customers lives. We see it into financial experiences such as BNPL, non- financial experiences, such as BNPL which typically was in e-commerce, but now we've embedded BNPL, or consumer credit product into that or more locally, we look at Moca and Grab, a rideshare that provides financial services. It's a world where use cases like buy my car, insure my car and run my car are now easily achievable. In TNEX, we believe in embedded finance, it's how we live, how we breathe, we believe it's the most important and effective way to serve our customers using embedded API's. 

Our customers are Gen Z, typically unbanked, and even though they're digital natives, spending on average, six hours and 40 minutes a day on their digital media, they actually place little value in traditionally delivered banking services. In TNEX, when we talk about API's, we actually talked about the second part of the sentence banking. Nobody has said I want to loan full stop, or I want to make a payment full stop. The value is actually found in the second part of the sentence. I need a loan or I need a loan to educate my family and make payment for food. 

 TNEX stays a digitally native bank but most  importantly, we digitally twinned with the everyday lives of our customers with the second part of the sentence. We've embedded using API's, our financial services, which are digital payments, cards, deposit insurance, and in Q3, micro loans, micro investments, to actually support our six lifestyle platforms, to embed it.  We have six platforms, we have seven including banking, we track our cost, we have our customer, their physical, emotional wellness, how they communicate, their financial education, their financial wellness, their leisure and gaming, and a merchant marketplace. We're in this embedded banking world, and it's a huge opportunity in Vietnam, particularly with the strength of digital commerce. But the future I strongly believe, the next phase where we're going to be in two years is the world of disintermediation.  API's in light of the emergence of network platforms, digital twinning, and the eventual regulation of the internet of value or cryptocurrency, customers will actually start to assemble and connect their own experiences that best suits them. That's all from me on the talk.

NK: Thank you very much, Brian, I appreciate it. Thank you for the insights. Onto the next question. As a traditional player in the Vietnamese market, your goal is to add value to the customer by offering a personalised and frictionless customer experience given the saturated banking environment in Vietnam, there is tremendous challenges on profitability and cost control. Legacy systems require inside transformation, therefore, banks are forced to adopt a holistic approach while taking into consideration the replacement and migration of the outdated systems. Nhu Uyen, what is your strategy at ACB towards implementing cutting edge systems to build greater automation within the organisation to be able to compete with the new market entrants?

Nguyen Ngoc Nhu Uyen  (NNNU): Thank you for your question.  So many things that are spot on about where we are. We have been in business for 29 years. Sometimes in this transformation and in trying to devise our digital strategy, I envy the likes of TNEX and Brian here who can start and do things right for the first time. 

We have been in business for 29 years and   when Brian started speaking about API's and living API's from the start, we only got to start building API's in 25 to 25 years after we have built all of our systems. And  , it is a challenge. What we try to achieve may be very similar with other banks but we will go through a very different journey and we will have a very different strategy.  We want to be an omni channel, we want to bring a personalization experience to our customers. 

We want to enable open banking, we want to bring innovation and agility into the way we work and the way we roll out new products to customers. Those are the things that we want to bring, as a customer experience. How are we going to do that? The strategy is we will have to transform from inside out, because of all these things that already exist. And that is a bit of a journey, trying to transform from inside out, changing the mindset, the way people work, the way you look at how you connect with the partners, and how you interact with your customers.

And so we have to do that, we have to transform from outside from inside out. But I think to speed up the process, we aslo  have to bring changes from outside in. And what that means is that we have to bring in partners, advisors, vendors to help us learn how to be agile, how to have the mindset and the way of working that will help us bring all these new digital experiences to the customers. 

It means that we have to be very open to new concepts, and even new business models. Because you talk about how to bring cutting edge system. But this digital experience is not only about bringing in new technology, it is also  about new business models, new solutions to customers. At the end of the day, even if your technology is not quite there, but if you have the right online to offline, seamless experience, that's okay. It doesn't have to be digital only or end-to-end digital for it to really shine through as a successful digital strategy. 

We are on that journey. And   in this strategy where it's both inside out transformation, as well as outside in changes, I think a very important part is to be open to partners, to the knowledge and solutions out there that we can bring together to really serve our customers.

NK: Thank you. And I actually totally agree with you. As you said, you have to start from the inside and from the outside. You start as a bank from the inside and from the outside. You work on collaborations and partnerships. And I'm glad that you mentioned this because we are going to touch base on partnerships later during our session.  Thank you, I appreciate it. Our next question actually is for the both of you.  I'm going to ask the both of you.

And I'm going to start with Nhu Uyen. Because ladies first of course.  I'll ask the question and the floor will be yours. Institutions are utilising emerging technologies, such as AI, API's and Robotic Process Automation (RPA). And we would like to hear from you about the implications of such technologies on your cloud strategy.

How are you enabling these technologies to both provide service enhancement to customers, while al  preventing service disruption and supporting business growth? Nhu Uyen?

Customer journey is enabled through the cloud, not built by the cloud

NNNU: Thank you for the question. There are   many use cases that we're exploring in terms of how to take advantage of technology like AI, RPA, open APIs in order to deliver a frictionless customer journey. And I think when you touch on cloud strategy, it's an interesting point that that you mentioned both of these topics because of what is available from the cloud that can help us enable these technologies much faster. 

And for us, I think we have become very customer-centric. And in applying all of these new technologies, we become very focused on how we look at it from customer journey mapping. Where can we take advantage of this technology in our customer journey. For example, we use RPA to overcome some of the constraints in operations at certain parts of customer service or we use AI to automate and enhance the customer service and the customer touch point. 

And I think it's a really amazing thing that we can leverage what is already available on the cloud and quickly deploy it for our customer. when we mentioned API's, I remember, Brian also mentioned how we use API's in order to help bring in and plug in partners quickly to help us extend our customer journey   that our touch point doesn't start and stop with the financial service.

 The banking service that we have, but start and stop with the customer journey. Like Brian's point that it's not   much about a loan, it's what people do with that loan. It's not about mortgage, it's about the home that your customers want to buy.  With open API's, we can connect to proptech, or whatever to really have an earlier touch point with customers, even before they think about the financing of their home. 

When they first think about choosing a home, we can already start to have that touch point through our connection, API's with the proptech. And there's  many more use cases. But I guess I also  leave the floor to Brian to also  share  me of the things that you've done.

BC: Firstly, I better speed up because the thinking that's coming out of ACB, I think they're gonna catch us pretty quickly. That's really, really good thinking. Thank you for that. I suppose there's  me type of strategy as I did turn down one of the early jobs at Amazon because I didn't believe their business models   I look at the share price every day and do cry. But what can you do?

I suppose I’ll answer the question. And it's quite interesting, because we had answered it from the perspective of moving from what were digital assets to almost technical debt in a digital world. I didn't have that technical debt, I had the luxury, it's not easy, but I had the luxury of starting from scratch. We don't have a cloud strategy, we’re AWS first we're cloud only infrastructure.

We don't even think about strategy. It's what we do. It's where we do it. And we believe without cloud, or banks, traditional banks, I've spent 30 years in banking, if they're not looking at a cloud strategy, which most banks in Vietnam are, they're not on that journey. It's not going to be a successful outcome in t plus, let's say t plus three years, where 33% of the working age population of Vietnam will be Gen Z. 

And they don't like branches. They like phones. It'll be an interesting time. On cloud, if I look at my cloud strategy from up here and give you a feel, we only use open source. We only use digitally native local platforms. We designs modularly, micro service patterns or other similar patterns.

We use real-time event for everything. And we integrate with the best rather than try to build it ourselves.   in our insurance product, we integrate in our health products. And you'll see  me other exciting integrations happening over the next two to three months. But the key point is, we enable everything with real-time data science. And if we couple that with API's and our culture, that's kind of our recipe for success.

 In TNEX, from eKYC, security functions, behavioural fraud monitoring, to our credit risk, even to our carbon footprint reduction calculations, to our marketing operation we use data. For us culture, rather than the tools. And if you look at the tools, without the right culture it's not going to work. The way I describe it to our team, culture is our heart.

Data science is the brain, API is the nervous system. And digitally native tools deployed on the cloud are the limbs of any digital organisation that wants to be successful in either managing risk, or in delighting their customers. 

Don't start with the technology. And I think there's a lot of that at the moment. Start with the customer experience from the inside out and try and build that culture, and definitely driven by data and leverage APs.   that's my answer.

NK: Thank you, Brian. Thank you, I appreciate it. The next question is for Brian as well.  Every bank wants to be customer centric, but it has proven to be challenging. After mapping the entire end-to-end process, and obtaining a holistic view of your various customer journeys, banks should try to identify if there are any areas that could be digitised.  Brian, as a digital only bank, how do you identify or prioritise the elements of mapping the frictionless customer journey in such a competitive market?

BC: The key is you've got to fail a lot. And fail is a difficult word. I spent   many years here in Vietnamese culture, and in a lot of cultures, but you got to get lost.

Because you never going to get it right. But the digital technologies that you have, you can go what I call Fail Fast Forward. Whereas in traditional, if you've got a problem, because we look at most traditional banks, reconciliation is very hard, because there's a monolith. And as we Lego or assemble banks, we can make changes and fail very quickly. Failing is a huge part of it.

For us, we actually co-design everything with our customers. I co-design everything with customer. Because one hour with your customers is 1000 hours with third -party consultants.   you got to build that intimacy with your customer. Not everything has to be digital. You've got to build that human connection we're building for humans. 

We co- design everything. And that takes a lot of effort. And in fact, the first hire I made in here was a psychologist, not an IT or risk person because we wanted to understand how we can be emotionally linked to our customers. 

We also  created a group and they're like gig economy workers for us.  Young people, obviously. The next one is how do we make sure we Fail Fast Forward, as I said before. This is really good, you're not gonna learn otherwise. And   what we use is data science. We have, arguably one of the most advanced data science installations.

In  Southeast Asia, it's everywhere, everything is fueled by data, everybody's got a dashboard, it's real time. Everything is moving around data is moving around using Kafka, of course Kinesis.   we drive everything by design that includes customer engagement.

We've deployed tools which allows us to actually see every action even on  social media in real-time, what our customers are doing, and parse that. But every night, we're using open  source tooling from Apache, where we relearn the customer. Okay, and then we take it from there, I'd like to move to real time machine learning, but I haven't figured it out yet.

It's under to do list. And the last thing we use  social media feedback loops. And al , not just from the code design and test, that same group that we co designed and test we do face-to-face with again, because we know we haven't got it right, because you've never got it right for everybody trying to move towards the centre, that your delighting as many customers as you can through per nalization to being able to take real time action marketing, I suppose the last one marketing and sales have disappeared and digital then become one.

Okay, we remember the good old days where you did sales, and then marketing looked after retention that's all gone.

It's all data, data, data, but not everything is solved by data, you need to have a good relationship with your customers, you need to take the time, you need to move away from third party opinion out weighing what your customers are saying. Because that was quite traditional in banking. The only person right for me is the customer. 

NK: Thank you, Brian. Thank you very much. The last question is for Nhu Uyen. Unfortunately, our session is almost over.  I'm gonna ask you this question. And then we're going to wrap up. Specialised fintech players have unbundled services. However, classic economic forces remain relevant.

Big tech firms and other new players are deepening their inroads into core financial products. How do you see the collaboration between banks, fintechs and tech firms will add value to the digital transformation of the financial institutions rather than being competitors only? And how do you think partnerships at the front end and back end with the fact that digital transformation in the industry? How would our partnerships and collaborations with fintechs and tech firms benefit them as well?

NNNU: Since your questions have so many parts, what I would like to emphasise first is that we definitely see the fintech and techbanks out there as partners rather than just competitors. 

And I guess we have seen a lot of them seeing us the same way, that they not only want to disrupt us, but they also  want to partner with us. 

Because there's so much synergy. I think that they have helped us. Even when we have not partnered, they have helped us in expanding the pie, right? Without all the fintech we wouldn't see cashless payment growth   much.   even without a partnership, all these wallet providers, all these fintech have already helped us so we definitely see them as potential partners rather than competitors and from the way that we have seen them coming with very open agenda, to speak to us, I think that they are probably seeing us the same way. 

That there's  many things that we can do together to  solve  many problems. When we talk about finech, it's from a lot of angles because you've talked about front end and back end. It could be like a vendor, who helped us bring in new technology, new capabilities that we never had before, it's the outside in transformation that we talk about, it could be at the front end, the partner who helps us bring new solutions to our customers that we didn't have before.

It could be us going on to that platform, to enable financial services on their platform. Or it could be us bringing their third party services onto our platform. The way, we bring a digital only insurance product on to mobile banking app, or the way that mobile banking app now can help you choose your movie tickets, pick the seats, and then pay all in that mobile banking app. It's a non-financial service on your own app.  I think there are  many angles that that that we can work together with fintech.

And I think another part of your question was, what do we bring to them? What's in it for them in coming to a bank? I think there are a lot, we already see that. One of the things that can bring fintech to us is they want to overcome the legal barrier, because banking is   regulated, that they want to partner with us and have a licence to provide all these services. And al , we have been in the business for  so long, we have a customer base, we have the data. We have 29 years of data from customers. 

Together we can better utilise it. And al  another angle is that, I think that we have already seen from a customer's point of view, you will see that even though say, let's take an example: e-wallet is a typical fintech, they have acquired   many users, and engage with the users   much, but you al  see that the type of transactions are small value transactions, and the balance that people keep in the wallet, is still small. 

There's still this trust and we still have that strength of having that trustworthiness, that prudence, that years and years of risk management, credibility that help with partnership, bringing  something to the customers that is very well-rounded. It's not just very innovative  solution, but it's also  something that is  lid from a very trustworthy service provider.  I think for the potential partners, the fintech in the audience, we're very open.

Banks need to look at business conditions, market development and customer needs

NK: Thank you very much. Digital Transformation is extremely challenging to banks and Vietnam. Building a digital ecosystem is also a challenge. Banks are not only concerned about digital transformation, but they also need to look at business conditions, market development, and customer needs. Legacy systems challenged the implementation of digital solutions. It is imperative to participate in the ecosystem of partners to get the best value for both the bank and the public. Digital banking will be the future of Vietnam's banking system. Therefore, banks need a strategic and long-term action plan for digitalization. Banks with a strong digital ecosystem can gain a competitive advantage. 

I would like to thank Nhu Uyen and Brian for sharing your thoughts for today's session. And we hope that our audience has benefited from your insights and the sharing of your experiences. Thank you very much, Brian, thank you very much, Nhu Uyen. 

VO: Thank you to our speakers and moderator. Ladies and gentlemen, please welcome Mr. Swapnil Deshmukh,  Regional Lead,  Infinity Digital Engagement at Temenos for his presentation on First-class User Experience: Minimal Change, Maximum Growth.

Swapnil Deshmukh (SD): Hi everyone a very good afternoon and xin chao. My name is Swapnil. And a big thanks to The Asian Banker for inviting Temenos to speak at today's event. Before I start with my presentation, just a quick introduction. I'm the Regional Lead for Infinity Digital Engagement at Temenos. And I've been in digital banking for over 15 years now, including my role as head of digital banking for Maybank in Cambodia. Having worked as a banker, as well as on the technology partner side, I believe I have deep appreciation for today's topic, which is around delivering world class user experience. I've lived in Vietnam as well, for three years. It's a great country, fantastic people. And the pace of digital transformation has been simply staggering.

I'm going to talk to you today about three things. And I'm going to cover about delivering first-class digital experiences. How do you deal with digital paper cuts? And how do you optimise customer journey for digital customer acquisition? And the rea n we're going to focus especially on customer onboarding and customer acquisition is because it's extremely hard.

We know that that very well. Because we've delivered thousands of digital applications for banks around the world, it's probably the most important journey of a customer's relationship with the bank, you can't afford to get it wrong. But before we go there, let's talk about how do you introduce innovation in your bank's technology stack. 

And I like what Brian said earlier in the previous session, don't start with technology, start with customer experience. And then you work outside in.   how do you go about managing introducing innovation in the bank? Now you're all familiar with Gartner. And Gartner thinks about this all the time. Even small projects, you deliver them with the same speed and process as a large project. Do you deliver all the innovation from IT? What is the best time to optimise customer journey, and we like to believe the best time to optimise is all the time.   they introduced a framework called pace layers. And pace layers has been around for a while now. In this framework, you have systems of record, systems of differentiation, and you have system of innovation. System of records are your packaged  ftware, where you store all the critical customer master data. 

These typically would have a long-term life cycle about 10 years or so in our experience. Then you have systems of differentiation, where you support unique processes for customer requirements. You might need a bit of configuration there because of changing customer requirements. These have a medium life cycle about a year to five years. And then you have systems of innovation, which basically supports new opportunities, ad hoc initiatives, which could have a life cycle anything from a month to a year and at Temenos in fact, our technology is layered around a similar framework, which has helped banks build trust with customers and regulators. Then we have the front office  lutions, which are platform  lutions. Think about digital banking, internet, mobile, analytics,   on. 

And then we have systems of innovation such as the Temenos Journey Manager, which will help banks rapidly innovate. And that's what we're going to focus on today. With the help of real examples, I'm going to share with you how to use systems of innovation to optimise digital customer acquisition. Now, this is a standard marketing funnel, I'm sure you're familiar with that.

Wherein a customer recognises they have a problem, they look at how that problem can be  lved using your product or services, applies for it, adopts it and becomes an advocate for it. The thing that sets it different in digital sales, however, is that it entirely relies on customer motivation. And that's why it is   difficult, because in digital sales, customer expects to apply and starts adopting your product. Think about it, like customer trying to climb the mountain is similar to the customer onboarding journey that you have. You want to make it as simple as easy as possible for the customer to complete the journey.

It’s a very well-known fact, for every hundred customers who will start the journey with you, only 15 of them will complete the journey, 85% across the industry 85% applications, customers will abandon their application after entering  me details. And you don't want that because that cost opportunity cost is huge.   how can we make it easier for customers to complete the journey? And how can we quantify the benefits of optimising the user journey? I'll give you a real world example here: Bendigo and Adelaide Bank, it's the fifth largest bank in Australia, they had an existing digital personal loan application, which they replaced with Temenos Journey Manager.

Then bear in mind, they did not change the product, they did not change the marketing. We worked with them to optimise the customer journeys. This was about 12 weeks work. And after those 12 weeks of work, the bank saw an increase of 78% through the same digital channel for the same product.   think about it this way: three months programme of work.

And an upshot of 78%. I spoke earlier 85% of people give up, you don't have to accept that you can change it by using systems of innovation such as Temenos Journey Manager.  Let's also  talk about dealing with digital paper cuts. I know when you look at this picture, it's confronting. But that's exactly how your customers feel as well. That's how I would feel as well.

A digital paper cut in customer onboarding is  something that hasn't gone right, that makes it difficult for the customer.  Let's look at an example of how you manage your digital paper cut. And again, as promised, I'm giving you a real example of a customer.  Tier one US Bank, they had a credit card application on their website and in the app. They shared with us that the value of customer to the bank is $450 on an annual basis.

However, they had a symptom, they had an issue: abandonment.  Customers were abandoning the application at a certain point, they won't show why. And they reached out to our team. That's where we used one of our tools called transact insights to look at this. Now what you see on the right hand side here is an actual screen shot of our product. Not only can  how many customers started the journey and how many abandoned that's a regular stuff, however, you can actually dive in and a field level where you can see how many customers spent, how much time on each field, how many keystrokes they entered, at what point they started, what point they abandon, right? 

 Our team spent five minutes on this abandonment issue and realised that on this field called type which you see on the mobile phone, and this is again from actual screen shot of the bank where on this field called type 11,349 customers were abandoning their application. I mentioned to you earlier, the value of the customer to the bank is $450.  You take that that's a five-million digital paper cut for the bank.  We look deeper. Why are people abandoning at this particular field? At this point, the customers have entered their name, date of birth, chosen the product, enter the phone number, and after data they are abandoning.

Well, if you look closer, there's a text below which says if numbers provided or mobile number, the bank consent, the customer consents to allowing the bank and its affiliates to contact to auto dialed messages. Now, this text, which obviously is a lot of legal jargon, customers found it confronting, they couldn't understand it. And as a result of it, they started abandoning their application at this point. We highlighted this issue to the bank that this is where the issue is, the bank had, obviously discussion with their legal team with compliance, they changed this text, they optimized the text, and they made sure that they put it in a manner that customer could understand this consent option when they entered a mobile number. 

As a result of doing this, the bank has not only paid for the software, hardware, the support infrastructure for five years by optimising the text and optimising the customer journey, in this particular case, and that's the power of systems of innovation. And that's the power of optimising customer journey.

There's few other things that you could do in your customer onboarding journey. The thing with analytics is, it may not always tell you where the problem is, but it will tell you exactly where to look.   make sure that you have true omni channel responsive web, native app ready solutions, you are API ready, cut through the architecture cut through the technology, keeping the customer in mind, give the customer the choice to save, resume that application as they would need and definitely focus on abandonment management because there is an opportunity to optimise your customer journey right there. And we bring this back to where we started at the presentation. Temenos invests and continues to invest to help customers— which is banks in our case— deliver innovation in a safe and fast manner at the same time.   if you think there's a need for digital enabling digital optimising digital applications, digitising your core, digitising your bank. Come talk to us. We'll be happy to have a chat with you. You can reach out to me anytime. Thank you so much.

VO: Thank you Mr. Swapnil for the informative presentation. Ladies and gentlemen, to lead us to the next exciting session, on the future of cloud banking in a hyper-connected world, allow me to introduce Mobasher Zein Kasmi, head of research at The Asian Banker.

MZK: Great, good afternoon attendees and welcome to our session. I'm Mobasher, head of research at Tab Insights. And I'll be your host for the next half hour or so. We have with us a very distinguished senior executive in digital banking from one of the leading financial institutions in Vietnam. He'll be sharing with us his perspective on key issues impacting the ongoing transformation of banking, powered by the cloud as we assess the different approaches adopted by various market players in navigating really this fast changing financial services landscape. And this is really built by deploying new business models enabled by cloud technology.  This session will be focusing, on key developments in transforming legacy onto the cloud. We'll be looking at a multi cloud versus a hybrid cloud approach, assessing which one is really the most effective in terms of cloud infrastructure connectivity. We'll also  be looking at developing a digital journey through cloud first core infrastructure, as well as delivering a unique experience by utilising data and mitigating third party risks. 

I'd like to thank everybody for joining us today. And I look forward to an insightful and interactive session. Naturally, the pandemic has accelerated the need for migrating into the cloud. As this certainly brings scalability. With that said, I would like to introduce our guest, Colin Dinn, who's the chief digital officer at Vietcombank, who would have certainly a lot to say on what's been happening in the past couple of years in terms of the impact that the pandemic has had, and really how the cloud brings in scalability, and how this has really become an opportunity for financial institutions to transform. It al  brings into focus the role of the cloud, as we've seen traditional players in Vietnam and beyond, who are recognising the importance of utilising innovation that is now really being deployed by their nimble fintech counterparts. 

Incumbent banks naturally understand the value of building and nurturing a strategic partnerships that are born and reside in the cloud. And they welcome the arrival of these innovative tools that allow them to work more efficiently alongside their digital pacesetters.   with that said, and to kick things off, I would like to, perhaps invite Colin and to get his feedback on in terms of the steps that Vietcombank is taking in utilising cloud based technology.

Perhaps he can share with us  me insights as well in terms of how the role of the cloud essentially in terms of the bank's overall digital transformation plans.

Colin Dinn (CD): Good afternoon Mobasher and thanks for the invite. Yes, cloud. Great capability. But before we start on cloud, I just like to clarify this question of digital, because I think it's a dramatically misused. Statement. Digital is not a technology, digital is a combination of multiple capabilities that have come together at the right time. We've got mobile, we've got micro services, we've got API's, we've got artificial intelligence, we've got machine learning, we've got Internet of Things. And a big part of digital is cloud. A big component of digital is cloud. And just as important as the cloud native capabilities, auto scaling, auto provisioning, the digital journeys cannot happen without these kinds of capabilities.

What I'm looking at right now is not just cloud in itself, but cloud as part of these technology enablers to actually move to digital. We also  have the multipliers. It's interesting to see. And I think that one of the things I say, think about in Vietnam today is we've got the multipliers in place. We've got the connectivity, we've got the mobility, we're building the data intelligence in our systems. And with cloud, we've got the scaling on demand.

Now you start to see that this digital explosions, it's being fed by this fusion of technology, that it's actually been able to drive us faster, it is not something that can be done by any one component.   what do I think about when I look at cloud? The first consideration I look at when I'm thinking digital is very pragmatic. I have scale to deal with. I'm a banker, and I have peak months, I have peak days of the year. And if I actually configured all of the assets that I needed to be able to run all that I would be able, I will be having somewhere in the region of 95% of my estates being idle on the quiet day, even more in some cases.

Basically, that's one of the things I can't really see that going in a digital journey, you can afford to acquire all of these things, the time it would take, and all of those aspects, not only that the data centre space, all of this equipment takes power. It takes a handling capability. All of these things have to be configured as well. And that's a huge overhead for an organisation.

Cloud and cloud enablement is a big component of the digital journey the way we look at it. The second is the whole thing about digital is we've got to move fast. Now, I can't turn around to a business innovation sand say, fantastic idea. Come back in three to six months when I've been here to provision everything I need to put in place, you can't do that, you've got to be well ahead, you got to have this ability to, basically, make a phone call and provision the capability, it can't say, come back in three to six months, because three to six months, the opportunity has died, and it's gone away, or someone else has taken it. 

The other thing is about  software, or  solutions, rather, as a service, we've all know the great names, I'm not gonna mention them all. But they're all there. I'm not here to do their advertising. But it's really important. I don't want to build commodity, I'm not interested in commodity, I even go to the state where I would say, core banking capability and product is commodity, there's not much difference in a loan and deposit. But let's take the simpler example. I want an email service, I just rent it. I pay as I go. All of a sudden, we've got this whole new concept driven to a through cloud, of being able to align our business value very much with the usage, because we pay as we go.

And I don't have all of the overheads of the maintenance and the security. And as we all know, the maintenance is one dimension, the whole security issue, nowadays is a completely different dimension.   those are the things I think those are the things that I think about, I look at and what I'm considering within the overall cloud, and the cloud strategy, and how we are leveraging the cloud going forward. I just want to put a footnote on this, which I only found out this morning, a telephone took 35 years to get to mass adoption.

And mobile phone took 13 years to get to mass adoption. And I fell to two and a half years.   we're into a very, very different era where,  , to get mass adoption can be cheap, quick. But al , we've got to remember, we've got to retain those users. And that means we've got to provide something engaging.

And I believe earlier speakers were talking about the whole thing about customer centricity and customer experience, which is one of the foundation stones that we certainly believe in as well. It's a core of everything. It's not driving for product that's driving for customer engagement is providing the convenience and respect to COVID.

And mobile phone took 13 years to get to mass adoption. And I fell to two and a half years. We're into a very different era where to get mass adoption can be cheap, quick. But also we've got to remember, we've got to retain those users. And that means we've got to provide something engaging. And I believe earlier speakers were talking about the whole thing about customer centricity and customer experience, which is one of the foundation stones that we certainly believe in as well. It's a core of everything. It's not driving for product that's driving for customer engagement is providing the convenience and respect to COVID. 

Did the pandemic have an impact on the cloud usage? I looked at the AWS first quarter results of 2020 and their overall run rate in the first quarter of 2020 was 14 billion.  You can see that actually, yes, it did have an impact. Yes, were everyone going to the cloud to enable? Basically, yes, we needed to reinvent our businesses, everyone needed to reinvent their businesses. And cloud has been a big enabler to do all of that. And without cloud, we could not actually scale to the levels of capability that we have. Those are the things that I can see where we are influenced by cloud, and we're cloud as a cornerstone nowadays.

MZK: Excellent. And on that note, having the right cloud strategy, as you pointed out is really critical in terms of having the efficacy of your digital transformation strategy. And there are different, of course, paths towards having a successful cloud migration.

What are some of your key considerations when you're looking or evaluating or assessing between taking a multi cloud approach versus a hybrid cloud approach? Given that arguably, multi cloud offers greater flexibility and hybrid perhaps provides for more experimentation?  How do you view this?

CD: Again, I come back to definition first, everyone's on the same page, because I think I've seen these terms used very interchangeably and people will talk about multi when they talk about hybrid and all this.   I actually decided to share my definition. Multi cloud is the use of two or more cloud platforms, very simple. And it's multiple service, it could be infrastructure, it could be platform, it could be software as a service, where hybrid is usually blending private cloud or public cloud.

Now, this to me, there's a logic to this whole thing. I'd certainly from where I stand. I'm what I work in big banks. I've evolved through that.  I actually have one problem in my move to cloud, I have to deliver hybrid it is it a cloud or is it an on premise solution? It's irrelevant to me I've got to build and deliver against a hybrid IT  so that I can actually mix them matter.  First journey, that we can go down. And   picking what is centre in me. And my thought process around this is, who is the right provider. For me, it's not about who's got the biggest name, it is really about who is the provider, that's ongoing to help me grow because I need to grow my skill base and grow my capability as to the right support structure within a country. 

And it's different in every country, I've got to say, I've been in several around the region, and it's very different in the different markets.  In respect to that, I actually looked at the right organisation, and  someone that's going to work with me as a partner to build the internal skills. And we'll come to skills a bit later in the discussion, because they're absolutely fundamental.  In respect to that, I start with a hybrid IT. And I've noticed through my own experience that going into multi cloud will happen by default. And very quickly, you'll have cloud services, SAS services that you're going to be using, like a GL or, or like a sales capability or  something of that nature.  Very quickly, in one to two years of starting the journey, you will end up with three or four cloud providers by default.  You have to handle that multi cloud environment.

But the difficult question is, and I think the one that really is the burning platform is, do I take the same core application and build it, or buy it and set it on two different clouds? And then that comes down to the whole capability? Can I afford to invest in skills in two different clouds? How can I do that? How can I invest in that capability?  That's actually managing the whole thing on concentration risk.

The way I look at that is, first of all, it's a longer term  solution, not a super short term solution. I definitely look at the ways in which we look at the start. The start has got to be when we're building cloud native, we've got to use abstraction layer so that we can migrate if we need to. And then we will consider concentration with risk as we go along. It's not something I'm going to try and balance between two major cloud providers, or two major cloud platforms at the early days of a cloud journey, because the skill base of what we've got to learn the cloud is huge.

MZK: And also  looking at the business fit.  How would banks ensure that their cloud  solution architecture is fit for business? And as we're seeing this transition to digital, and given the development, all of these new business models, how would banks be best placed to manage this transition?

CD: Okay, to manage the transition, I think that they've got to actually start to look at a couple of different things. First of all, you're right, they've got to make the selection, correct. They've got to look at the dynamics of what that cloud provider can do in that in the country for them. The labels will give you lots of encouragement, you will need lots of good sales pamphlets. But what you've got to do is really understand what they're doing and what they're investing in, in the country to be able to know. The other thing that I think that we've got to do when we're looking at moving into cloud, is we certainly have to invest in people. We've got to actually build our own capabilities. I am a big advocate of the fact that we are still , the owners of the system, if they're running in the cloud, or anywhere else, we are still accountable. Building those core skills is very important. The core skills in relation to that will be not simple. It's very different from the way in which we operate today. It's very different from our point of view of how do I manage a system a day- to- day operation? How do I manage the fact that I've got a multi cloud environment? And I'm moving data between the two? How do I ensure that,  , we come to a thing that we have to think differently. And this is what I encourage the team, we've got a team going through all of this right now.

And it's consequence design, what are the things that will go wrong, because that's what you've got to do. And it's very different from the way in which we build systems for the last 10 years, because we haven't really had to think of all the consequences. Now we have to think of the consequences.

From a business point of view, or from a technology, business point of view, those are the things that I think about from a business, it is really more about the accessibility, the partnership, that they're going to build with you, the investments that they're going to make with you to actually get you to the level where you are self-sufficient and capable. And I think that those are the important factors that I look for in a cloud provider. And it's been interesting. I've talked to many over the years and they've all got slightly different approaches.

It's really, which is the right provider in the country, invest in training. But the other thing, then is al  start to make your business fully aware of what cloud means, because they will have lots of different views in relation to cloud.

MZK: Fascinating. And looking at all the competition and the disruption that is taking place, how do you see financial institutions, at least leveraging the cloud, and it's particularly the computing power that comes with analysing data, and the implications that this would have in terms of offering more frictionless customer journeys? Specifically, when supporting, all these the range of digital banking services on offer? And is the cloud framework sufficient to really help address  some of the customer pain points that we see today?

CD: Without doubt, the cloud is a core component of the strategy. It's got to be a core component. Will it address all the pain points, no, it won't. I think people mentioned quite a lot things like omni channel. Omni channel is not a magic thing that will get fixed by the cloud. Omni channel, I really don't follow those that kind of model, I follow what I call a common sales and service model could because I want to have multiple channels. I won't have a massive expanse of channels, and there will be new one.

Cloud economics is very important and one has to understand the elements of the cloud before addressing customer pain points

Customer pain points like the use of commonality and you're making it very convenient, making a very quick availability all the time, all of those things, cloud will enable us. But it really starts off with a really  und architecture, a business and technology architecture, to be able to look at how you're going to leverage this. And I think that this is one of the things that I will put down as a watchword and many organisations think the cloud is a magic answer.

If you use the cloud wrongly, it will cost you more money than on prem. Cloud economics is very important. The thing there is, you've got to understand the elements of the cloud that will address our pain points, yes. But we as a financial institution still have the responsibility and accountability to design it in the right way. That it does address the customer pain points, I was listening to a previous speaker where they were talking about the customer journeys, those customer journeys are enabled through the cloud. They're not built by the cloud. And it's having that level of focus and that level of diligence in the way in which you design those interactions, the way you design the business and technical architectures, that will enable us to resolve the pain points, the cloud will make it easier for us to do that. The cloud will reduce the cost and time to market. But it's not a magic answer in itself.

MZK: Not a magic answer. Absolutely. Colin, we're also  getting a question from the audience. They’re asking you. What is the current status of cloud adoption of banks, currently, as you see among financial institutions in Vietnam?  What is your sense of where institutions are currently in terms of cloud adoption?

CD: I've been in the country, only six months, so  please forgive me. But I have been here before. Compared to other markets, it's still slightly earlier in the adoption cycle. I think that it's still got a way to go. I think it's escalated quite substantially. I think the whole aspect of cloud will escalate more. I think that there are  me early movers, and they're getting  me benefits out of the cloud. But I still think that it's got a long way to go. Are we on market with  me of the top end countries using cloud?

No, we're not there yet. But we are seeing interesting things. I'm seeing not just the big names in cloud, but I'm actually seeing,  , local companies invest in in cloud technologies and provision of cloud. I'm seeing the infrastructure investments   that we've got the high speed links with Singapore, Hong Kong and Japan,   that we can reduce our latency time, right really down to a small level.   seeing all of those things, yes.

We're seeing adoption grow. I think it will go very fast. And I think that it's going to be constrained only by the lack of good capability and good resources. But I think that we will see as we move a lot faster. Are we on par with other big markets? I think we're a little bit behind.

MZK: Fascinating. And on that note also,  the learnings for different institutions, you spoke about the aid of investments, especially in terms of skills, and addressing potentially some of the technology skills gaps. What is your benchmark for in terms of cloud adoption for Vietnamese institutions?

CD: That's a pretty interesting question. The first benchmark is to create the stability, the resilience, the scalability. And so it's not about just using the cloud, it's about actually being a cloud native. You cannot go into the cloud and take a lump of technology and push it into the cloud and say, it's going to operate better or I'm going to get efficiencies.  No, you've got to look at the cloud native design. 

Those things have got to be tackled, and they're one of the first levels of success. And the second level of success will then be how can I increase my speed to market not just in  individual digital things but in my overall transformation of building new solutions, building new capability. 

And I think the third will be the economics, my total cost of ownership has got to come down. Those are the three things I look at, but I measure them over time differently. And my most important thing is get the stability, get the strength and get the resilience within the service solution to make sure that you're comfortable with that kind of capability.   that's my first measure.

MZK: Absolutely, it makes makes a lot of sense. Call it clearly. I mean, institutions that are able to integrate these cloud-based platforms, they're obviously in a position to facilitate the digital experiences that banks desire for their customers. And we do see that with this increased agility that the cloud is offering, products can be brought to market much faster and in a cost efficient manner. And as you mentioned as well, scalability, resilience is what is paramount for financial institutions. So cloud migration shouldn't just be looked at as a technology shift, but al  as a cultural shift in my view. And it's an opportunity for all institutions, to really seize this moment, to help facilitate their digital transformation. 

With that said, Colin, I'd like to thank you for this session and for having shared your exceptional thoughts with us. We hope the audience has al  benefited from your insights. And I would like to encourage everybody to stay tuned, because we have another fascinating session on e-payments. I'd like to thank you once again, Colin and we'll be in touch. Stay safe.  

VO: Thank you to our speakers and moderators. Ladies and gentlemen, please welcome Mr. Richard Hartung international resource director at The Asian Banker who will be hosting our next sessions on redefining e-payments with the rise of the new market entrants.  

Richard Hartung (RH): Thank you very much, and welcome to our session on redefining e-payments. I'm Richard Hartung with the Asian Banker and I'll be your host for this session. I'm joined by distinguished panelists with tremendous experience in products, payments, customer experience from leading financial institutions. Gunneet Singh  is head of product, payments and customer engagement at Ubank. Kanishk Upadhyay is executive vice president, head of liabilities cards and payments at Techom bank. Without further ado, let me begin by asking our panelists to do a very short 30-second elevator pitch introduction of themselves, and then move on to look at the first question I have for you. We've seen a lot of dynamic changes in the payments landscape in the past few years.

There's new technology, higher customer expectations, complex regulation, new competitors, what are the key changes you see leading banks like yourselves and payment players like yourselves doing to make payments infrastructure to stay competitive in this dynamic environment and to keep customers engaged?   Gunneet let me start with you, if I may, please.

Gunneet Singh  (GS):  Coming directly to your to your question. I clearly see that there was a time when payments was for  something that you do by going to a branch. That's many, many years back. And then we had internet banking. And then suddenly thanks to COVID, everyone was doing transactions using his mobile phone. Now, the big change, which has happened is on three fronts. The first front is that, for making payments and transactions, mobile is the first instrument of choice.

If you have to make a payment, you look for your mobile phone, nothing else, you don't look for your wallet. That's one thing. Now, when you are there in your mobile phone, and this would differ from bank to bank, what do you use to make a payment? Previously, it every country has got their one unified payment system, and you use that very system to make those payments. In Vietnam, we have gotten a pass. But the beauty right now is that centralised unified payment system has become only one of the options. And there are multiple options which have come up. What smart banks have done is that they have integrated well with different fintech players across the market. They have gone to a horizontal integration.

Today, if you have to make a high value payment, you typically look at your equivalent pass, but if you have to make a quick small value transaction or a payment, you look out for SmartPay QR, VNPAY QR, or transfer money from your account to a mobile wallet and use mobile wallet to make those transfers.  , the second thing which has happened here is that there are a lot of banks that have opened up, and they have looked at integrating with various fintechs. 

The bank is not thinking that, oh, this money should stay with me and I should be having this money with me and whenever the transaction is routed out through my network, I'll make my one half percent interchange. No, he's saying payments, for me is a very basic offering that I should be giving to the customer. I do not worry about margins, payments are more for the stickiness for the customer. 

Coming directly to your to your question. I clearly see that there was a time when payments was for  something that you do by going to a branch. That's many, many years back. And then we had internet banking. And then suddenly thanks to COVID, everyone was doing transactions using his mobile phone. Now, the big change, which has happened is on three fronts. The first front is that, for making payments and transactions, mobile is the first instrument of choice.

If you have to make a payment, you look for your mobile phone, nothing else, you don't look for your wallet. That's one thing. Now, when you are there in your mobile phone, and this would differ from bank to bank, what do you use to make a payment? Previously, every country has got their one unified payment system, and you use that very system to make those payments. In Vietnam, we have gotten a pass. But the beauty right now is that centralised unified payment system has become only one of the options. And there are multiple options which have come up. What smart banks have done is that they have integrated well with different fintech players across the market. They have gone to a horizontal integration.  Today, if you have to make a high value payment, you typically look at your equivalent pass, but if you have to make a quick small value transaction or a payment, you look out for SmartPay QR, VNPAY QR, or transfer money from your account to a mobile wallet and use mobile wallet to make those transfers.  , the second thing which has happened here is that there are a lot of banks that have opened up, and they have looked at integrating with various fintechs.

The bank is not thinking that this money should stay with me and I should be having this money with me and whenever the transaction is routed out through my network, I'll make my one half percent interchange. No, payments for me is a very basic offering that I should be giving to the customer. I do not worry about margins, payments are more for the stickiness for the customer. 

And that's what I'm looking at. And then simply whoever gives the best experience to my customer, you can take their transactions. That's the second thing which has happened. The third thing which has happened over here is that with payments being the first choice for the customers, the banks have beenforced to look at a lot of security on the digital side, that whenever this payment is getting processed, irrespective of the value, they are able to look at it, they're able to take care of all possible risks and challenges, which come across when that payment is getting processed. 

Banks from a scenario where they were having an online banking, they were having OTP authentication, they were having dongles to generate an OTP they have now moved to a scenario wherein, SDKs are attached to the mobile app to be sure of that the guy who's making the payment is definitely the same guy, who is their accountholder.  In my view, I would say that these are the three big changes which have happened in the payment space. There are and the biggest of them the second one that have said that banks have now opened up and they're integrated well, with different players horizontal integration, and being open to say, my customer is there, whoever gives the best experience can take that transaction.

RH: Now, the integration in the ecosystems are really a big shift over the past couple of years. Kanishk, can we ask for your insights, please?

Kanishk Upadhyay (KU): I think when Gunneet was saying big banks have opened up he was pointing in my way.  That was a good segue. But yes, I completely agree with him.

Payments is about ubiquity. It is about access for everyone. Right? It must be so that a customer doesn't have to debate one versus the other, or he should just be able to go and make a payment. And then the real experience comes from how each bank, wallet or institution is making it seamless, easy automated. That's where you win the customer, not by creating walls. But the only part where perhaps I would slightly go away is that I do feel that and I've seen from personal experience in my previous markets, that the benefit of a single payment rails, whether Malaysia, Singapore India has really, really opened up the economy. Because it has really helped small business owners be able to go out and not have to deal with multiple wallets, which is the situation right now in Vietnam. 

I think it's a matter of time, I think our dear friends are working towards a central  solution where each institution will win the battle on surveys and other value-added initiatives, but not on being able to provide access at the point of sale. I think the access should be just uniform, single-minded, colourless, transparent. 

And in that regard, there is a lot of work to do on the infrastructure.  This is not bank-level, but country, nation-level infrastructure. I think that is needed. As long as there is a vision for that, then whether they do it on their own, or they get experts to do it, or whether they get banks to collaborate and do it together. I'm more than happy to do that. And I see that happening, there's no way we can escape that. 

But that's the that's the real conversation that that we would like to see happen, because we've seen the benefits of it, as this has been unified in other markets. And for me, that infrastructure conversation is the more important one. As each of us, of course, in our own bank, and in our own wallet creates a better experience, which of course, is equally important.

RH: Let me continue on with you Kanishk if I may, because one of the things you mentioned is customer experience. Now consumers have instant information these days, really superb experiences with the movies watching, the music they're listening to, with food delivery 10 minutes is too long. But they can order instantly, they can get their goods delivered right away. They get personalised offers, super convenient access. What are your firms doing to give customers the same level of experience with their payments or other services you offer? What do you still need to do? And what do you see coming up over the next year or two to give that same level of superb customer experience?

KU: You're absolutely right. This is the whole subscription model of banking moving into the subscription model. But it's about value-added services and customers don't want go back. But they didn't have a choice. Banking was a verb, which was used, right? Back in the day, your grandfather would go up and say, I'm going banking today. He meant newspaper, a cup of coffee, conversation, and then put in the check. That's no longer the case. But then there's a fine balance to maintain as well, an actual need which is on the security, which is also the responsibility of the institution, to make sure that while we make it easy and convenient, while we are available everywhere, the customer can also rely on us. And I think that that we cannot let go of that. 

As we get more and more experiential based number one, number two al  have to take a call. A lot of things which come up and then fail. You have to pick your bets, or try to do everything. For example, the 10 Minute delivery doesn't look like it's succeeding. It's burning a lot of cash. That's an example. It's a constant battle. I don't think there's any one good answer here. We'll probably try 15 things and 10 will be common with another bank. And hopefully we'll get it right. We are already getting right. Consumers enjoy auto card provisioning.

And that's a wonderful experience, right? On the other hand, there are other fad things like lucky account numbers etc, which may come and go.   I think we keep trying and succeeding and failing fast and then hopefully succeeding again.

GS: I think my take on this is that the customer experience is a given thing. And that is what ensures that a customer does not look at the long term value that he's getting, but he's looking at the immediate ease that he's getting. To give you an example of customer who has got a credit card. And he is getting, let's say 2% cashback on every transaction that he does over there.

And he's doing a 200,000 transaction or a 150,000 transaction, he knows that he's supposed to get some VND5,000 as a cashback. But in that case, the transaction will come in, and he needs to take any OTP and put an OTP.

And then what will happen as compared to a mobile experience? In which he simply says yes, and it's done. What I've seen is that people are ready to sacrifice that monetary value of a cash back for an immediate, good experience that they get when they're making the payments. And that says a lot about how customers are thinking now. 

They’re absolutely thinking in terms of convenience. And everything else has to happen in background and has to happen in an absolute automatic format, just press of a button, and you're already identified about your Netflix account, and the payments are being made. 

Clearly as we move ahead, customers would like the payments to just work in the background. 

Another example, which is popping up in your mind is that when Uber was launched, and it was in Vietnam that I had first experienced Uber. The best thing about Uber was not that I would call it and they would come and the car would be clean, all that was given, the best thing was that when they reach the destination, I simply walk out. 

I do not pull out my wallet, I do not look for currency notes, I do not give it to the guy and it says, okay,   this is the balance that you have. Something that struck me that Uber is good was not because a good car, or it can come in whenever I want to. But it was like this: when I'm at the destination, I just move out, and the payment is handled and managed in an absolute seamless manner. That's how important payments are in every business that you're doing. 

The complete differentiation, which is being created right now is on the checkout experience. And checkout experience means at the place where the customer is making the payments and is moving out.   undoubtedly, it is there.

Buy-now-pay-later (BNPL) is shaped by consumer behaviour and demand

RH: Well, let me carry on from that and ask about the buy-now-pay-later (BNPL) experience that you just mentioned. BNPL has come out of nowhere, fairly recently, and markets like Australia, and young people don't want credit cards, don't want debit cards, they want BNPL. And it's moving into other markets.   what do you see happening with BNPL in Vietnam? What are the traditional institutions yourselves doing to offer  something similar? And where do you see BNPL or something like that evolving, and also  managing credit risk over time?

GS: I will just pick up from your Australia thing we'll add two things to it. The first thing is that

research proves that the youth, Gen Z is more comfortable with a debit card than a credit card. They feel credit card can get them involved into many, many things, lots of outstanding high interest rates,   they're more comfortable living within their means, and using a debit card for all the payment requirements. 

And to that very segment, suddenly, there was this, this thing came across that can buy this thing and you and me will have a prior agreement that you will pay me this much amount of money for three months, six months, and no interest will be charged. 

It's a clear, clean transaction, which the Gen Z loves. It's a well-defined thing. That kind of transaction between the customer and the company is loved by this age group, and they kind of jumped on to it. That’s another story that  50% of the people definitely required. That was on the Australia piece. Now coming to Vietnam, we have seen that few of the finance companies, fintechs have tried it. But very  on we should be seeing that a serious BNPL product is launched in the market.  Right now, we have not seen it but groundwork is happening.  on it should be out. But there are strong players in the market who are providing 0% interest schemes for three to six months to the lower income group across all organised retail primarily focusing on consumer durables and two wheelers.

I will just pick up from your Australia thing we'll add two things to it. The first thing is that

research proves that the youth, Gen Z is more comfortable with a debit card than a credit card. They feel credit card can get them involved into many, many things, lots of outstanding high interest rates,   they're more comfortable living within their means, and using a debit card for all the payment requirements. 

And to that very segment, suddenly, there was this, this thing came across that can buy this thing and you and me will have a prior agreement that you will pay me this much amount of money for three months, six months, and no interest will be charged. 

It's a clean transaction, which the Gen Z loves. It's a well-defined thing but I have to pay.  , that kind of transaction between the customer and the company was loved by this age group, and they kind of jumped on to it. That’s another story that people 50% of the people definitely required it and 50% of people just did it. Now coming to Vietnam, we have seen that few of the finance companies, fintechs have tried it. We should be seeing that a serious BNPL product is launched in the market.  Right now, we have not seen it but groundwork is happening.  There are strong players in the market who are providing zero percent interest schemes for three to six months to the lower income group across all organised retail primarily focusing on consumer durables and two wheelers.

Once BNPL comes in, the biggest push will come into the luxury or the quasi luxury segment. That's where I like the product, it's such a good shirt, but should I be paying in VND5 million for a jacket or  VND10 million for a jacket and a suit. That segment is what will bounce up when BNPL comes in. Because that very segment is not having anything but a credit card only with them.  We will be seeing action on the BNPL space coming in  on. E-commerce sites for the first one, as we have seen across the globe should be coming in. And organized retail in the premium segment will follow.  

RH: One of the things we're seeing also  is in Australia.  Carrying on from that, other players jumped in. And then about two years later, three years later, the banks jumped in. You’re sort of in the perfect position with the bank to look at it and say, Now what are you looking at with BNPL?

KU: I think BNPL is a fantastic feature. It’s a perfect example of being at the right place for the consumer, right? Where he wants it. It's right there. And there's a big difference on how it is being done. Credit cards have been doing it for 20 years. But anyways, let's call it new. And the whole BNPL experience is a great way to give a customer an instant experience, and then let him come into the bank, and then enjoy the rest of the life cycle. For a bank, it's a great feature, it's a great way to make the customer feel happy, that experience is wonderful, and then convert him. I think banks will do a great job. On the other hand banks, will also do a responsible job of it, which I think is very important. 

Banks and financial institutions need to raise consumer awareness to address fraud and cyberattacks

RH: The question I have is around fraud. One of the concerns, and you both alluded to it a couple times, is the increasing threats and especially on the e-commerce side. What are you seeing as key threats that are evolving? And what are you doing to counter those threats of fraud to make continue to make payments safe for your customers? Kanishk you let me ask you and then back to Gunneet.

KU: I think one of the most least spoken about topics when we talk about all the cool fintech ecommerce stuff, right? There are equal centres of excellence in product like absolute experts, geniuses, hackers and work, finding ways to cut over whatever you thought you had done. And it requires a lot of attention. I think that's where technology is really helping us. I think AI is playing a very big role. This is now where you look at the behaviour of the consumer and then you look at his latest transaction, and it just doesn't look like our customers. He just did a transaction with Vietnam, and now he's in Cambodia? And then there's the most powerful ones, which are all over the place on the e- commerce site. But again, the more data you have on your consumer, which at least big banks do, combine that off and on with non- banking activity, social media, we will be able to protect them having those tools in place. And really, by partnering with experts in the fraud industry, rather than building  mething on your own, I think this is moving equally fast, and hopefully faster than the guys who are trying to prod the customer.

RH: Thank you Kanishk.

GS: I think what Kanishk said is absolutely right, the technology helps us to define or helps us to take care of possible frauds, and to proactively control them. I would like to just take a step back before we get onto the technology side, what do we need to do? And what's the starting point of that approach? Now, clearly the starting point, in my view, is that, first, let us define that, if on a mobile phone and asking a customer to download a mobile app, am I allowing him to have an active app on another device as well? Or I'm saying no, you cannot have it, or in case the customer is changing the device. What kind of protocols and following to ensure that it is an OTP? Or a kind of verification of the customers changing the phone number? What are the policies I have defined to ensure that I tried to control the fraud, possible fraud risk, and the starting point itself. 

Now, defining the policy, and procedures at the end of relationship between the customer, the mobile phone, the mobile app, and the SIM card, okay, these are absolutely critical. And these four relationships, lay the foundation of how strong is your fraud management is. And the tricky part is that there is a thin line between the customer inconvenience and customer security. But that's another topic of discussion. And from there, putting it and starting that as a point. 

RH: Before we close, let me just ask each of you, for your one minute takeaway. What would you like your the audience to take away from this session? Kanishk?

KU: As new entrants come in, and this is very often the topic which comes up: fintechs versus banks. I think the future or even the present is really banks with fintechs. Banks are not going away. They are evolving. They're evolving very fast. But most importantly, as most market research shows, they hold the trust of the customer. And they continue to do so. People love the new stuff, but they still hold the larger relationship in a bank. But that doesn't mean banks can sit on their laurels. I think that's an already established fact. It's about how fintech and how the new tools that they come up with is integrated and plugged into large scale institutions, who are able to make sure that offer goes to multiple customers. Credit cards were not started by banks, but today, they are the biggest issuers and I think that will continue to happen. It's about providing the best experience to customers at large scale, which I think will always mean new entrants. Fintechs are waking up banks in the industry on certain points, but there are also  a lot of collaboration for the benefit of the customer.

RH: Fantastic. Thank you and Gunneet, what's your takeaway, please.

GS: I will pick up the last word that Kanishk said: collaboration, I think, clearly, in the payment space, we see  so many, just to give an example, there are more than 30 wallet licences that have been given away in Vietnam, but only three companies are controlling 90% of the market, Moca, Momo. Every time an entrant comes in, they come across with a new proposition or a little bit of tweak and so on. Payments is the type of relationships that you're building up with different ecosystems. My take would be that as a bank, or as any fintech, be open for a horizontal integration. Try to get connected in the ecosystem as much as you can. The beautiful thing called API has made our life   good.  Be open for that horizontal integration, be open to have new ways in which the customers can pay or authorise a transaction. Just give as many options as you can to the customer. Because for a bank, the biggest revenue right now will not be payments. Banks are practically giving 2% cash back and giving all the revenue that are getting in payments. For us, the revenue comes in from lending from investments from insurances and payments is just a tool to engage.

RH: Collaboration as you mentioned it is key. Thank you very much for the insights, Kanishk, Gunneet. We learned a lot from you today. Thank you very much. And let's hand it back to the emcee please. Thank you.

VO: Thank you to our speaker and moderator. We have come to the end of Finance Vietnam 2022 conference. We really hope that you enjoyed today in sessions. The full recording of the event will be available on our website.

Keywords: Technology, Investments, Open Banking, Fintech, Growth, Digitalisation

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