"Digital transformation is mixed up with optimisation" | RadioFinance

"Digital transformation is mixed up with optimisation"

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At the Finance Vietnam Leadership Dialogue 2021, heads of retail banking, products and businesses, including Le Xuan Vu, MB Bank; Dinh Van Chien, TP Bank; Augustine Wong Kok Seng, VP Bank; Bryan Carroll, TNEX; Gunneet Singh, Ubank; Kanishk Upadhyay, Techcombank; Riddhi Dutta, Backbase, together with Pham Duc An, Vietnam Banks Association – discussed the challenges in building operational resilience during the pandemic and debated how new challenger banks and incumbent players will win in a digital-first era.

At the Finance Vietnam Leadership Dialogue 2021, heads of retail banking, products and businesses, including Le Xuan Vu, MB Bank; Dinh Van Chien, TP Bank; Augustine Wong Kok Seng, VP Bank; Bryan Carroll, TNEX; Gunneet Singh, Ubank; Kanishk Upadhyay, Techcombank; Riddhi Dutta, Backbase, together with Pham Duc An, Vietnam Banks Association – discussed the challenges in building operational resilience during the pandemic and debated how new challenger banks and incumbent players will win in a digital-first era.

The following key points were discussed:

The following is the edited transcript of the interview:

Foo Boon Ping (FBP): We are very excited to have an outstanding group of leaders across digital, retail finance, and financial technology from the Vietnamese banking and finance sector to discuss the future of the industry as we make the transition to the next normal, which is digital post-COVID-19, and debate how Vietnam's state bank has allowed new know your client (KYC) measures to be implemented, and has allowed new digital players that will challenge incumbent players. Who will win in a digital-first era, when everyone will become digital?  

Wilson Chia (WC): In this session, 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. Helping us kick-start this virtual debate are our guest panellists who have huddled beforehand to help frame the discussion.

Let me introduce our panellists: Le Xuan Vu, member of the Board of Directors and head of Retail Banking, MB Bank; Dinh Van Chien, deputy chief executive officer (CEO) and head of Retail, TP Bank; Augustine Wong Kok Seng, chief information officer (CIO), VP Bank; Bryan Carroll, CEO, TNEX Digital Bank; Gunneet Singh, head of Product, Payments and Customer Engagement, Ubank;  Kanishk Upadhyay, head of Payment Solution, Retail Banking Group, Techcombank; Riddhi Dutta, regional director, Association of Southeast Asian Nations (ASEAN) and South Asia, Backbase.

FBP: These are some of the topics that we hope to cover today in the next 60 minutes. What is driving each of your institutions’ digital strategy and leadership priorities now that we are all going digital? How to optimise customer-centric ecosystem? How should we re-think collaboration using application programming interface (APIs) and open banking, as well as accelerate innovation through collaboration with fintechs? The first topic is what is driving each of your institution’s digital strategy and leadership priorities? We know that among you, there are the incumbent banks and you are aggressively transforming to digital. Also, we have new digital banks.

We know that COVID-19 has been a catalyst and accelerant of change. How do you respond to the pace of change as well as the entry of new players and competition and the impact on the competitive landscape, as well as unforeseen crisis events such as COVID-19? How do you prepare for emerging risks from data leaks and theft, cyber fraud and security breaches, to ensure operational resilience? We’d like to first hear from our incumbent banks, the likes of TP Bank, MB Bank, and VP Bank, who have done quite outstanding things in transforming yourselves into digital institutions. I would like to first call on TP Banks’ Mr. Chien to give us an insight into your digital strategy. 

Keeping up with consumers

Dinh Van Chien (DVH): The last two years have been a good time for us to accelerate digital strategy, transformation, and innovation in digital space. What drives us? Clearly, we can see on the market that consumers are changing. Consumer behaviour has changed a lot, compared to five-six years ago. That really drives us to step up our digital transformation by offering a new product as a new way to provide services to our customer, and to make sure that we can improve the business performance from the bank perspective. The second thing that drives our digital strategy is technology. Technology advancement is now different. In the past, moving from Internet to mobile was already a big change. But now, based on the movement with Internet and mobile, a lot of new technology, whether it's artificial intelligence (AI) or blockchain, new things are happening every day and these allow us to do more things in a better way for our consumer.

FBP: Yes, a critical part of digital transformation is digital leadership and to have it driven from the top. MB Bank is also doing a lot on the digital front and working with its technology, but also in terms of creating a whole new more exciting brand. We would like to call Mr. Le from MB Bank about the digital priorities that is on your agenda. 

Le Xuan Vu (LXV): We brought in a lot of technology partners to help us with the last three years and we signed a trading partnership with IBM for two years to support us in creating our channel and do a lot of things for our internal business, in terms of transformation and technology, and applying new technology to our model. We focused on how to acquire more customers, because we all think about customers. The chain of customers will change rapidly in terms of COVID, in the new way of doing business and doing banking service. Digital is the way we can have the buying customer and retail together more closely. In our digital transformation, we created what we call the smart transformation. It means that everything needs to be done quickly: customer needs, buying, doing the service, more convenience and doing a lot of things beyond the banking service. 

We measure the outcome from the digital onboarding. For example, when our digital customers onboarded successfully on the first quarter, our revenues were three times compared to the last quarter of last year. So, we’re quite happy with the results of the first stage, but we still have a lot of things to do to make our customers happy and serve them more products and services. 

FBP: We see the effort that's been put into onboarding new digital clients. That is part of the whole move towards digital, a lot of customers are being onboarded digitally. Now, I'd like to get a perspective from one of the new digital banks. I’d like to call on Mr. Carroll of TNEX to give a perspective as well. The Vietnamese market is still relatively untapped? There's still a lot of underserved customers. But there are a lot of incumbent banks that have jumped unto the digital bandwagon, so to speak. How are you working to onboard customers? How are you creating a differentiation for yourself? 

Bryan Carroll (BC): From a strategy perspective, digital is not a strategy, it’s what we do. We don't have a technical debt. I've been in banking close to 30 years now and I've worked in everything from fintech, venture capital (VC), and traditional banks. And I don't envy what I see, what the banks have to do here, and banks advisors across the world have to do to deal with moving from a pre-digital to digital. But it's great to ask me about the market. I think it’s really interesting and exciting. I've seen what MB has done and it should be very proud. It’s really excellent work. We see what Techcombank is doing, VP, so everyone is really moving. But I suppose my comment on the market is the misuse of transformation. It’s a problem. It's not that word is being misused, unfortunately. there's this whole mix up between optimisation and transformation. And perhaps if I develop that a little bit more, transformation, you see some of it being done by MB, by Ubank, and ourselves.

Transformation vs. optimisation

BC: Transformation is about identifying new lines of value, new value propositions and executing these in a digital way. Whereas optimisation is faster horses. Now there's a lot of money on faster horses. But that brings me to my next point. Vietnam is dramatically unbanked, we know that, or underbanked. At a best guess, we're looking at an underserved population of 58 million people. But on the other hand, as you said earlier, a digitally-obsessed nation. It's a young nation, it's 80% under 52. And where we work is obviously in the Gen Zed part of that, where by 2025, 25% of the working population of Vietnam is going to be these GenZillas, these Gen Zs. 

I suppose my other observation on the market is we're all very proud of being part of this journey of Vietnam and seeing what's happening to the industry. But the issue is, banking’s too expensive, too hidden with sneaky stuff. And this isn't just in Vietnam, this is all over the world. It's too much concentrated on net interest margin (NIM), which isn't a bad thing. It's not what our customers want. We're very much focused on Gen Zed, and removing those barriers for the customers. We all know every management consultancy company will overcharge you to tell you that you should be working on small and medium-size enterprises (SMEs) and Gen Zed in Southeast Asia. Banks currently cannot service them. Because the technical debt is too high. There's an inherent inbuilt cost in traditional banking that has to be served because we have to make a profit, we have to represent our shareholders. And banks, if they transform, they need to understand that they need to move to a cost of ownership of a customer model that is unheard of. Cost income ratios in a digital bank start in the 20s at scale, they don't start in the 50s. So that involves a massive deployment of a target digital operating model, massive uses of AI, modularity, cloud, etc. But in TNEX, we had no technical debt. we built an end to end two banks in nine months, from core to front. We also did the third bank, which we will be announcing, which is our open bank with our first two customers. All of it is API. All of it is data driven. Our cost of ownership at three million customers, when we get there is $1. I only need to make $1.01. The number of people we need to run three million customers on that on built assets and liabilities is 141, full time equivalent (FTE).

Role of culture in digital transformation

BC: These statistics that I'm quoting are absolutely completely unattainable unless traditional banks transform. And to transform, it's not technology.

It's not about that because the likes of Amazon, Google, open source and fintech have democratised this now. We can put these banks in quickly. The biggest problem we have is culture. My two favourite people on this topic are Peter Drucker, we all know Drucker, “culture eats strategy for breakfast”, but also in reality, a mathematician whose name just slipped out my mind, “we're all destined to produce solutions that mirror our communication structures”. Banks need to break down the barriers in the brains. I think the most important thing to transform is to deleverage from a balance sheet, if you want to be a successful digital bank, get rid of the old culture. That's very difficult. And it doesn't start with a digital factory. That's a lot of theater. It starts with leadership. And if we can get the leadership right, Vietnam is going to be one amazing digital economy in the next five years. 

FBP: You really fired up the discussion. Maybe we can get some responses. Are incumbents really transforming or just getting faster horses? Maybe Mr. Wong, who's looking after technology at VP Bank? 

Augustine Wong (AW): When you inherit a brownfield environment, you have a lot of legacy to deal with. One of the key challenges is how do we then ensure all the nice and snazzy things that we can roll out? The challenge for us is really how do we make it stable, secure, and simple to use, because you have a wide spectrum of users, with different capabilities and different backgrounds. It's important for us, from our strategy perspective, is as long as we keep it simple, we make it stable, and we make it secure, you will naturally gravitate a lot of people into your environment. Because everybody, we are a bank, the whole entire purpose of a bank is for people to put money into the bank is for security. In essence, it hunts the secure function capability. It is important for us from my perspective, and from VP Bank's perspective, that we chase these down and make sure that we only make it good and solid. The whole entire cycle of customer experience needs to be enhanced and rapidly done. 

FBP:So your challenges are in terms of legacies and also in terms of on the regulatory front? You need to be extra careful on the security and stability. Now, are you creating new value proposition? I want to hear from a product perspective, maybe we can hear from Mr. Upadhyay from Techcombank, we've seen our payment solution with one of the areas where it's wasn't all about payment and transformation. How to deliver payments faster, cheaper, and more efficient. 

Young demographic driving product creation 

Kanishk Upadhyay (KU): When we talk about payments and what we do, there are two ends which really fueled what Techcom has been doing. One is the customer. This is one of the few markets where you don't have to create the product and then convince the customer, the customer drives the product creation. It's a very young, very eager, very digital population and it's already very demanding. We are, in fact, sometimes a little behind with what the customer wants. That makes our job a little easy, because you know what the customer wants, you just have to make it better and faster than the next guy if you want to win market share. The other end is that the board is also equally aligned to driving the bank into the next decade. When I say align, I mean, they don't need to be convinced, they are pushing us and everybody, the whole management, to take the bank to the next level.

You realise that what you're trying to achieve when it comes to payments is actually invisibility, you want payments to just disappear. Customers don't want to do payments. Customers want the product they want or the service they want. And they don't want to go through the process of doing payments or one-time password (OTP). They don't want that to be cool. But it's your job to make sure that you make it as invisible or transparent. Yet maintaining the security, that is why people come to banks. We can't forget that repeatedly, no matter how much of new banking comes about and how much of open banking comes about, the one thing that stands out in customer demand continues to be that the banks are safe, among other things. That's one reason why incumbents continue to perform well, provided they catch up to the new commerce in terms of technology and ease of banking. So a lot of innovation on that side, from how we are allowing our customers to interact with us, to use us to move from banking to conversational banking, to invisible banking. I think that is the path that we are following. And we are somewhere perhaps 40% there. But the way customers adopt, I think that's the best answer. It's a fantastic journey, the results that we are getting. I hope that next year, we'll be here telling you about how we have clean-sweep the market. 

FBP: Mr. Singh from Ubank, are you creating your value proposition?

Gunneet Singh (GS): I think we're the youngest kid on the block. We started our journey sometime in the middle of last year to set up a new digital bank. As you said in our introduction, we are a bank powered by FE credit and NDP bank. FE credit is Vietnam's biggest finance company, it has a share of more than 50% in terms of loan disbursed and a share of around 80% plus when it comes to profitability share of the market. We have close to 12 million customers, even more than that. These customers are having a transactional relationship with us. They come here for a loan, they take a loan and then they move away once the purpose has been solved, but these are people who definitely have a banking need. These are people who are banking, not with not with us, but definitely with someone else. The key purpose of having UBank over here is that how do we take care of these customers who are also taking a loan from us? How can we give them a digital banking solution wherein the loan part and banking are both married together very closely We are a finance company, so our target market segment is defined as mass and upper mass segments. In that segment, we are in the business of giving loans so we look out for people who are employed, or they have their own business. It's basically people who are who are salaried or have a fixed source of income.

We are looking at a strategy for Ubank. You can't ask customers for payments when they consider it to be free. Right now, majority of the banks are giving propositions in the market, with absolutely no fee, no charges, nothing for payments. The credit card is free, debit card is free, everything is free. If you still have to take money, where exactly do you make money if everything is eventually being given free? It has to be a kind of a value-added service and the value-added service that we're looking at over here to start with is the lending proposition combined with things which are primarily insurance specially designed and targeted for mass and an upper mass segment. This complete package of a payroll banking solution, combined with lending combined with insurance, all three of them being delivered to the customer, digitally now. That is what we intend to do over here. 

WC: That's kind of a good setting for the next topic, which is diving in depth about optimising customer journey, creating seamless, personalised experience, as well as onboarding right to the continuous usage of financial services. Consumers today are so used to making purchases in the retail platform, which provide them the speed when it goes into banking services, they are also expecting to see. We've talked about eKYC. And even to execute eKYC, the bank must have the ability to extract information as fast as possible, whether the information is available nationally or in a database so that we can do the eKYC as well as be in compliance with money laundering requirements, or in the case of business, it could be the TBML, which is trade based money laundering. These are challenges that banks will face and try to be comparable to the retail online stores. At the same time, the traditional bank that competes with the digital bank that leverage on artificial intelligence machine learning to support the onboarding. 

Let's hear from Mr. Le from MB Bank, how they are leveraging on artificial intelligence or eKYC to have a seamless onboarding of customers at the same time, deliver bespoke or personalised banking? 

LXV: For our customers on eKYC, a customer is onboarded successfully with a video call or some other technology. We provide them with a beautiful account with the limit amount that fits their requirements, for example, $12,984 (VND 300 million) a month. We have policies to do the logistics that can get the document from the customer and have them become a hundred percent active with full limitations. So, we go to two levels for our customer when they onboard with us.

WC: I'm going to ask the view of a digital only bank and ask Brian to make some comments on how the onboarding process and how they use technology, coupled with whether by biometrics and leveraging on national data to onboard customers perhaps.

Turning data to valuable insights 

BC: We made a decision to build our own eKYC. That was a brave decision and one that did keep me awake at night. The reason we did that was fundamentally eKYC is not just about anti-money laundering (AML). eKYC gave us an opportunity to harvest data, to look at behaviour and also under eKYC, we have a behavioural security AI model which protects us. But eKYC is hygiene in digital banking. We need to get over that now. We have eKYC in Vietnam. It was really good by the special purpose vehicles (SPV). But then we'd get onto customer experience. In TNEX, we do believe a little bit of the old misused Bill Gates quote, “people don't need banks but they need banking”. But let's change that. People don't need banks but they need trusted banking. 

Nobody has ever said I want to loan from FE credit, or from VP bank, or from MSB Bank, what they've said is, I want a loan for: to support my family, fix my roof, pay the agent $3 million that needs to be paid, for a student loan every September so that kids can go to university. We've built our whole customer experience around that second part. And we're very lucky, because we don't have the need for robotic process automation (RPA) projects because we don't have people. Digital doesn't have RPA, it doesn’t need it. We don't have master data management (MDM), because all the data is in one place. It's secure, it's encrypted, as it should be. But what we're concentrating on is why do customers want us. They want an embedded lifestyle, or what we do, ecosystem. 

Every night, we relearn every single customer's behaviour. And it's personalised, even from the UX. But also on the merchant side, of course, we're two banks, we've also got a micro-SME bank, but the customer experience for micro-SME is completely different. The reason is 50% of all transactions done in Vietnam every day are from micro-SMEs. This is big business. So very important. Butthey want a completely different experience, they want more sales. What we did with them was they can now target using our AI, we've given them all our tools. Socustomer experience for us is always personalised. And the challenge, of course is how do you get to that individual customer? How do you know that? How do you individually know a customer and how you do that is data. But it all comes down to behaviour, the customer, everyone in our lives, 80% of what you do is emotional, or my wife's case, 100% when I'm around. What you've got to do is know your customer through data, co-design with your customer, stop guessing. We co-designed everything with our customer: with university students, with merchants. Measure every day, measure and take your time, take the feedback. And don't be afraid to be wrong. Because you're going to be wrong. CX is always going to be wrong, you're always going to be improving.

WC: In essence, I think to summarise it, it’s using structured data, semi-structured data, unstructured data to contextualise banking, so that you can have a personalised customer experience.With this experience, and we talked about ecosystem, I want to have the view of Riddhi. In your opinion, what can banks do better to support SMEs and small businesses? 

One platform for all MSME needs

Riddhi Dutta (RD):We all know that the SMEs and micro-SMEs are operating in a very fragmented banking environment and it simply isn't serving them on a day-to-day basis, What we have seen is SMEs are tapping into a wide range of applications and services to meet their overall financial needs. They have something for banking, for bookkeeping, for payroll, for reconciliation, payable, receivable, you name it, but they don't have that one platform, or that one application through which they can do all of it. And who is best placed to solve this problem? Nobody like banks, and I personally believe the traditional incumbent banks that we have here today on the panel are probably very well-suited to solve this problem because while they have a legacy, while they are incumbents, they also have their infrastructure, which they can build on top of. But coming to SMEs, one of the core tenets of serving the SME customer is to identify how they can focus on growing their business while letting technology be with banks where the money is. And there are four key things that we would like banks to keep in mind when these are trying to service their SME and micro-SME customers. 

The first thing is what are the services that the SME customers are using most often? You don't need to reinvent the wheel for this. The basic things that SME customers are looking at is, can I do payments? Can I process my payroll and salaries? Can I do some form of cash management and cash forecasting? And if required, can I do a little bit of cash flow forecasting and a little bit of things around account payables and receivables? Those are the basics. Now, can you as a bank, really digitise that and start solving that first problem? So that is the first thing that one probably needs to keep in mind. The second thing is prioritise the right technology. Obviously, technology is not the solution but technology is always an enabler and it has to be backed by a business in a real business driver. But when I'm talking about prioritising the right technology, when you're trying to solve a problem, you cannot really keep on adding layers on top of one layer trying to solve that one problem.

It's very important to identify and prioritise the right technology rather than going for short term fixes that okay, this can do eKYC this can do AML, this can orchestrate the entire journey. But is there one platform that can do all of it? So that's the second thing. The third thing, and I think it's very important when it comes to SMEs. There are two parts to the wheel here. There is the SME customer and then there is the internal bank employee. Quite often, we focus a lot on the SME customers than the self-servicing bank, but we also need to understand that in an SME or a corporate scenario, not all transactions are going to be straight through. There is going to be a lot of transactions which need the bank employees to intervene. How would their experience be from an assisted servicing perspective, and that is very important. That is one of the places where the turnaround time for some of these transactions can vary between one day to 14 days. And that is where the entire employee experience, the entire internal bank employee engagement also becomes very important. And then finally, my fourth point is that it is not just about doing something once, it is about how do you continuously deploy these improvements? How can you potentially look at release cycle of a fortnight so that you are not just topping up after six months or eight months or nine months, but every single month from there on, you are adding more and more and more onto the platform. While the first three points were more focused on SME per se, the last point is more generic. But broadly, these are the trends that we have seen in the industry in the marketplace, when we're talking about trying to service SME and micro-SME customers. 

FBP: The next topic we are on is rethinking the world collaboration using APIs and open banking. The whole customer proposition now is no longer generated by the banks, it’s no longer about products or services. It's about me, as some of our panelists have alluded to. It's about what the customer wants. And today, the customer is not seen as a single entity, they are right in the middle of an entire ecosystem. The ecosystem participants can be your customers. It is about not just B2C, not just the bank to the customer, but the bank to other service providers, it’s B2B to C, and creating the ecosystem, having the technology and ablement to link, connect, and share data, APIs, which traditionally banks are very averse to doing. I’ll never share my data. I'm an incumbent bank, why should I share my data with someone who wants to eat my lunch so to speak. But in payments, more than anything, is where you get a lot of transactional data, you get so much understanding of where the customer has been. And to analyse its needs by his shopping habits, his life stages, everything. I’ll go back to Kanishk of Techcombank. Payments is one area where you're using APIs, meaning open banking to widen the ecosystem. How are you addressing that point?

Advantages of an advanced ecosystem

KU: First, let me admit banks are very protective about their data. That's been the traditional stance for some time. But I just want to take a step back and say, it's not about a bank or an entity trying to solve everything by themselves. I think the ecosystem play works both ways. It is very important to partner up for different needs. Everybody trying to build everything is just a whole waste of productivity. There are smaller, niftier entities doing such exciting stuff that you can plug in, you can borrow. Open banking, perhaps it's already here, but open data is definitely here. Whether it's telecom, whether it's social media, how we are eKYCing customers, but credit scoring customers, I mean, we have social media chat platforms giving credit scores, and with very good Gini scores. There is a whole ecosystem played. Banks, traditional or new, need to be very clear on what their strengths are and aren’t. And perhaps not try too hard to try to make everything but rather partner. Whether it's a loyalty ecosystem that you want to partner with to solve that problem, whether it's a payment ecosystem you want to partner with, we have many closed loop wallets and that leads to a lot of disintermediation. If you look at other countries, having one single national payment player, or non-national doesn't really matter, has unlocked so much of the economy. And I think that today or tomorrow, Vietnam is headed there, and it must, otherwise everybody inventing these small pools, which they own, doesn't really help. It's an absolute unproductive way of moving forward. Now that I'm speaking about payments, specifically, I think we need to have a uniform, open payment ecosystem where everybody can play in, a customer doesn't have to look at the color of the QR code and try to match it to his own QR code. Am I the green guy or the yellow guy? But be able to play at the open. And then, of course, the person who leads this is the person who gets the data. That's still the domain of the guy who's willing to go in and do the acceptance issuance. But the point is that when you connect everybody together, that's when a customer base is able to perfectly flow and money's able to flow back and forth. That's one of the things we learned in payments. But payments is how you get customers in, how you make their lives easy.

FBP: As an industry, how are we moving towards open banking and digital ecosystem? Mr. Wong, if we can get your perspective? And then maybe after that, TP Bank’s Mr. Chien. 

Recognising the need for collaboration

AW: To be frank and honest, because of the tight competition between the different organisations, there’s still a long way to go for us to pull together and collectively come together to form these nationalistic payment structure that we are so used to in the other economies. For now, a lot of us, even within VP Bank itself, we are looking at creating this platform of our own, tapping our own internal ecosystems as well to leverage against some of the key critical issues, like SMEs across down to the customer base, etc. As a result, one of our strategies, like what you already probably know, we spin off digital banks, through Ubank and this is actually to create and enlarge our own ecosystem to envisage and pull these all together collectively and provide services among our systems and in our subsidiaries, at the same time, share the data to understand how do we provide that edge to these people. 

Once we are able to do to the open API mechanism capability, the connectivity, it doesn't prevent us from opening up to a greater a greater group of people and even pluck ourselves into the nationalistic payment system, like whether it's National Payment Corporation of Vietnam (NAPAS), we are able to get into it. As a result, enabling a larger pool of people to cross reference and to do cross payments across different customers who may have their own preference to a particular bank, helps us to generate that capability within Vietnam. Going forward, that would be some ways to go but it is also a start. I'm sure the other banks and my esteemed colleagues would also be thinking along some of these lines where they will be building some within their own ecosystems. At some point, we will be able to come and cross-breach and pluck ourselves together, as long as we are adding value to our customers. 

FBP: An interesting strategy that VP Bank has taken, creating different units to be a different proposition and creating an internal ecosystem around that. Maybe one more perspective from TP Bank, Mr. Chien, on how you see the industry coming together on open banking? Of course, open banking is something at different markets, is that is a national policy directive, initiative. 

Evolving relationship between fintech and open banking 

DVC: In our discussion in the market, people talk about agent banking. It's a new concept in terms of opening outside the ecosystem, but in a more offline mode. I have to talk offline. If that platform regulation allows us to do something like agent banking, I think it'll very quickly move from there to open banking, where the whole banking business can be shared with other partners. By that time, we'll definitely see a much better, closer working ecosystem. It is not just a closed loop ecosystem that some of the banks are doing right now but it's more open one, and that will be a big benefit for the whole market and also to the consumer. We will see better customer experience, less transaction costs. We'll see a lot of improvements there. I believe that the direction has been somewhere internal from the Asian banking perspective and we’ll see it move very fast, because all this leads to transformation. 

FBP: There are many lessons that we can draw from other markets that have gone along that path. Riddhi, given your regional role, you see a lot of development initiatives in different markets, best practices that you observe, what can the banks in Vietnam better learn from that?

RD: I'll probably take an example of another bank without naming them that we work with for quite some time. We have been working with them for almost five years now in the Philippines. It's a traditional incumbent bank. It's in fact the oldest bank in Southeast Asia. This bank was facing the same set of challenges that I heard from some of the traditional incumbent banks on the panel today: legacy, the siloed architecture, monolithic architecture. What they did, and I must give complete kudos to them, is that they said they have to get the basics right and for them, getting the basics right was about start investing in platforms. The bank thought about it back then that platforms are the way forward and they would like to invest in platforms through which they can do the land and expand strategy that you start on one customer journey, but on the same platform, on the same building block with the concepts of reusability, how do you extend that one journey to more journeys, not only in one line of business but across lines of businesses. They started with very simple journeys around payments, which is commodity. You need to move towards the invisible space on payments. They started on journeys like payments, but today if you look at them, they have moved from payments, they have gone all the way to digital onboarding, they have gone to insurance on the platform, they're doing trading on the platform, they are they are doing a lot of cross sell to the extent they are also onboarding wealth management customers using the same credential within the same ecosystem. Just to keep my answer, short and crisp, is that what we are seeing in Asia, in other markets, as well as other parts of the world is that more progressive banks are not looking at digital transformation as siloed experiments that I want to give my customers a good experience on a mobile app. That's not digital transformation. Digital transformation for us is where banks are saying, ‘Okay, let's go one level below the experience, let's start thinking about the engagement.’ 

As platforms, as banks, we have so much data. Are we doing enough with the data to literally drive the engagement, to literally drive the experience? And that is where I think banks in Vietnam need to start focusing on, which is to drive the customer engagement, drive the customer experience through the platform, rather than just looking at these individual channels as silos or as experiments as you might want to say.

FBP: This digital journey that the banks in Vietnam are on is right at the start, and from the different perspectives that we hear, there are a fair amount of challenges that we face, still, whether you are on a full-blown transformation, or just optimising technology today, are you creating new value proposition? And how are you creating ecosystem with technology to best leverage all the very useful data that you have? You are doing different exciting things that will move this whole digital endeavour forward. And it's something that we will continue to track. I'm sure this is not the end of this conversation, it is only the beginning. And we hope to come back and have an update of this as we go.

WC: I want to thank all the panelists and guests for sharing their contributions, their thought leadership, as well as sharing some of the things they are doing, both the traditional banks and the non-traditional, and the challenges you face. We have all benefited from this exchange of views, sharing our experiences, as well as thought provoking ideas.

Keywords: Covid-19, Ekyc, ASEAN, APIs, Fintechs, VC, Genzillas, NIM, SMEs, OTP, Tbml, RPA, MDM, AML, B2C, B2B


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