During the COVID-19 pandemic, the volume of digital transaction increased by about 300%, and this tested BIDV’s products and strategies Mobile money will soon be accepted in Vietnam, and every customer who has a mobile number can become a mobile wallet user right away BIDV focuses on the customers’ journey, capability for open banking, capability for data analysis as well as security and IT infrastructure State-owned BIDV (Bank for Investment and Development of Vietnam) is one of the oldest and largest banks in Vietnam. It stands at the forefront of Vietnam's growth by providing investments and meeting development and financing needs of enterprises and consumers across the country. In 2017, the Vietnamese government sold a minority stake of BIDV, which propelled the bank to reorganise its corporate structure, upgrade products and services as well as enhance governance framework in order to meet the requirements of a joint stock commercial bank. In 2018, BIDV digitalised key aspects of its retail banking business. The bank was able to reduce processing time from 42 minutes to 7 minutes through BIDV e-zone. Its SmartBanking offering also aimed to foster greater cooperation between BIDV and fintechs. Finally, it also launched a virtual card through its partnership with Samsung Pay. In 2019, BIDV officially established its Digital Banking Centre, which will drive its digitalisation goals for the next decade and enable the bank to face competition from new digital players. For example, its latest BIDV SmartBanking app is compatible with wearables, such as the Apple iWatch, and allows customers to perform financial transactions on their devices. A virtual assistant has also been integrated into the app, enabling customers to use voice-based instructions to perform banking transactions. This year, the bank announced that it is aiming for 80% of customers to access and use its e-banking products by 2025. Nguyen Chien Thang is the head of digital banking division at BIDV. Prior to this, he was the director of digital sales and partners at Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) from 2016 to 2019 and served as the director of eBanking from 2013 to 2016. Below is the full transcript: Foo Boon Ping: In your opinion, where do you think the future is headed for banks like yourself? How important is digital transformation? Nguyen Chien Thang: Digital transformation is not just a concept. It is a strategy, an action for an organisation, especially for a bank to compete in this era. We don't call (fintechs) competitors, but we think that this is a challenge. It challenges our resolve to apply (digital) to our strategy and business development. Digital support (to customers) is what we really try to sell, so we must first be on track in terms of digital transformation. Next is from the new entrants like the fintechs and nonbanks. They must provide a quick and lean service to offer the customers an alternative channel for traditional banking services. We also compete because any bank that knows about retailing knows that post-digital transformation is important. Next, the high demand from customers, especially for a new service. In Vietnam, it's easy to switch between channels and expectations, and the requirement is higher. It has to be quick, confident, smart and free of charge. And these are the challenges in the digital transformation. FBP: How do you see COVID-19 affecting the consumer and the banks? Are all banks able to quickly roll out transaction services? What is that one single biggest challenge that BIDV faces during this time of digital innovation and disruption? NCT: COVID-19 is a good test and lesson for any bank who already has a response strategy ready. For our bank, the volume of digital transaction is about a 300% increase. We were not surprised because we are prepared. if it were last year, we must run a lot of campaigns to motivate and educate customers to use the digital channels. We were already well-prepared for this by the time of COVID-19 since we have been testing our system, products and digital strategy. The biggest opportunity is to upsell. Before COVID-19, a customer does two very basic transactions, fund transfer and utility payment. But during COVID-19, we enhanced the upsell, especially when we launched the online shopping via our mobile banking. Customers can go into mobile banking and shop. They can go to every local supermarket to buy goods. Also, SME and corporate banking, the offline transaction to online is very high, so it is a good opportunity. Before COVID-19, it is difficult to sell and send a message to SME or upsell for retail banking, but during COVID-19, it seems good to increase the transaction. The active rate has increased. Before COVID-19, it was just around 55%. But during COVID-19, we recognised that over 75% are active. That's based on the customers already registered on our online channel. It's because we have a big customer base for retail. Now, around 45% to 47% of our customers are on the digital channel. We have around 11 million customers. Soon, Mobile money would be widely accepted in Vietnam. Momo and ZaloPay are capitalising on this trend. Mobile money is the new trend that the government is promoting. Mobile money will be a wise decision to use since every customer who has a mobile number can become a mobile wallet user right away to check and transact. The customer does not need any bank account. FBP: What is your key strategy to be successful in digitalisation? Can you talk about some of the initiatives that you have introduced to support these key strategies? NCT: For BIDV, it is very simple. The first thing is, we focus on the customer journey. We try to digitise the journey for customers who want to transact with the bank. The second is, the IT capability for open banking. We have application programming interface (API) management. We can work with any third-party vendors and others, like insurance or securities companies. We try to use APIs on all our services, so that we can easily expand our ecosystem. Third, we have the capability for data analysis. That is the key, and that is more important because we are using data to know and understand customer behaviour, allowing us to offer a personalised message for the customer. Data analysis capabilities are key, certainly. Lastly, we have the security and the IT infrastructure. We are prepared for a high volume of transaction and customers. COVID-19 is a good test for our system. If we were not prepared before that, we cannot meet the requirements. We applied blockchain, letter of credit (LC) management and budget finance for corporations and corporate customers. It is a good thing in terms of connecting many countries, not only in Vietnam. We will try to launch the data model and analyse the churn rates of customers who use a digital channel. We have a model for customer segmentation, which means we can know exactly what and how customers with certain banking services can contribute to the bank. So, based on that, we can offer them a service that is personalised. FBP: How would you describe your bank’s digital journey? Do you consider it a reinvention of the bank, a transformation of the bank or an evolution of the bank? NCT: This is a chance for us, it is a journey. The end target is that we will transform in the long term. In some ways, we already got some good achievements, but the journey is still far ahead. So, we try our best to be very consistent and focus on the targets as a whole. BP: What is your view about cloud-based open IT architecture? Do you think that these are critical components of a bank for the future and how do you achieve that? NCT: In terms of API and microservice, we’ve already done that in the past and we are already preparing many changes in our architecture. We also try to use API and follow the microservice trend. We are already following this trend, but this is not for the future. It is already happening right now for cloud. I’ve talked about cloud many years ago. In the short term, it still does not work very well because we still have a lot of limits, like limit by regulation, limit by the infrastructure and the mindset of the decision makers. Forprivate cloud, we've already applied some, but not on a large scale. It takes a certain time.In reality, we have a team that is already looking into migration and we are also learning many services from many vendors. It takes time. We can move to cloud eventually, but not in the short term. We already applied AI as well in some industries. But from my point of view, it is not successful yet. We already applied AI last year for chatting with customers via chat bots. The result wasn’t very good. We also have our mobile phone application. We use Siri to recognise the voice, but that is just a small thing. It doesn’t run smoothly and not very smart. So, we still try to evolve more. We already applied AI some ways, but we need to improve. At BIDV, we also applied online onboarding for a certain group of customers. We use this to allow our customers to do online banking in a “live” way. Customers no longer need to go to a branch to register and do online banking. The rate of customers who are using that has increased. BP: We talked about some of the initiatives as well as some of the technology that you're using. Next, we want to know what has the impact been around three areas – impact on customers, impact on your internal organisation and the impact on your financial performance? NCT: There a lot of benefits for merchants. The transaction volume is doubling every year. The customers also have a lot of benefits. They can possibly transact free of charge. It’s very easy. We decreased the fee and the volume increased. The total benefit is the increase. We follow a product management rule in our digital banking. We are quite confident with our risk management. Our products are ready for the customers. FBP: What personal advice do you have for people who are undergoing the same thing that you're going through, driving the digital transformation of your organisation? NCT: The technology, the markets and digital banking are still very new. We just focus and believe in our roles. We are very consistent. My advice is to follow the way you already chose.
