If you walk into a branch of VietinBank in Hanoi, you are asked to take a number at a kiosk. Within seconds, facial-recognition software identifies you as either a premium or a regular customer.
If you are a premium customer, you will be immediately directed to a VIP service rep. If you are a regular customer, the kiosk’s screen will ask you a few basic questions and give you a queue number to approach a teller.
But by the time you do, the teller will already know who you are, what you want, your entire credit profile, and what the teller is allowed to sell to you. They might even greet you by your name.
This is one way that state-owned VietinBank is working with technology vendors and fintech partners to compete in Vietnam’s highly competitive banking market, says Tran Cong Quynh Lan, deputy general director and the bank’s chief digital officer and chief information officer.
The market has just gotten even more competitive. In March, the State Bank of Vietnam (the central bank) authorized telecom companies to offer mobile-money services, similar to Kenya’s M-Pesa (pioneered by a local telco).
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The State Bank also allowed banks to provide remote KYC and customer onboarding, so they can also approach customers online and offer payment services similar to those offered by telcos. VietinBank launched its eKYC capability this month.
Mobile wallets are not new, however: there are roughly two dozen fintechs offering e-wallets in Vietnam. The space is crazy-competitive.
“If you come up with an iteration, you have maybe three months before everyone else in the market has copied it,” Lan said.
VietinBank has been working with global tech vendor FIS since 2012 to revamp its core banking system. That work was completed in 2017 and Vietinbank today leverages FIS’s architecture to support its internet and mobile strategy.
“I’m happy,” Lan said. “Our productivity is way up. Our branch staff can do customer segmentation and offer them customized products. And we can now launch products faster.”
Banks need to sweat every dollar to create a competitive advantageKanv Pandit, FIS
Kanv Pandit, group managing director for banking solutions in Asia Pacific at FIS in Singapore, said, “In Vietnam, the work is around core banking and payments,” he said. “Banks need to sweat every dollar to create a competitive advantage.”
Lan says mobile is now a major battlefield. He says VietinBank has doubled its mobile user base every year for the past six years.
For example, Lan says now that the bank has launched eKYC, it is now working with fintechs, e-commerce companies and telcos to offer online lending, a service it expects to launch in July.
Although the bank faces many fintech competitors, Lan says these are mostly limited to mobile payments; some engage in peer-to-peer lending, a regulatory gray area.
But banks can offer more. VietinBank can provide many services that fintech wallets cannot, such as handling deposits, facilitating transactions, and extending loans. Banks can also provide extras, embedding e-commerce into their apps. VietinBank’s app, for example, allows users to book airline tickets or shop online.
“Our app is as good as any wallet’s,” Lan asserted, adding that most wallets compete by offering discounts, but they’re just burning money on promotions that won’t generate customer loyalty when the funding runs dry.
Telcos represent a bigger threat because the government is keen to use them to expand mobile money operations.
But banks are also partnering with fintechs and telcos. Telecom operators can’t offer loans, so they need banking partners if they want to do anything beyond money transfer.
VietinBank also collaborates with fintechs. These come in two flavors. One is the ecosystem play. VietinBank works with Grab, providing basic banking services to its drivers. “It’s easier for a bank to establish an ecosystem,” Lan said.
The other flavor is to hire fintechs that specialize in artificial intelligence, biometrics, and credit scoring to support VietinBank’s eKYC and branch-kiosk services.
The bank is now exporting its partnership with FIS to neighboring Laos. The cultures of the two countries are similar enough that VietinBank can copy-and-paste its core banking structure and its products. (Lan, who used to work at OCBC in Singapore, says this approach would never work between, say, Singapore and Malaysia.)
For now, the revamped tech stack is directed at corporate clients, mostly Vietnamese corporations with Lao subsidiaries. Lan says the bank is thinking about expanding to Cambodia on the same stack.