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Leading digital banking for a better Vietnam

Interview - September 9, 2020

The banking landscape in Vietnam is being significantly reshaped by digitalization. And leading that charge is MBBank, which is the only bank in Vietnam to offer separate digital platforms to retail and business customers, and is number one in terms of electronic transaction rates. In this interview, CEO Luu Trung Thai gives his insight into the growing role of the private sector and FDI in Vietnam, discusses MBBank’s operations and its contribution to socio-economic development in the country, and explains how he aims to build “a financial ecosystem group of six companies working on finance, insurance, security, asset management, and micro-finance services.



How important is this new strategy and set of reforms not only to overcome the middle-income trap but to achieve prosperity and sustainable development?

I think The Innovation of Vietnam started from 1986, we tried to find new ways to change and innovate our economy. The country is welcoming the triumphs of the private sector and FDI in order to find the new strategies to change our economy. Now you can see a lot of policies that the government is applying to the private sector, FDI and also the state-owned sector. However, the most important thing comes from the balance and the fairness of the government for these three kinds of sectors. Now you can see state-owned enterprises are only focusing on several key sectors. They don’t involve themselves in every field of the economy.

Secondly, the private sector is open to investing in every sector. I think the fairness between state-owned and private enterprises is clear for investors. On the other side, you can see that FDI and foreign investors are encouraged. I think the key from the government’s strategies is the effort to increase the state-owned and private sector, and also encourage the FDI and foreign investors to invest in Vietnam, in order to create more job opportunities, bringing greater prosperity for the private sector, as well as creating the fairness between state-owned and private enterprises, even foreign investors, in Vietnam.

So the results have come. Over the past 10 years, all three sectors have been increasing, then pushing the GDP to increase by 6% to 8% every year. You can see that in the young generation; there are more millionaires, even billionaires, emerging in Vietnam. The other reason comes from the hunger for prosperity, success and wealth for the country, and more education for Vietnamese people. We try to find new ways to encourage both Vietnamese and foreign investors to boost the development for the country.


How critical is it for Vietnam to move up the global value chain and incorporate Industry 4.0 (technologies) to increase productivity and enhance its overall competitiveness?

Compared to other countries around us like Thailand or Malaysia, Vietnam’s productivity is not so high. The question is how we can use the opportunities today in order to increase productivity, and also to link and improve the position of Vietnam’s economy.  Industry 4.0 is impacting almost every industry. It’s important to learn customer behavior, that way, we can understand the customer more, use that data, and link with partners around the world in order to seek opportunities and reduce costs. So it would help Vietnam to move up the global value chain.

For Vietnam today, we find that digital transformation is an opportunity, a tool to show Vietnam’s ability to other parts of the world. In Vietnam, we also find some ways to serve a huge number of customers with the help of technology. In MB, we find that investing in platforms and technology can help us acquire millions of customers per year. After 20 years, we already have 4 million customers. This year, for example, MB can acquire 2.2 to 2.5 million more customers. It shows that, in just one year, we can attract the number of customers that is equal to that in 15, 20 years. I think it’s a golden opportunity for the country.


Could you share with us how you are collaborating with different stakeholders to drive digitalization and e-banking within your bank?

We have tried different ways to attract more customers. The reasons we chose to cooperate with Temenos is because we realized that the number of highly affluent customers is increasing day by day. So in the domestic market, no banks have served this customer segment with that level of service.

To implement the target of reaching affluent customers, we chose Temenos to be our partner because we’ve had a long-standing relationship with them. We understand Temenos’ technology quite well because we have been working with them more than 10 years, since 2004. The question is, because generally speaking, rich people in Vietnam are now in the age range of 30 to 50, which is quite young. Taking full advantage of digitalization and other different ways to serve this customer segment is my choice.


What is the role of digital services/products such as APP MB Bank in allowing you to become “the most convenient bank” in Vietnam?

How do you access the level of convenience of a bank? From my perspective, it’s the speed you deliver your services to your customers, the number of customers you are able to serve at the same time. For example, if you can serve at high speed, but only for a few customers, that’s not enough. I want to serve 10 million customers at high speed. How can we do that?

So in some giant banks in Vietnam, we have the Big Four banks that serve customers by network with a huge number of branches across Vietnam. But now we don’t do that way, that’s not the right trend to follow. We acquire and serve customers through platforms, which are App MBBank for individual customers and Biz MBBank for SME customers. Customers now don’t like to come to a physical transaction place. It’s too complicated because it involves a lot of paperwork, procedures and is very time-consuming.

Another factor comes from traffic. You don’t want to spend your time and your money on transportation to go to the bank. Almost everyone understands this situation. TPBank, Techcombank, even Vietinbank and Vietcombank understand clearly the story I told you. That’s why the difference between us lies in speed. We all understand this goal and the way to achieve the goal, but if I go faster, I will achieve the goal sooner. Our bank uses speed to attract customers because we are one of the first banks in Vietnam to build just one platform for individuals. We are one of the first banks to build just one platform for SMEs. The bottom line is we use platforms to serve customers. This is my strategy. That’s it, nothing more – just focusing on the platform. 


Could you share with us the role MBBank plays within the financial ecosystem, and how you have supported the socioeconomic development of the country since your origins as a military bank?

I would like the answer the latter question first. For our country, we contribute by creating good revenue, profit, and the number of employees. Actually now, they talk more about productivity. The number of employees does not carry that much significance anymore. It is revenue and profit that play the most important roles. On the other hand, the number of customers we can serve at high speed with high-quality services and good experience also offers positive contribution to the country. We build a financial ecosystem. The question is how we can serve customers with a smart process. A smart process comes from speed, simple services and the number of customers served. If you cannot provide your customers optimal services so that they’re happy with the experience, you cannot achieve to gain millions of customer. The number of customers you serve is a very important KPI to show the country that your bank is good. For me and our bank, we find that we have some ways to serve a huge number of customers by setting a financial ecosystem group with 6 companies working on finance, insurance, security, asset management, even micro finance services. We have platforms to serve different kinds of services. That’s the ecosystem in MB. Now we just need the number of customers. We aim to acquire 10 million customers in the near future. That’s the way we have supported the socio-economic development of the country.


What do you consider have been the main drivers behind this success, and what would you describe as the core competitive advantages of the bank?

The key for our success is our hunger for success. The second factor is platform, how you understand the customers. The customer is the key to building a good platform, good services.


Could you share with us the midterm strategy (2017-2021) you have put in place towards achieving the strategic vision “To be the most convenient bank”, sticking to the strategic goal of becoming one of the “TOP 5 commercial banks on business efficiency and safety”. Which growth segment have you identified as strategic towards becoming one of the top 5 commercial banks?

We’ve already been in the top 5 commercial banks. In Vietnam, there are two ways to understand number 5. The first way is profitability. The second one is total assets. Regarding profitability, we are in the top 5. Regarding total assets, we are at number 7. After some Merger & Acquisitions, some banks become bigger than us. In Vietnam, we balance between the growth rate of total assets and outstanding. It’s very difficult to increase outstanding because the State Bank always sets the limitation to all the banks in system. So the opportunity to grow very fast is not possible now, but we hope to see that in the future.


How do you see your result evolving over the next few years and how are you working to mitigate the impact of Covid 19 on your business?

If you look at some reports in China, the provision of some major Chinese banks increase by 250%, while that of big Singapore banks increases by 50% to 170%. Singaporean banks’ profits fell by 20-37%. At MB, new profit growth for this year declined by 10% compared to last year. I think it’s reasonable. But the impact on customers, especially the SME sectors, is considerable. You can see the outstanding of SME and individuals this year is not efficient.

For this year, we will adopt the strategy to balance growth and saving costs. We are going to save 5-6% in operating costs this year to reduce interest rates for customers, so we will also reduce our profitability by 10%. I think now we should focus on ways of how to survive together, not try to increase revenue, profitability. That’s the social responsibility. So I think this year, how to survive with customers during Covid-19 is another perspective. We believe that, after Covid-19, opportunities will come to us. Once you have the ability to stand strong during a difficult time, you will come back stronger.

I believe the opportunity is now for Vietnam. Our country is very fair with others, including China, our neighbors, ASEAN, a lot of partners, and we have a very good relation with China, Europe and also the U.S. And post-Covid is the opportunity for MB as well. In another point, this is a good year for MB and also Vietnam, because we are not affected by Covid-19 as badly as many other countries in the world.

I think MB is in the number 1 now in Vietnam in terms of electronic transaction rates. We have gone from 30% a few years ago to 80% today. The rate of electronic transactions of MB is higher than other banks. We will take this advantage to move forward and to serve our current and potential customers better and better.