The financial services industry is going through dramatic changes as a consequence of changing customer behavior, increasing expectations, channel proliferation, disruption, innovative use and adoption of new technologies and the digitization of business and society in general. Cost reductions, increasing top-line revenue and mitigating risk remain the key drivers, also in retail banking.
The digital transformations taking place in finance are driven by many common challenges and opportunities across the industry, whether it concerns insurance, retail banking or other financial services. At the same time, in each of those financial industry segments there are several specific challenges, depending on the digital transformation maturity level, the region, the overall ecosystem, the customer context, the business scope and the degree in which digitization has taken place and processes have been connected.
Deputy Chief Executive Officer cum Chief Information Officer at Vietnam International Bank (VIB), Mr. Tran Nhat Minh talks to Vietnam Insider about the journey and challenges in digital banking transformation evolutions in his bank.
Could you share some facts and figures about VIB’s digital transformation process over recent years? How did these changes help improve your business performance last year?
Digital technologies are rapidly disrupting business models across industries and Banking is not an exception. VIB, as a player in the industry is also actively engaged in transforming our business to digital.
VIB started our digital journey 7 years ago, when we stepped up from the market’s standards by adopting SOA Architecture in preparation for a digital transformation. 2 years later, in 2014, with the emergence of mobile technologies and rapidly changing consumer behavior, VIB once again set the pace by introducing our MyVIB mobile banking application to the market, going beyond normal banking apps by providing multiple value-added services. It is still considered one of the most innovative mobile banking apps on the market, as well as one that offers the best user experience.
By the year of 2015, VIB pioneered digital procedures to open a bank account online. This process not only allows customers to apply for a current account online within minutes, but also reduces time and resources of VIB’s operational human force.
2016 & 2017 we focused on open collaboration with Fintech Entrepreneurs to launch a series of innovative services that go beyond banking services, such as booking hotels and flights, or transferring money on social media using MyVIB social keyboard.
2018 was the year that we reinforced VIB’s website and transformed it into a sales platform, with completely new and accessible user interface and sale process. As a result, the number of visitors has doubled since launch, and the number of new users increased by nearly 120%.
This year, we will continue to reinforce our digital platforms by embracing digital technologies such as Robotics Automation, Machine learning, and Chatbot.
What kinds of technology has VIB been investing in to upgrade your banking system and services in recent years? How is the progress of implementing digital core banking system to accommodate Internet banking payment services and digital payments at VIB at the moment?
VIB has been actively seeking the right technologies that we can embrace overtime without causing too much change in our legacy systems. Instead of pouring out a lot of money in new technologies, we focus on optimizing our legacy systems and at the same time investing in suitable digital technologies (such as Enterprise service bus, Robotics Automation, Machine learning, Open API, and Cyber security) and ensuring that these new technologies are consistent with our enterprise architecture.
We upgrade legacy systems such as Core Banking, Core card, e-banking and payment gateway periodically to ensure service consistency and 24/7 availability.
We focus on expanding our collaboration with Fintech to offer creative and flexible digital solutions to consumers.
Besides working with world class IT companies such as Oracle, IBM, Microsoft, Cisco in normal traditional IT banking model, we are also making our own way to explore open-source technologies. Our goal is to harness technologies that are cheaper, easier to implement and which would increase our in-house capabilities.
How has VIB’s operational model and business strategies changed in order to adapt to the digital transformation trend as well as to capture opportunities from the local banking sector?
The world is at the early stages of Industry 4.0, and so is Vietnam. We have massive opportunities regarding digital transformation. 66% of our population is Internet users. 72% of those who use smart phone and banking customers are responsive to the trend: 44% are using digital services, the e-wallet market is booming with more than 10 million users from 20 active e-wallet companies in the market. Digital banking is critical to this trend towards a cashless society.
At VIB, we focus on offering fast, simple and secured digital services across digital channels. MyVIB is recognized as a powerful app that integrates multiple functions beyond normal banking app. Our sales website is becoming a primary channel for external customers to open accounts and cards. We are developing internal digital solutions to serve internal customers, aiming to provide smart and interactive tools that save time and money for both the bank and the customers.
Digital interaction between banks and customers has now been considered among the most difficult challenges facing banks in Vietnam. What do you think about this statement? What barriers has VIB been facing?
Digital technologies are changing consumer behavior and new competitors (such as Fintech) are on the rise. It will be increasingly difficult for banks, specifically traditional banks to interact with customer successfully without effective communication on digital channels. At VIB, we believe the solutions are customer centric design thinking and a digital marketing approach.
In the process of developing digital banking, we have been facing some barriers regarding customer behavior. For example, when we first introduced our mobile banking app and internet banking to consumers, they hesitated to use these services due to lack of trust, fear of insecurity and unclear benefits. We had to make sure to communicate frequently with customers through digital marketing and communication. By adopting the customer centric design thinking, we made sure that the services were fast and easy to use, so as to foster a sense of security and encourage consumers to continue using the apps. We measured performance, analyze and improve daily every single detail in interactions between VIB and our customers. Until this day, this process is constantly repeated to ensure constant optimal experience.
What are your plans and strategies to accelerate technology investment for the bank’s digitalization process in the future?
VIB is using 6-7% of our total revenue to invest in technologies. As mentioned above, we will not only be investing in new digital technologies but also investing to improving the legacy systems. We can’t just get rid of the legacy systems in the short term, but we also can’t delay the digitalization process, hence we plan to get the best of both worlds by proactively developing and upgrading both old and new technologies and ensuring compatibility. The goal is to serve our traditional business while making our way to digital business.
Digital banking is one of VIB’s top strategic directions. Digital transformation is not just a trend, it is a must for our survival over the next 10 years.
This article was originally published on July 18, 2019. All content © 2019 by Vietnam Insider and may not be reproduced by any means without permission.