2020 was a tough year for Vietnam, yet the economy has reaped remarkable achievements. Analysts believe that Vietnam is showing stronger resilience than most similar economies and that its medium- to long-term economic outlook remains positive.
Vietnam, with its 97 million inhabitants, 69% of which are unbanked, has a high demand for banking and financial services. Over 90% of financial transactions inside the country are still conducted in cash, hence the demand for other types of banking & financial products is set to grow.
Vietnam Insider talked to Arnab Ghosh, co-founder and CEO of Rainbow, a group of companies for financial services in Vietnam and SEA about challenges and opportunities for financial services companies in Vietnam.
What’s your thought about global financial services trend in the next few years?
Financial services in 2020 was defined by a sudden acceleration in digitization and digital engagement—pushed by the impacts of the COVID-19 pandemic. Exchanges moved to remote trading, mobile banking transactions spiked, card-not-present transactions saw an unprecedented growth and mobile payments soared higher. With the post-crisis normalcy gradually settling into place, it is now becoming obvious that embracing disruption and accelerating the pace of technological change is emerging as the most creative force in the financial services ecosystem today. The next few years will be defined by trends that include rise of sharing economy in financial services, digital becoming mainstream, death of branches – birth of hubs, FinTech driving the new business model, customer intelligence taking over as the new revenue leader, cloud becoming a dominant infrastructure and Asia emerging as a leading hub of innovation in financial services.
How about digital strategy, speed and inclusiveness driving a stronger customer experience?
Digitalization has changed every aspect of people’s lives and has also penetrated their behaviour towards financial services shrugging off the challenges presented by the pandemic making digital banking an irreversible trend. Unfortunately, while we saw many organizations providing new digital engagement options, few have created the experiences that consumers demand. While 2020 witnessed a significant increase in digital application capabilities both for accounts and lending, the time to complete the processes for most remains sluggish at best. If the time it takes for a digital application is over 10 minutes, banks and consumer finance companies are only faking digital.
People said blockchain, artificial intelligence, and open banking are making waves in the financial sector. Do you agree with this and why?
While I do not necessarily agree with them making waves, I do see them emerging and slowly cementing themselves as foundation of financial systems in the coming years. I believe the use of the blockchain “public ledger” will go on to become an integral part of financial institutions’ technology and operational infrastructure. Advances in AI and open-banking will start a wave of ‘re-shoring’ and localization while also driving how customer experience credit.
As an expat living and working in Vietnam’s finance industry for many years, what’s your prediction for Vietnam’s financial services market?
In my last 10 years in Vietnam, having spent equal amounts of time in banking and consumer finance respectively, I had the opportunity to cover both the breadth and depth of the market and have witnessed a sea of change in the financial services industry in Vietnam and people’s general attitude towards this sector. While the trends I highlighted for global financial services mostly holds true for Vietnam as well, there are some key differences. Financial services industry in Vietnam has done extremely well in 2020 remaining immune to the impact of Covid-19 with post-tax profits increasing by over 10% across the sector. Hence, Vietnam is less likely to witness a death of branches but rather the branches themselves will evolve into technology hubs. I remain broadly positive over the longer-term outlook for Vietnam’s banking and financial services industry, which I expect will continue to expand at a solid pace, supported by robust demand and a growing middle class. The key trends that will drive the positive outlook will include consolidated ecosystem banking/finance (1MG, Grab, Rainbow), fintechs moving focus from digital payment to personal and SME finance, rise of standalone digital banks aimed at the youth, seamless adoption of fintechs by traditional financial institutions and deeper integration of AI/ML based credit decisioning.
I can see Rainbow providing broad range of businesses, which are your key focuses for Vietnam market?
Rainbow at its core is a financial technology marketplace that operates in different segments through three companies in Vietnam. We are focused on developing an eco-system of end-to-end digital platforms aimed at creating a new-in-class experience for customers for their different needs. Our platforms include MyRewards – an unique B2C loyalty platform that aims to rewards every spend, MyInsure – an insurtech platform aiming to deepen insurance penetration in Vietnam, MyMoney – a platform that redefines how customers compare and experience financial products, MyBike – a great marketplace for motorbikes and MyHero – a sales-tech platform that powers our 3,000+ sales team providing the essential last-mile physical conversion through our financial services distribution company.
Interesting to see Rainbow also venturing into the B2C loyalty space. This space is currently dominated by brands like VinID, Grab Rewards and other airlines/credit card based loyalty programs. How is MyRewards positioning itself?
Indeed it’s a crowded market and hence it is imperative to find the right positioning by solving a real problem that consumers face here. Most loyalty programs currently popular are based on a desired action from the consumer – fly a particular airline, book a specific ride-hailing service, use a credit card, etc. To add to this almost loyalty programs are focused on similar segment of merchants with are typically are segmented for mass-affluent and upwards. When was the last time you got rewarded for your daily micro spends like having your morning pho or mid-day banh-mi or your evening café sua da? Probably never and that’s the problem we aim to solve.
MyRewards achieves this by rewarding our users for their everyday essential spends that typically go unrewarded so that they can collect these points to redeem against non-essential spends like a nice dinner with the family or a surprise gift for the loved-one. In addition, they can also choose to redeem their rewards against discounts on financial products within the Rainbow ecosystem. We target to enroll 15 Million users and digitize 500K micro-merchants over the next 5 years with more than 100M transactions annually. The transactional data that we will collect from our users and merchants will help to connect them to tailor-made financial products including insurance, loan, credit card and micro-investment.
Let’s talk about MyInsure. The insurtech space has been recently gaining a lot of attention with many new entrants. How does MyInsure plan to improve the penetration of insurance products in Vietnam?
MyInsure is an AI-powered health & lifestyle based insurtech platform that would offer aggregation of unique, tailor-made, customer focused insurance products that understands the changing and dynamic lives of today’s customers. A single platform that connects customer, sales force, Insurance partners and distributors in real time and creates a second to none customer experience. We have secured a strategic partnership with PVI to design unique digital insurance products for our customers.
With the current low penetration of insurance in Vietnam, our aim is to drive inclusive insurance in the country by educating customers about the benefits of staying protected, creating products that meet their real needs and simplifying both enrolment and claim process. Our contribution to inclusive insurance begins with an ID Theft policy that is given absolutely free to all MyInsure platform users for the first year and the issuance of this policy doesn’t take days or minutes but just 30 seconds. This policy is designed for the young generation and protects them against financial and reputational loss due to compromised identity including bank account and payment cards. MyInsure will further mature into a connected technology app that will reward customer for staying healthy and give them access to exclusive offers related to health and lifestyle. We aim to protect 5M customers in the first 5 years of launch with this platform.
It appears that Rainbow Group is building an enviable set of platforms – both financial and non-financial. How do these platforms work together?
What we are building here is not just marketplace platforms but an ecosystem that aims to gives back to the society we operate in by driving our financial inclusion agenda. Our ecosystem will ultimately digitize micro-merchants, give them access to small ticket digital credit so they can invest back into the business, reward mass customers who represent the largest consumer segment in Vietnam, deepen the penetration of affordable essential insurance, simplify access to traditional financial products and offer everybody an opportunity to have an additional income stream (with our MyHero platform). We have made significant investments towards customer data platform (CDP), artificial intelligence (AI), machine learning (ML), a state of the art CRM and marketing tool in addition to design thinking capabilities to achieve this.
Very interesting indeed. When can we see these platforms in the market?
We are ready and giving some final shine to our platforms before they hit the market. MyInsure and MyHero are scheduled for launch in April 2021 while MyRewards and MyMoney will be launched in May 2021. The platforms will be available for both IOS and Android users as well as on the web. We are very excited for our launch and believe strongly that Rainbow Group ecosystem will redefine how consumers, merchants and corporates view loyalty, sales and financial product journey.