Executive interview: How Vietnam’s MBBank sets the highest level of banking standard

Luu Trung Thai, the Vice Chairman of the BOD cum CEO at Military Commercial Joint Stock Bank (MBBank) believes that the bank has achieved breakthroughs as it sees opportunities in the Covid-19 time.

In a recent interview with USA Today, a very popular daily newspaper of America, published on May 5, CEO MBBank has affirmed that in the context of Covid-19, MBBank has successfully kept the lights on while considering Covid-19 as a golden opportunity for the bank to promote digital transformation.

The banking landscape in Vietnam is being significantly reshaped by digitalization. And leading this digitalization wave is MBBank, which is making many aggressive and successful moves within the digital sphere: such as establishing its digital bank as an independent beta bank, creating its banking app (MBBank App) as a platform for multiple users, providing banking infrastructure (including license) as part of its services, and positioning itself as a technology-driven company. At the same time that MBBank is growing its assets, customer base and digital services, Vice Chairman of the Board of Directors cum CEO, Luu Trung Thai, has set the bank’s goal to be in the Top 5 – while striving to reach the Top 3 – commercial banks in Vietnam in terms of quality and efficacy, while continuing to lead the nation’s digital transformation.

Related: How Vietnamese bank will digitize services for import and export firms?

The digital revolution has been sweeping across Asia recently. There has been a steady trend in the region of people turning to their mobiles and the Internet for banking services, with the number of physical branches in decline as more and more customers opt for the convenience of online services. In Vietnam, the prevalence of information technology was credited by the World Bank as one of the primary reasons the country dealt so rapidly and efficiently with the outbreak of the coronavirus pandemic. Not only were businesses able to go digital, consumers embraced online shopping and increasingly turned to the Internet for information on public services. Banking, with a solid foothold already in place, adapted swiftly to the changing mindset of customers in the age of COVID-19.

Vietnam is one of Asia’s fastest-growing digital economies, with the sector expected to represent 30% of the national economy by 2030. At a consumer level, smartphone penetration in Vietnam stood at 44.9% according to data from the latest annual Newzoo Global Mobile Market Report, the 15th-highest level in the world and which represented 43.7 million smartphone users. Accenture estimates that internet usage in the country will rise to cover 65.1% of the population in 2022, at a total of 63.8 million users, with smartphone penetration projected to reach 52%. By comparison, Japan’s total penetration in 2019 was around 57% and China’s just shy of 60%.

“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,” Luu Trung Thai told the reporter. “Rather, customers tend to conduct transactions on their mobile through digital platforms.” “Regarding profitability, we are in the top five,” he notes. But there is a key difference in what MBBank offers and it is key to the institution’s overriding strategy: “For Vietnam today, we find that digital transformation is an opportunity, a tool to show Vietnam’s ability to other parts of the world,” Mr. Luu says. “In Vietnam, we also find some ways to serve a huge number of customers with the help of technology. At MBBank, we find that investing in platforms and technology can help us acquire millions of customers per year.”

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With the pandemic prompting a push to accelerate digitization of product and service activities, Vietnam is currently implementing the National Digital Transformation Program 2020 – 2025, in which the banking and finance sector plays a crucial role. Under this Program, the Government of Vietnam has set a target for more than 50% of the population to have an electronic payments account by 2025, a goal which will be facilitated by MBBank’s digital services. At the forefront of the nation’s digitization drive, MBBank, with a vision to become the most convenient bank in Vietnam by 2021, has been taking pioneering steps towards digital transformation. It has created a series of new platforms, such as the MBBank App, the BizMB App, SmartRM and Smart CRM, providing outstanding digital experiences for its customers.

Through these digital platforms, businesses in a variety of fields can provide their essential products and services to customers. Indeed, rather than going to physical offices to pay their electricity, water, and phone bills, or education and health care fees, as they had to in the past, customers now can conduct payments quickly and conveniently on their mobile through the MBBank App, which is harnessing the power of the latest Industry 4.0 technologies. Thanks to the power of artificial intelligence, the MBBank App uses Electronic Know Your Customer (eKYC) technology to verify that a customer’s identity matches their ID card, which ensures that opening an online bank account with the MBBank App is much easier and safer. Meanwhile, Big Data analysis is significantly facilitating the credit application process for customers, allowing for the automatic generation of customer credit ratings.

As a result of these pioneering steps in the digital sphere, MBBank made a major breakthrough in 2020. “It took us over 20 years to acquire 4.5 million customers. But within the year 2020 alone, thanks to enhancing digital transformation, MBBank attracted two million more customers. It shows that, in just one year, we can acquire the same number of customers as we did previously in 10 or even 20 years. I think it’s a golden opportunity for the country,” Mr. Luu says. An MBBank report shows that, in 2020, its transaction rate grew three-fold, reaching 90 million electronic transactions. More than 84% of the transactions were conducted via digital channels. And this number is expected to increase even more in the near future.
In August 2020, MB Shinsei Finance Limited Liability Company (Mcredit), a joint venture between MBBank and Japan’s Shinsei Bank, launched the Mcredit JCB Credit Card in an effort to bridge the gap in the consumer credit market. Card holders will benefit from zero interest at over 40,000 retailers in Vietnam, as well as access to over a million ATMs globally. It is all part of Mr. Luu’s vision for MBBank and the sector at large: no waiting around. As digital banking reduces the need to travel to branches, maybe getting stuck in traffic en route, only to then join a queue at the destination, targeting like-minded customers produces the best of both worlds.

“How do you assess the level of convenience of a bank? From my perspective, it’s the speed you deliver your services to your customers and the number of customers you are able to serve at the same time. For example, if you can serve at high speed, but only a few customers, that’s not enough. I want to serve 20 million customers at high speed,” Mr. Luu says. MBBank also recognizes the potential for the digital transformation to have a positive impact on humanitarian work. As part of its participation in Vietnam’s National Digital Transformation Program 2020-2025, MBBank has been shifting charity work from the traditional to digital sphere through iNhandao (https://inhandao.vn), a government-level digital humanitarian platform in coordination with the Vietnam Red Cross and Vietnam’s Post Office.

With a modern, convenient and easy-to-access approach, this platform offers a transparent method for people to help those most in need, whose addresses are made available on the platform after being checked and verified by the Vietnam Red Cross. Money donations and the payment of goods designated for those in need can then be made online and delivered to beneficiaries through the Post Office’s Smart Logistics system. Even during the COVID-19 pandemic, humanitarian work has remained a top priority for MBBank. Vietnam’s rapid response to the threat of novel coronavirus spared the country from the worst of the pandemic but with the world in the grip of the next wave of infections, digital banking is likely to be as much part of the “new normal” panorama as online learning, remote working and reduced capacity recreation. What began as an organic shift based on an increasing tendency for everyday transactions to be performed remotely for convenience could well prove to form the very fabric of online business and personal finance as the world moves inexorably towards cashless societies.

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“The key for our success is our hunger for success. The second factor is the platform, how we understand the customers. The customer experience is the key to building a good platform, good services” – said Luu Trung Thai.

For banks, the society entering the “new normal” represents a double-edged sword: social responsibility on the one side and the need to remain solvent on the other, with the weight of public opinion towards financial institutions weighing heavily on the sharp end. “I think now social responsibility is what we should focus on promoting,” Mr. Luu observes. MBBank has recently donated more than 2.6 million USD, equivalent to 60 billion VND, to the Vietnam Fund for Vaccination and Prevention of COVID-19, contributing to finance the country’s effort to secure 120 million doses of COVID-19 vaccines by the end of 2021.

“So, I think in 2020, how to survive with customers during COVID-19 was another perspective. We adopted a strategy to balance growth and save costs. In 2020, MBBank implemented a reduction in operating expenses with cost-to-income ratio (CIR) decreasing by nearly 3% compared to 2019, while revenue still increased by 10% compared to the previous year. 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,” added Luu Trung Thai.

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