Vietnamese commercial lender Techcombank, short for Việt Nam Technological and Commercial Joint-Stock Bank, has been positioning itself at the forefront of innovation in the country’s financial sector. Innovation in banking is not about competition with the rise of fintech. It is more about giving customers the best experience they can get. Understanding that ultimate goal, Techcombank has been tirelessly transforming itself to deliver greater benefits to its customers. While acknowledging the bank has established a strong track record as a financial services innovator in Việt Nam, Techcombank’s CEO, Jens Lottner, reckoned that there was still a lot for it to do to better understand customers.Techcombank appointed Lottner as its new CEO in August, who came from Siam Commercial Bank, Thailand’s largest commercial lender. Lottner shared his thoughts on the growth potential in Việt Nam as well as how Techcombank will invest in innovation going forward.    

when I got the offer from Techcombank to go to Việt Nam and help one of the best institutions in the country to become even greater in its pursuit for customer excellence,he accepted it. He first came to Việt Nam in 2009 to help establish McKinsey’s practice in the country. At that point in time, Techcombank was the first McKinsey client in Việt Nam. The country then, as today, was full of optimism and dynamism. There is a lot to be done and a lot of opportunities so that each day becomes better than the day before.  He hoped Techcombank management team will also ask to understand what customers really want, and not just pretend that we know the customers. There are techniques to get to a much deeper customer understanding than just having an individual fill out a survey. If you do ethnographic research, you will actually accompany a customer for a day, observe what he/she is doing, what kind of financial transactions they are doing, and how complicated life can be for a customer to do his daily banking. Jen Lottler thinks they need to get to that level of customer understanding. He said “If you ask me about cost, I think we should only have costs which are helping to create customers value”. Ultimately, every bank employee should interface with the customers and not spend time with internal bureaucracy between departments. In order to do that, we need to invest in technology to streamline our processes. At the same time, customers will still want to have a human interface, so we need to enable our staff to deliver a better experience to our customers. Financial services are still very fragmented. There are still a lot of smaller banks in Việt Nam compared to some of the other markets right now where the big banks have a much higher share. If the banks take the top six, they would constitute above 70 per cent. According to him, it is harder to make the required investments to modernise your business and operating models, as you can’t spread your fixed investments across more companies or customers. So He expects more differentiation to happen between the leading banks and the rest of the industry. And I would expect this trend towards a more consolidated banking industry structure to accelerate as the investments required for staying ahead will increase over time. Techcombank has always been at the forefront of innovation. The number of customers who are coming in through Techcombank’s digital channels is pretty high compared to a lot of other banks and they are constantly trying to improve it. In order to kick-off to help Techcombank to achieve initiatives, according to Jens Lottner, The core enabler for that is data. Data allow us to understand our customers much better than we were ever able to in the past. Techcombank is trying to be the best institution in Việt Nam when it comes to using technology and data to understand customers. Once we are able to do that, it's just a question of training people to use that information to continuously create better solutions for our customers.. So there's much more information we have on the customer than pure transaction data. The amount of data you can actually get as a bank is so rich compared to what we're currently doing. Banks in Việt Nam are still very much behind in terms of innovative technologies in data mining. In fact, very few banks in the world are close to the experience you can get from Amazon or Google. But you can close some of these gaps very quickly. It's a question of dedication to having the right talent and putting the resources in to collect this data and transform it into insights and ultimately action. We're really serious about this and are hiring people who are well ahead in these capabilities to join Techcombank. 

How do you prepare for degital banks in Việt Nam?

 In some markets, even in Singapore and Thailand, it's unclear which customer problems the new companies are really trying to solve. In markets like Indonesia for example, where Gojek is very strong, they solve a customer problem where banking penetration is not so high and they offer a much more convenient service compared to what banks can offer. But to give you an example, in Thailand, you can do any kind of payment straight from your banking app. We have not seen big inroads from Alipay, PayPal, or any of these tech giants because there is no real pain point. Is there an intrinsic customer problem in these markets which would not be solved if they would suddenly disappear? Not really. Therefore, I think it's unclear if it would be sustainable.The fact that Techcombank has created zero-fee accounts already made it much harder for others to come in. But if a technology can provide mass access to financing, it invites people to come in and start establishing a foothold. And that's where we need to figure out how we respond. Our credit growth will continue the momentum. We will probably see acceleration compared to the beginning of the year. A lot of our credit exposure is in areas which are less affected by COVID-19. The exposure mainly sits in real estate and mortgages, with relatively less impacted customers. People are coming out of the crisis with a better handle on it. The stimulus programme by the Government was also helping, so we have a lot of liquidity in the market. First and foremost we need to acknowledge that this and also the next year are still very challenging, for our customers and hence also for the banking industry. We have already provided a lot of support to our customers, in the form of more credit lines, restructuring options, interest rate reduction, etc. We monitor the situation very carefully and stand ready to help our customers depending on how the situation develops going forward. Our focus is very much on our existing customers, so we will probably be more careful with expanding into new areas or into new relationships. In the first half of 2020, Techcombank recorded a profit before tax (PBT) of VNĐ6.7 trillion (US$289 million), up 19 per cent year-on-year and accounting for 51.5 per cent of the full-year PBT target approved by the AGM. The bank’s profit after tax reached VNĐ5.4 trillion, compared to VNĐ4.5 trillion achieved in the first quarter of 2019. The bank continued to lead the market with a healthy 2.9 per cent return on assets (ROA) for the 12 months ended June 30. The capital position was strong with Basel II CAR at 16.9 per cent. Total deposits as of June 30 were VNĐ249.9 trillion, a year-on-year increase of 13.4 per cent. CASA deposits grew by 29 per cent year-on-year to VNĐ86 trillion, while time deposits improved 7 per cent to VNĐ163.9 trillion, reflecting the bank’s continued focus on CASA growth. CASA ratio was 34.4 per cent for the quarter ended June 30, up from 30.4 per cent in second quarter of 2019.