Sunday, 27 September 2020

TPBank's Nguyen: "Technology is only one-third of the answer"

By Foo Boon Ping

TPBank CEO Nguyen Hung shares how the bank’s digital transformation is being anchored not just on technology, but also right mindset of its staff and process.

  • TPBank’s goal is to build a win-win partnership with neobanks and fintechs, instead of treating them as rivals
  • TPBank investing in new and critical platforms such as AI, big data, biometrics and Open API
  • The bank is undertaking POC (proof of concept) projects in its digital transformation initiative to plot ideas on reasonable scales and minimise financial loss and other risks

Tien Phong Commercial Joint Stock Bank, popularly known as TPBank, has been in the thick of digital transformation for years now as it aspires to be the leading digital bank in Vietnam. Although a relatively new financial institution – having been founded just in May 2008 – TPBank’s digital banking services and products are becoming more and more diversified and friendly to customers.

TPBank prides itself as inheriting strength from strategic shareholders, including DOJI Gold & Gems Group, FPT Group, Vietnam National Reinsurance Corporation (Vinare), SBI Ven Holding Pte. Ltd (Singapore), IFC International Finance Company (under World Bank) and PYN Elite Fund.

In July 2012, the bank appointed Nguyen Hung as CEO. Nguyen, who was re-appointed CEO in September 2020, has 30years of experience inthe banking andfinance sector, including more than 20 years of senior management.

Nguyen discusses in this instalment of the Reinvention Series TPBank’s investment in emerging digital platforms to drive better results in key areas such as risk management, human resources management and marketing. He also emphasises the need to invest in people through education and training to make sure they have the right mindset as they balance innovation with development.

 

The following is the edited transcript of the interview:

Foo Boon Ping (FBP) : What does “reinvention” mean to you personally?

Nguyen Hung (NH) : “Reinvention” to me is to constantly find something new, to renew myself, and to be better at what I’m already doing. It doesn’t have to be something brand new that has never been found or been done by anyone. As long as it is new knowledge to me and brings me new experiences which help me improve myself, that is what I try to do every day.

Digital banking is transforming the landscape in Vietnam and ASEAN, with neobanks and big tech challenging the traditional banks. In your opinion, where is the future headed for banks like yourself?

The rise of fintech is clearly getting more powerful than ever. Even though it does bring challenges to traditional banks, I don’t think of fintechs and neobanks as rivals. I’d like to think they’re “partners”. As innovative as they are, there are some businesses that fintechs and neobanks have not been able to do but only traditional banks can. After all, traditional financial institutions have been around for hundreds of years, they cannot be replaced so easily in a day or two.

That’s why I believe cooperation is the best way to go. We want to work with fintechs and neobanks for their expertise in technology and offer them ours in providing financial services as well as risk-management, to build a win-win partnership.

TPBank is a rather young bank and we keep ourselves open-minded. We also establish fintech departments within ourselves so that we can guarantee to have both the advantages of advanced technology and traditional banking expertise.

FBP: What does “reinvention” mean for your bank and what you’re trying to drive? Why is it so important?

NH: “Reinvention” process for our bank means both digitisation and digitalisation. Some projects are about digitising parts of the original process to better suit the current demand. However, some other projects require a complete transformation of the product to meet our customers’ expectation. In a way, it is the balance between invention and reinvention.

In essence, with every project, customers’ benefit will be our main focus, and we try to balance our economics and technological resources to make strategic decisions. Naturally, all resources have their limitations. Therefore, it is the CEO’s duty to prioritise multiple investments. Only by doing that can we maintain our competitive advantages yet balance our financial book and guarantee the confidence of our shareholders, while serving the customers to the best of our abilities.

FBP: What role is technology playing in the reinvention of the bank? Can you give us some examples of technologies in use and how they’re supporting this?

NH: Technology is surely one of the three most important links in the reinvention of the bank. Along with that is people (or “Mindset”) and process. I believe that only when these three elements work together to change can we come up with new and advanced financial products / services.

For the time being, we are investing in new and critical platforms such as AI, big data, biometrics and open API. These technologies will not only play a big part in creating new and improved products / services for our customers, but also benefit us in terms of managing certain operations of a financial institution such as risk management, human resources management, marketing, etc.

With a technology partner like Backbase, our time to market has been significantly shortened as it took only 10 months from kick-off to successfully migrate nearly three million customers to the new platform. And in the eighth month,TPBank’s team could confidently take over the development process.

The new microservice architecture allowed us to expose to Backbase’s services and to different partners. Overall performance of the system was also greatly enhanced even with millions of request per day.

FBP: With reinvention comes risks and failures. What professional “failure” have you survived?

NH: For us, digital transformation is not simply a project, but it is a strategic roadmap that includes many experiments and POC (proof of concept) projects. Due to the frequent changing of customers’ habits, all of our plans must have high agility, which means they can be done quickly with minimised impacts so that we can start over if they don’t work out.

Much like all financial institutions, our investments can’t always be successful; we have made the wrong bets at times. What we’ve learned from our failures is to carry out POC projects, to pilot our ideas on reasonable scales, and to always have an exit strategy so as to minimise financial loss and other risks. For example, we have set up a pilot environment of nearly 10,000 employees, which is proof of how cautious we are when we aim to alter customers’ behavior in general.

FBP: How are you teaching people at your bank about risks and failures?

NH: There are always occupational hazards in any work that we do, maybe even more so in the banking industry, as these hazards can involve issues like finance, reputation and the law. Therefore, understanding, classifying and managing risks are extremely important to the bank.

At the same time, we must have the right mindset when it comes to risk management so as to balance with innovation and development. Simply put, risks should be classified based on characteristics as well as severity. Once that’s done, we can come up with suitable action plans.

FBP: Banks don’t necessarily have the best reputation and it’s a highly regulated market. How do you think your bank can become the bank that people love?

NH: Our slogan is “A deeper understanding”, which means whatever we choose to do eventually is to bring meaningful values to our customers. TPBank does its best to understand the customers’needs and even to foresee what will benefit them most in the future. We believe once our customers see how our products / services can better their lives, we’ll naturally become “the bank that people love”. That being said, TPBank’s goal has always been to bring true values to society, not simply build up our reputation and status.

FBP: What are your personal aspirations for the new year?

NH: This year we were met with the COVID-19 challenge and so our priorities must change accordingly.

For our customers, we’re doing whatever we can to help promote the economy and overcome the damage of this pandemic by debt restructuring, interest and fee reductions.

For our employees, we’re currently providing them with the best working conditions and opportunities without resorting to pay cut or staff reduction.

For our shareholders, we’re maintaining profitability as planned by reducing costs and minimising losses.

In the first quarter, we can still closely follow the plan and have nearly the highest growth rate in the industry. However, the rest of the year will be very challenging and we must stay focused in order to guarantee growing profit.

FBP: What personal advice do you have for people wanting to follow in your footsteps?

NH: In my opinion, there needs to be a transparent and cooperative top-down digital transformation strategy that transpires from the leadership to every employee. As I mentioned above, technology is only one-third of the answer. What we need to invest in is the people, or their mindset to be exact, through education and training. Only by that can we make real changes to a system with old habits that’s been around many years.

FBP: Thank you for sharing your thoughts with us.

 



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