Established in 1996, Orient Commercial Bank is one of Vietnam’s larger banks with nearly 5000 employees. Orient Commercial Bank was one of the first banks in Vietnam to embark on a digital transformation journey. In an interview with International Finance, Sanjay Chakrabarty, deputy chief executive officer and head of retail banking at OCB describes the challenges faced in the bank’s digitalisation journey in Vietnam and how the bank is leveraging digital technology to bring the bank closer to the customer.
International Finance: Could you please share some facts and figures about the digital transformation process of OCB over recent years? How could these changes help improve your business performance last year?
Sanjay Chakrabarty: Orient Commercial Bank was clear that our digital strategy had to be embedded in our core business. So, we didn’t simply go around copying ideas from developed markets and implementing them. We put in a lot of effort to understand where we could harmonise our digital strategy with our ongoing business model which includes the physical network. We worked with well-established consultants to build out our roadmap and it took us a while to get full clarity on the digital transformation that we wanted to bring about. We realised that it is so such more than just technology, it is also a mindset and a culture. Today, I can confidently say that digitalisation and automation are part of our corporate DNA.
This process has changed the way we do business. Ninety percent of all new customers we acquire now have complete at least one online transaction in the first six months. Forty five percent of our credit cards are being sold exclusively through digital channels. We have unsecured pre-approved loans that are delivered and fulfilled through digital channels. We are now selling insurance as well as investments through our mobile app – the OCB OMNI platform. This has resulted in a significant enhancement of the customer experience we deliver. Our front end staff work seamlessly between digital touchpoints and physical ones.
What kind of technologies has OCB been investing in upgrading your banking system and services in recent years? How is the progress of implementing the digital core banking system to accommodate Internet banking payment services and digital payments at OCB at the moment?
The enhancement of technology is a continuous process. We upgrade our technology, no matter how small the requirement, every month. Today, we have a frontend that cuts across mobile app (OCB OMNI), online banking, and systems used by tellers. What this means is that any customer can interface with us through any of the channels – physical or digital, and still have a consistent experience. But that’s just the frontend. At the backend, we have a customer relationship management system (CRM) that gives us a 360-degree view of the customer at all times.
We have a workflow system for loans, so that we can track loan applications as they go through different stages and we can keep the customers informed. Our data hub that ties in with the 360-degree customer view, can make trigger-based offers for various products on a real-time basis through mobile apps. We connect to our partners through APIs which then support frictionless payments through our bank. All these capabilities have required significant upgrade of systems, but more importantly they have called for re-orientation of the mindset of our people who design products and customer experience.
As you have alluded to in your question, one of the most primary needs for a retail customer is to be able to make payments. For a customer to stay loyal to a bank, the bank must enable frictionless payments for most of the recurring payment needs of a customer. If the bank cannot do that, it will not be relevant to the customer anymore. We understand that. So, we have built a direct payment network with phone companies and utility companies, hundreds of schools, key universities, and hospitals. We have also tied up with platforms that gives us access to large merchant networks where we have set up our QR code-based payments platform.
At OCB, we have also continued to enhance our credit card and debit card capabilities which were the first means for cashless payments. The internet economy of Vietnam is roughly three percent of GDP which is one of the highest in this part of the world and that has been made possible by banks such as ours that have relentlessly pursued digital payments.
How has OCB’s operational model and business strategy changed in order to adapt to the digital transformation trend as well as to capture opportunities from the local banking sector?
I would like to look at this question at a little differently. For OCB, digital transformation is embedded in operational model and business strategy. So, digital transformation does not change operational model, but it is the other way around where we are using digital capabilities to change our operational model.
For instance, we have been able to build ecosystems for most of our partners across SME and retail banking product lines. Our retail banking products are used by our partners to serve their employees and customers better. The interconnectivity of products and services across different financial needs is possible only because we can build and support it digitally. Now with open APIs, we support real-time interactions with most of our partners. Digital transformation has allowed banks like ours to assemble their complete suite of products and services on one single platform that the customers can access seamlessly. This is important for the customers to be loyal to banks. If a bank offering is discrete and siloed, if they cannot build out product compositions that remove the pain-points of businesses and individuals, they will lose their customers to fintechs who are so much better at addressing a narrow vertical in the financial value chain.
Vietnamese banks consider the interaction with customers among the most important challenges of digital banking in Vietnam. What do you think about this view? What barriers has OCB been facing in the process of digital banking implementation?
Interaction between customers and businesses on digital platforms for any industry is not without challenges. Besides, banking has another very important aspect to it – trust, which is difficult to establish purely on digital channels. So, for digital banks this can be a struggle. However, for OCB, we harmonise physical and digital touchpoints. We have clear understanding of the strengths that each channel brings and so this issue is not so much of a problem for us.
Digital platform is great for simple transactions such as payments and paying bills or even gathering information while deciding on investments or while buying insurance. However, for value added products and services such as getting a mortgage loan, digital channels have to be supported with face-to-face interactions. I think the banks need to understand that clearly.
With regard to challenges, OCB is not facing any barrier in digital expansion that is unique to it. Vietnam is still going through transformation of its regulatory framework that will set clear guidelines for e-KYC or electronic signatures and, once that happens, the banks will be able to onboard a lot more customers and serve them online. This will drive financial inclusion in the country where the ratio of banked population is still quite small at 30 to 35 percent.
What are strategies are you pursuing to accelerate technology investment for OCB’s digitalisation process in future?
OCB is committed to digitisation and digitalisation. This is true not just for customer interfaces, but for every aspect of the business. We have partnered with various consultants and even fintechs to accelerate the digital journey. Our mobile application has been recognised as one of the best in the market. We have built products and services that are targeted at digital platforms. Our customer service has highest ratings from end-users after we automated various process steps and reduced turnaround time for key services. We have loyalty of our partners as we have built out eco-systems for them that offer financial products to their employees and customers with least friction. We are seeing progress and value from different parts of the business coming through from digitisation and digitalisation.
We understand that this is an ongoing journey. We have a company culture where we seek speed and simplicity in everything we do. The key components that sustain this drive are of course, embracing new technology, the orientation to automate as many manual processes as possible, using the data to understand customer needs at all times and present solutions rather than sell products and finally, empowering the customers to make their own choices.