Techcombank CEO bets on digital transformation
Digital, data and human excellence are key in Techcombank’s transformation journey: CEO Jens Lottner
Ha Noi-headquartered Techcombank recorded another year of stellar financial performance and growth in 2021 while supporting its customers, employees and communities in Viet Nam impacted by the pandemic.
As the recovery of the Vietnamese economy gathers pace in 2022, Techcombank’s investments in its digital platform, data analytics and the talent of its people have laid a strong foundation to capitalise on the growing demand for banking services, according to Jens Lottner, CEO of Techcombank.
The bank has witnessed strong profit growth in 2021. Does the 16 per cent growth target for 2022 seem too cautious?
From 2015 to 2021, our PBT grew at a CAGR of around 50 per cent. As we scale, the bank will reach a size where it won’t be possible to grow at 50 per cent every year.
We set a target of 16 per cent, which we feel is highly achievable and note that this still means 4 trillion dong more than last year. Is more than that possible? Yes, certainly, we could achieve 40 per cent growth this year if Viet Nam’s economy continues to recover and the tailwinds are favourable, but not everything is in our control.
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We are investing in our transaction banking capability through our digital mobile app, one of the priority areas we are supporting. We want to bring differentiation to the app through data analysis.
For example, if you are a new-to-bank
customer, we can still underwrite you by quickly developing a credit score that uses up to six external data sources. The ability to interact with customers, understand them, and provide tailored financial solutions to meet their needs through our app, just as we would do in a branch, is the customer experience we want to create.
We plan to have 5 million customers migrate completely onto the digital platform by this year. We currently have around 400 people working on enhancing these digital capabilities.
We have set aside $500 million for tech investments over the next five years. We have deployed around 15 per cent to 20 per cent of that total amount, but we expect to see an acceleration of our investment in the years ahead as we implement larger-scale technology initiatives.
We are committed to deploying this capital responsibly and in ways that will help to transform the bank, make us more efficient and give our customers the best digital experience possible.
What makes Techcombank's mobile app different from those of other banks?
We want our mobile app platform not just to be a service platform but to have the feeling of real human interaction that understands what a customer needs. When it comes to the scale of 15 million or 20 million customers, human interaction will only work if you connect many different elements, from infrastructure to data systems and front end systems and employ machine learning.
We also want to provide customers with a seamless experience across our different channels, from the branches to our digital platform. There are probably only a handful of banks in the world that are close to offering this type of seamless experience for their customers, and I think it will focus on many banks for the next 10-15 years.
Look at Google. Every single time more people are using it, it learns more and becomes even better. It's a virtuous cycle that is very hard to replicate.
What do you make of the level of digitalisation by Vietnamese banks compared to others in the region? What changes need to be made in terms of regulations regarding data protection in the cloud?
We are 5 to 10 years behind compared to where banks in other markets are, but we are catching up fast. The main differences are in the technology stack. How scalable are the systems? How easy is it to make changes and create new capabilities? How long does it take to get to the market? A lot of the systems used by Vietnamese banks are very tightly integrated, and this makes it harder to create new customer experiences compared to what we see in other markets.
In terms of the legal frameworks, I think that the local regulator, in certain areas, is much more open than in others. For example, moving to the cloud would have been much more difficult in Singapore, Thailand or Malaysia. Maybe we are too lax with data privacy, but that's not true.
Look at how much money AWS, Google, and Microsoft are investing in strengthening their data protection, and it's much safer to be up in the cloud than somewhere in a local data centre. From that perspective, I think the regulator has the right perspective regarding what they intend to do.
However, probably some of the legal frameworks need to be enforced. If there is a more robust sandbox regime where people can test things in many areas, it would be much more helpful.
Through this sandbox regime and through working with the banks, we could come up with solutions. If the banks can make the right case, regulators are willing to entertain us. It can be only on a pilot level initially, but regulators understand that they need to do something.
Throughout your transformation process, you’re beefing up the team with many overseas hires. How will it change the bank's performance?
We need certain skills and capabilities that we believe are not in the country. But everyone coming here has a very clear mandate to pass down their experiences to the staff. Ultimately, we will not be able to rely on constantly importing talent.
Within Techcombank, we're not making such a big differentiation between local and foreign experts or returning overseas Vietnamese. Many of the people we're having now are building a career with the bank.
On the other hand, as we start transforming, we aspire to become one of the leading banks in ASEAN. So for many experts, this becomes a very different proposition for them. They are excited by the growth and the quality of work, and the people they're working with.