Expanding digital-only lenders open up framework questions

Expanding digital-only lenders open up framework questions, illustration photo

Digital-only group TNEX, in partnership with Vietnamese lender Vietnam Maritime Bank (MSB), is boasting about its service speed as a core component of its business. It takes just a few minutes to register, and new customers will immediately receive a free-for-life revolutionary bank account and virtual debit card with virtual TNEX Blue Card within 24 hours.

According to Bryan Carroll, TNEX CEO and also chief digital officer at MSB, TNEX is the first cloud-based bank in Vietnam where everything is open source.

TNEX leverages user data analytics, AI, and machine learning for event streaming, and also a number of Amazon tools. It will also shortly move to utilising facial recognition.

Its in-house electronic Know-Your-Customer makes use of data science – customer data captured can be used to improve the customer experience, such as using it to make payments.

“TNEX’s mission is to provide inclusive, secure, free, and innovative financial and lifestyle solutions for every individual and small- and micro-sized enterprises in both urban and rural areas,” Carroll said.

“We have not followed traditional banks that run campaigns to teach their customers how to use products. Instead, our products are articulated in a way that they understand,” he added.

Vietnam boasts great potential for digital financial services, with 80 per cent of the population under 52 years of age, 68 million internet users, and 148 million active mobile subscriptions.

Besides new entrant TNEX, several other players are vying with each other to increase their footprint.

Timo Bank, the acclaimed digital-only lender which has operated in Vietnam for five years, recently started its partnership with Viet Capital Bank, saying it would “bring a seamless and smooth banking experience, fuelled by technology and innovation”.

Viet Capital Bank CEO Ngo Quang Trung explained, “Digital transformation is an inevitable trend for banks because of the social context as well as the rapid change of technology that has shifted customer habits. Viet Capital Bank is not an exception to this trend. Fintech is the future and we have been quick to capitalise on this trend for development and growth.”

“In the upcoming roadmap for development, Viet Capital Bank is pivoting towards providing a banking platform and services to partners operating in the fintech space,” Trung added. “Timo is a partner that we highly appreciate not only for its experience and the similarity of our visions but also its customer experience efforts over time.”

Before tying the knot with Viet Capital Bank, Timo cut ties with its original banking partner, VPBank. The latter has nevertheless been making strides to build its own digital subsidiary with YOLO, which since 2018 has focused on younger people.

Replicating a strategy that has made Chinese tech giants Tencent and Ant Financial global fintech leaders, YOLO is pursuing the idea of providing a digital ecosystem with diversified services combined with a bank.

It is now in close relationship with Mastercard to issue debit cards services, without visiting brick-and-mortar branches.

Elsewhere, Wee Digital – a Vietnamese startup offering digital banking experience through biometrics-based solutions and deep data analytics – has received much attention from international and local investors alike.

In June 2020, the startup successfully raised a seven-digit US dollar amount from South Korean InterVest and existing backer VinaCapital Ventures.

Wee Digital said it will use the funding to expand its operations across Vietnam and focus on partnering with banking clients in applying biometrics solutions to their services, enhancing customer experience, according to Dealstreetasia.

In Vietnam, some major lenders have also sped up with digitally-led services, together with virtual banks such as TPBank with LiveBank, and OCB with OMNI.

Virtual banks in Vietnam currently have to pair up with more-established groups as current regulations are currently restrictive and incomplete.

Dao Minh Tu, Deputy Governor of the State Bank of Vietnam, said digitally-led banking services are expanding at a breakneck pace, facilitating various perks for clients, especially amid the pandemic. However, it is not straightforward to properly manage and build a comprehensive legal framework for virtual banks.

“We need to thoroughly study how to manage this kind of bank,” Tu emphasised.

According to Tu, e-payment methods of ride-hailing platforms like Grab are already causing authorities to scratch their heads in terms of a suitable legal framework. Preparation for such a framework for fintech sandboxes is underway, but issuing official policies may still be some way off.