How to leverage big data to strategize digital banks in Vietnam?

As the use of big data is not easy for Vietnamese commercial banks, experts in the banking sector will share their recommendations to utilize big data.

The Vietnam International Bank (VIB) was among the first banks to successfully apply Big Data & AI to issue credit cards within a record of 30 minutes. VIB is among a few banks in Vietnam that have realized the urgent need to use big data as a new source to enhance the customer’s experience and engagement.

Using big data, Techcombank developed financial management solutions individualized to every customer, helping them to make plans and use support tools of the bank to realize their financial goals.

With Techcombank Mobile app, Techcombank was awarded “Most Innovative Mobile Banking App” by Global Business Outlook last year.

At a recent seminar entitled “Finovate Innovation Day: When Innovation Meets Sustainability” in Hanoi, Mukesh Pilania, Executive Vice President and Head of Digital Banking for Techcombank, affirmed that data is the new oil. Digital is the commercial engine that uses that oil to drive new customer experiences, new growth in the industry, and automation.

According to experts at the event hosted by JobHopin and the Vietnam National Innovation Center, data, especially big data, can be characterized differently depending on how you look at it.

In the banking sector, it can be characterized by the four Vs – Variety, Velocity, Volume, and Value. The question raised is what kind of data are banks in Vietnam collecting and processing?

According to Mukesh, data is actually a liability, especially for big organizations.

“We have lots and lots of data, a huge amount of data. And we have huge costs to maintain that. It will remain a liability until you use the data to realize its benefits and create value,” said Mukesh, adding, “The most important of the four Vs, to me, is value. What data we collect and how much data we collect is not as important as stronger analytics to derive insights from the data and create real value, whether in terms of identifying new growth opportunities, gaining better customer insights, or generating opportunities for cost reduction and automation.”

Over the past few years, leading banks have agreed that big data has brought many practical benefits to business and management, helping them create breakthroughs and rapid growth in a short time.

Tu Duong, Deputy Head of the Digital Banking and Retail Banking Division of SHB, says a lot of banks in Vietnam are still collecting very basic data: data about the customers, transaction data, and interaction data. Obviously all three categories of data are something banks should have, but they are not enough to create breakthroughs.

He insisted that it’s not about the volume of data, or the variety of data. It's what banks do with it.

‘What do we do with that data’ is the next question. I think there's now a fourth category. A lot of banks, who've gone through the first stage of this digital transformation, or the second stage, are going directly to the fourth category of data, which banks don't normally collect - social media data. And through these four categories of data, you start to get a clearer picture of who your customers are, and then get insights. And then you can provide a lot more value to the customer,” said Tu Duong.  

With the help of big data, banks can get enough information about customers' spending habits, behavior, sources of income, loans, and services they’re using, to offer promotions customized for each customer. That information is also a basis for assessing risk, making loan appraisals, expanding services, and cross-selling products to targeted customers, said Tu.

Once banks have the data, Tu raised a question: ‘How do I use this data to bring the most value to my customers?’

“I think the holy grail for any organization is to build a one-to-one relationship with their customers. The one-to-one relationship means ‘I understand who you are, I understand how we're changing, and I can provide you with a product or a service as and when you need it’. I think all organizations are heading towards that, and I believe, with the way data is advancing, we'll get there,” said Tu.

With collected data banks can create customer segments, provide services matched to each segment, launch effective marketing campaigns, and improve service quality by collecting and analyzing customer feedback.

To realize these goals, banks need a suitable strategy, mechanism, and tools, said Quynh Pham, Country Manager of EdgeWorks, a data center investor and services company.

She pointed out that as recently the world is talking about edge computing, decentralized data, where we bring the data processing and storage and collect towards the edge that is closer to the end-user.

“And with that kind of technology, it will support they're not only just the bank is retail, is for hospitality, is for education, so on and so forth, can process the data at the edge to collect the valuable data, not just anything. Like right now we collect anything, but then with the edge computing and edge of facility, we can process the data at the edge and just collect the valuable data for the core business or for the main application that you need to use that kind of data,” said Quynh.

With countless applications of big data and its popularity in all fields, banks in Vietnam are making the greatest efforts to put new technologies into practice in the digitalisation race, thereby enhancing competitiveness, improving profitability and service quality.