Customer-Centric Banking: Asia Commercial Bank's Innovation Journey

Ms. Chu Hong Hanh, Head of Innovation Lab, Asia Commercial Bank

In this episode, we are joined by Ms. Chu Hong Hanh (Hannah), Head of Innovation Lab at Asia Commercial Bank (ACB). With her wealth of knowledge and experience, we delve into crucial topics such as emerging technologies, what innovation means and how innovation can be measured. As Vietnam's banking industry strives to serve the unbanked and underbanked population, Hannah also shares her enthusiasm for the factors propelling growth within the dynamic and promising landscape of Vietnam. 

ACB is one of the leading joint stock commercial banks in Vietnam, with a network of branches and transaction offices spanning 49 provinces out of 63 in the country and has more than 13,000 employees, with many variety of products and services.

Transcript

AIBP Intro: 0:02

The AIBP ASEAN B2B growth podcast is a series of fireside chats with business leaders in Southeast Asia focused on growth in the region. Topics discussed include business strategy, sales and marketing, enterprise, technology and innovation.

Vanessa Kwan: 0:28

Hello and welcome to the ASEAN B2B growth podcast, where we sit down with individuals responsible for driving growth within their organizations here in Southeast Asia. My name is Vanessa, and I'll be your host for today, we have a very special guest joining us from Vietnam, Ms Chu Hong Hanh, head of innovation lab at Asia Commercial Bank. Asia commercial bank, in short, ACB, is one of the leading joint stock commercial banks in Vietnam, with a network of branches and transaction offices spanning 49 provinces out of the 63 in the country, and has more than 13,000 employees without further ado, may I invite Ms Hayn to give us a brief introduction of yourself. Give us a brief idea of your background, and perhaps share some personal hobbies with us.

Unknown: 1:10

Thanks Vanessa for the introduction. Hello to every audience of the AIBP. My name is Hanh, but you can call me Hannah. I'm currently the head of innovation lab of ICB, ACI commercial beyond stock bank Vietnam. I have about 14 years in working in banking segment, and mostly individual banking, and have and have the master bachelor of banking and finance. It's really honored to be here with you guys here, and I hope that I can share some interesting information with you guys about Vietnamese markets and about our ACB bank. Thank you.

Vanessa Kwan: 1:48

Thank you very much. Hannah, Could you perhaps give a brief introduction of ACB to our audience who may not be familiar with the Vietnamese banking context, and perhaps a little bit more about your roles and responsibilities as the head of innovation,

Unknown: 2:01

Sure. So about our ACB bank, you know, ACB is one of the leading us joint stock commercial banks in Vietnam. We ranking among the top four joint stock commercial Bank in terms of total assets and profits in Vietnam in 2022 so for many continuous years, ACB has consistently been one of the banks that maintain the lowest NPOs, why we achieving a high return on equity within the top tiers, we now focus on retail and SMB sector. In part of this segment, we are among the market leader, for example, in retail banking sector, ACB now have a lucky landing scale, and we have the second largest deposit scheme among private banks in Vietnam. For more details, also rated highest rating among commercial banks in Vietnam by the international credit rating organizations that are moving and Fitch for the three months, pillar for ACB, I think studio development are customer technology and people about customer, we always adhere to the principle of flexing the customer at the center, and we aiming to provide the best experience for our customer, for technology and people. In recent years, ACB had underground sub central as transformation Institute gone strengthening from the investing in technological infrastructure to facilitate with the digital transformation and innovation so Simon Says, Lee, there has been a strong emphasis on foresting and pure workforce with an innovative mindset, with a three pillar, we expect to achieve significant percent in the future, continue to develop value to our customer and society, and by the way, we also the bank who find the flying ESG in Vietnam. Now about the role and responsibility of our ACB Innovation Lab. I want to say something special about our ACB Innovation Lab, first, firstly, we perhaps may be the first bank in Vietnam to establish the innovation lab as earlier, about 2017 and our founder is also our chairman, Mr. Chen. We thankfully we direct report to our CEO instead of any other department. And it's really different with other banks in Vietnam. So the two unique aspects ensure that our innovation activities only occur quickly, efficiently and with extensive coverage, aligning with our bank overall direction, and adding the broader transformation process. We believe that transformation process, especially due to transformation, is not only related to technological factors, but also harmonization of elements like pupilizes, business model, policy process and also technology. So therefore our Innovation Lab is function is to connecting uni simplicity, integrating the mansion in Minutes forming cohesive and aligned with entity, with the mission. I think we have four missions. First is research and experimentation. The second is implementation of the new technology application. The first one is about mindset, information and promotion of creative future. And the final one is accept this new business model, and now we are working like assistant of the CEO to fulfill all the vision below

Vanessa Kwan: 5:31

Thank you very much. Hannah, I think what you've just shared about the innovation lab is very interesting, especially it functions as a connecting unit across the bank. For yourself, what does innovation mean to you? How does ACB measure the success of your innovation efforts? Perhaps, share some examples.

Unknown: 5:47

It's really an interesting question. Well, you

Vanessa Kwan: 5:47

Wow! There must be a lot of things that you are know that our ACB boss of directors always prioritize investment in innovation activities, and we believe in this is the crucial analysis for ACB to breakthrough in expansion and in this evident as one ACB core value innovation, I think, is this special thing about ACB. There's no no bank in Vietnam. That's that innovation as one of the core value so innovation activities strongly encouraged and apply to the business and operation, research and even development of the organization. For instance, annually, we organize a business execution program to sell the bank key trajectory through a format exhibition called activate. In the activate, they the head office of all units are responsible for introducing the doing at your innovation lab. How would you then prioritize news program and news tool, or new processes to all the attendees. The attendees here is the staff, the head of the branch, through some so case and additionally, ACB are updated with new information, new knowledge and technology, chance from expert and our partner of the organization, the purpose of and allocate the resources for the different innovation this innovation is to mentally to serve the customer, drive initiatives that you have planned, business model and increase profit. So therefore, we also evaluate the achievement of innovations. They are these criteria. For example, we we implemented new next technologies to have ACB to gain, how many new customer or how many costs that we will set. We always emphasize learning activity also, and enhancing capability and developing a giant growth mindset on our talent employee training programs that do transformation training, change management or design thinking, so that our staff are always ready to improvement and continuous Development to adapt new

Unknown: 7:58

yeah, when we think about the innovation activity, instances. Our expert. Also select talent and to send our passage back to external learning and networking activities to continuously get chance. The final is our innovation is structured to become an integral part harmonizing with business activity, because it's work and learning and development activities. We call it learn within the organization. So work life and learn that three key words that we apply to all our employees is probably a lot thing to do, right? So it's surely that we have to do is prioritize allocated resource for all the creative program based on ICB overall traceability objective is that so this year, we have one kind of prioritized so go back to HTTP treatment pillar I have mentioned above that we have customer technology and people Innovation Lab allocated research to focus on implementing innovation program of these trees below for customer, we implementing the customer journey project under the direct guidance of the CEO that redesign the entire process that our customer had been served by ACB regulation system and Even the ACB product and service based on the customer journey for researching and development, high tech project, we have a lot of AI and and RPA and new technology projects such as eKYC, AI RPA to help ACB acquire new customer and enhance our customer X. Billion and improve our productivity from implementing innovation program. We also have ACB Wednesday to force innovative thinking in development for our ACPR and Young Innovator deploying an internal website for ACB to stay updated and educated on the latest business trends, new technologies and innovating thinking and new working methods. Working with big organization inside and outside Vietnam, like aI BP is also one of the activities that we do a lot to expand our knowledge and communication with international community.

Vanessa Kwan: 10:44

Thank you, Hannah, I like what you just mentioned, customers, technology, people, and it all comes down to what the customers really want, and how as a bank, you are able to deliver on that. I think earlier on, you also mentioned that one of ACBS focus is on the retail sector, and the evolution of the Consumer Banking has been huge. You know, we started off with like bank, branch banking, ATMs in the 1960s to telephone banking, internet banking, direct banking, mobile banking, and then now we are talking about digital banking, a lot all these channels now, you know, still exist. There are a lot of the traditional banks who serve all of it, creating an omni channel experience for customers. And I think also it's very expensive for a bank to manage everything together. In your opinion, what is the role of technology in helping to promote such innovations? You know, you've spoken a lot about open banking, AI, RPA applications. Can you share more about some of these initiatives you are working on, and some of the metrics that you look at,

Unknown: 11:43

sure, sure, we talk a lot about technology, right? And it's really one of my passions, the technologies. I believe that innovation is that consensus of four elements. The first one is mindset transformation and human development. The second one is

Vanessa Kwan: 12:01

you know on the role of AI RPA in accelerating digitalization of process and project. The first one is establishment of new digital business model, and the final one is development of new technologies. Therefore, it can be that said, that technology is one of the keyword factor that play around foreigners, roles of the percent of the innovation and always goes hand in hand with the innovative activities. As I mentioned before about Open API, right? We are the first bank in Vietnam, maybe launching the open vi integration with partner at early of 2019, and we believe that we are developing a digital ecosystem is one of the key futures, literally, for expand the customer base and provide excellent customer experience. And subsequently, ACB has upgraded the open ranking into open banking API platform with the post launching in August 19, 20. so, so we also one of the first banking Vietnam who introduced the platform, and continue, continually enhances to expand our partner integration, as well as due to ecosystem, and probably to say that ACP, due to ecosystem, have been expanding rapidly, which focused on payments such as collection experiments, bank statement and Account Inquiry by API, we have two tier speed payment for talent school now about 5000 and we have Accenture service payment like electricity, water and others. And we also integration with E wallet, integration with security companies. And now we also integrated with E-commerce platform. So it's really a huge check leap of ACB to follow in the next few years. innovation. How has ACB, in your opinion, leveraged on the power of these technologies as the team focuses more on this sector in 2023 and even in the coming years ahead,

Unknown: 14:15

sure, API and RPA is two of the cutting edge technologies that ACB is leveraging in the transformation journey. Currently, ACB is applying a lot of AI technology, variously across our business and operation activities and automation engineers, for example, AI transport assisting customer is revolving inquiry related to 222 different kind of processing with over 300,000 customer support interaction per month. And right up right here now, when I'm talking to you right now, we have Mr. The amount of 1 million people who can support my AI chat bot in our city. System. And in 2023 RPI, we also launched the RPI. RPI automating processing. We will we automate about 261 processes, resulting in stepping of nearly 100 billions Vietnam per year. And am to talk about automating about more than 101,400 processed to 2025, and aiocl automatically is check information from about one 500 and now about 1000 different caps. And how about to processing about five, 50 million documents scanned annually, so you can see that it really impacts a lot about bank activity, right? And this technology is demonstrate ACB commitment to embracing innovation and utilization to enhance the operation and customer experience extremely, very important segment, ACB, in the next few years.

Vanessa Kwan: 16:07

Thank you for sharing Hannah, I think there's also been a lot of talk around generative AI and some of its applications for the banking sector. Is this something that you are working on as well?

Unknown: 16:18

Yeah, yeah, sure. We apply generative AI also, and we are tending to upgrade our narrow AI bot into generative AI in the next few years. We hope that it will help a lot of things impact to our customer and to enhance our customer experience into the near future.

Vanessa Kwan: 16:39

That's good. We look forward to seeing more of such innovations within ACB and, of course, across the whole banking sector. You know, across across the region, we seen a lot of digital banking licenses. Talk and Singapore, we've issued three digital banking licenses. In Malaysia, there have been five of which GXS and grab recently announced them going live sometime early September in Thailand. They've also announced some plans. You know, in Vietnam, we've seen similar incumbent banks playing in the digital banking space. A kick with VP bank. You know, we've seen T next with maritime Timo, with yet capital bank for ACB, within the space of digital banks. Is there a reason why you are or you're not actively pursuing a license. And you know, in your opinion, how does this tie in with your Super App vision? Because I know your CEO mentions quite a bit about the Super App.

Unknown: 17:30

yeah, yeah. So let's discuss a little bit here, right? We both know that there are four different form due to banking, not only one, right? So the first one is due to banking directly under traditional banks, involving digitalization and transformation of existing banking activity onto digital channel. This is the first concept of digital bank. The second concept of digital bank is new banking and challenges banking, maybe in the first and the second and the first concept of due to bank. This is the due to bank that independent from YouTube, bank which step listed and operate by FinTech or telecom modification companies as Tech or or some, some, some name that you have mentioned before, right? The final one is the outer banking are mass banking, fully automated digital bank for ACB, we choose two concepts in this four concept now, the first thing is we currently operate under the model digital banking, directly under citizen bank. That is the first concept to stop and provide the best benefit for our existing customer. But also, additionally, we have recently launched the SME lifestyle, the format of auto banking or smart banking, that system that equipped with modern, automated transaction machines to serve customer basic transaction need and automatically without replying on side by staff. So we focus on first one and the final one, and we hope that this kind of chastity will help us to serve our customer, both existing customer and new customer, our best way in the near future. That's

Vanessa Kwan: 19:17

very interesting. Thank you for sharing Hannah, I think let's move on to another topic that's close to a lot of our hearts, especially in the Southeast Asia region, there's been a lot of talk around financial inclusion. One out of two individuals in Southeast Asia population over the age of 18 remains unbanked. There's estimated 24% unbanked. 69% in Vietnam are unbanked currently, as we speak, representing, you know, a huge opportunities for the banks, for the fintechs. However, you know, there's been a lot of say. Also, no matter how big you are, partnerships, collaborations, you know, they're still essential to how we can better serve our communities. Can you share with us how ACB have collaborated with the emerging fintech? Players to innovate, to promote and to drive financial inclusion.

Unknown: 20:05

For many years, we in Vietnam talking a lot about FinTech and the bank discuss a lot. If they are our friends, they are our competitors, and it's true that Fintech is one of the most concern of the bank recent year.At ACB, we don't just focus on internal innovation, but we also very open to embracing new ideas from external source. We think that Fintech is our friends, more than our competitors, so we do a lot to upgrade the development of the FinTech ecosystem inside our and NASA in ACB. For example, we have an innovative program named ACB which is hosted directly by our chairman, and it is an annual innovation competitor that we aim to seeking for new and feasible ideas from implementation within a ACB. For this competition is we just not limited to ACB employees, but we also open it to young individuals, and new startup FinTech who are passionate about innovation and the startup who both within and outside the country. And will we really hope to to find the new product of the startup of FinTech and to so the ACB can be their buyer, their partner in the future. So in 2022 ACB will cooperate with zone startup Vietnam, which is a part of accelerator network under Ryerson future and zone startup we together organize drone boot camp, a startup competition and targeted targeting to early stage tech startup and students. So the goals were to create opportunities for young talents and staff to develop their idea. So we are also cooperating with leading FinTech companies in Vietnam, like Momo, Salo air box, to maximize business for customer, and they have us a lot to develop our digital ecosystem.

Vanessa Kwan: 22:31

Digital ecosystem, there must be a lot of challenges, a lot of obstacles along the way, especially when you're dealing with such a five varied types of FinTech companies, even internal, external, as we've shared earlier, what are some of the challenges, some of the obstacles that you face?

Unknown: 22:48

You are right when you have mentioned that innovation come together with a lot of challenge, challenges. You know that innovation is one of our core value, but caution is also our cover too. So therefore, the journey of innovation also faced with a lot of challenges. First of all, I think innovation must within boundaries for a lot and establishes organization like ACB, sometimes may not be a series or quick to change the FinTech companies you know and when new intuitive, also needs to be careful, assesses and evaluated before testing and wide scale development can sometimes collaborating with FinTech companies to implement new products and solutions. We face the difference in corporate future and operation processes. This require flexible from both sides during the coordination process. That is the first one, first one that I want to mention. The second one I want to mention is the contracts imposed by regulation. So the regulation for financial institutions are quite tricky, especially for the bank. You know, I'm not sure about Thailand and Indonesia and Malaysia, but in Vietnam, the bank is really trick regulation. So running pilot new idea must also ensure compliance with the current legal requirement. And this is really challenge. The final one, I think, is about innovation must be effective. We can talk a lot about innovation and we can do a lot and have an idea, no, but the ultimate goal on innovation activities should be to deliver more value to the customer, increase profitability and to enhance operational efficiency. Without those criteria, the innovation activity can be promote right. So therefore our innovation activity needs to be sweep throughout play and research, and have to be clear focused to have the efficiency to the back.

Vanessa Kwan: 25:11

Three things you mentioned, innovation within boundaries, constraints imposed by regulations, and also innovation must be effective. I think those are very nicely summarized challenges faced by ACB, and I'm guessing a lot of our friends in the banking industry would agree with what you just shared. Um, Hannah, before we let you go, we have a final question for you. We've heard a lot about emerging technologies, a lot about innovation. In your opinion, what are some of the digital financial innovations that can disrupt the financial market in the coming years. What are your views on the business growth for your industry and for ACB,

Unknown: 25:51

Before our meeting today, I've heard a coach on LinkedIn say that our market do not need traditional.We need innovation. So with today rapidly development of technology, you know, I believe that financial banking Markets is general and ACB is particular will have a significant and profound transformation in the near future. The first one is the percentage of Vietnamese having bank account with increasingly rapidly thanks to eKYC, as as to ACB. You know, in the short term, we have eKYC, the new customer we have equal to 10 years before. So, so it's really a rapidly increasing of the new bank account thanks to eKYC. The second we are saying is the use of cast our cod ratio will decrease and significantly due to the convenience of electric electronic payment services, we have a lot of more, more Zalo e wallet, and we have mobile money equal to the bank, right? So the third one is open banking, bank as a service, and embedded finance model will become more widespread. Customer will be able to make payments, stepping and borrowing through our non financial apps that they use every day without direct interaction with the bank. Banking service will still their bank will become more increasingly invisible and have more competitor from from the FinTech and TechFin company.And the final I thing we will see more application of AI technology, as mentioned before, in serving and supporting our customer, and customer don't need to go to The Bank or interact with the banking app or conduct finance transaction anymore, so the use of API technology to automate manual tasks with will become more common in bank, and banking employee will have more time to sell and do customer services and hopefully to see the rapidly development of banking and new technology in not only Vietnam, but also in ACB. And hope to together we can, can can promote the development of our ACM ecosystem. Fantastic. That is really my honor, and happy to be here to share with the aibp audience about our ACB story. And I really hope to learn more from from you guys, from other banks, from other institution about how you apply technology, how you do your innovation, and how you have successful in your transformation. And that is really helpful for us to come together with you. Thank you again, to have you here.

Vanessa Kwan: 29:19

And it was a brilliant and very information, informative discussion we had today. It's clear that the banking industry will continue to evolve more so in the new normal, very exciting times ahead indeed. Thank you so much for joining us today and speaking about the topic so close to our hearts. We look forward to seeing you soon. Thank you.

Unknown: 29:39

Thank you. Vanessa, look forward to see you soon. Thank you. Thank you.

AIBP Intro: 29:45

We hope you've enjoyed the episode. For more information about business growth in the ASEAN region, please visit our website, www.IoTbusiness platform.com.