The better the question. The better the answer. The better the world works. У вас есть вопрос? У нас есть ответ. Решая сложные задачи бизнеса, мы улучшаем мир. У вас є запитання? У нас є відповідь. Вирішуючи складні завдання бізнесу, ми змінюємо світ на краще. Meilleure la question, meilleure la réponse. Pour un monde meilleur. 問題越好。答案越好。商業世界越美好。 问题越好。答案越好。商业世界越美好。

How a pioneer commercial bank in Vietnam fundamentally changed banking for the unbanked

VP Bank embraced the unique opportunity in Vietnam’s technological leapfrogging in order to acquire customers.

In 2017, it established a digital lab, which pools together the internal resources and skills for digitizing customer journeys and incubating new digital business models. In the same year, it established VPDirect in pursuit of the ambition to develop a digital-only bank.

In September 2018, the bank launched YOLO, the first digital bank in Vietnam, after working with Ernst & Young Vietnam Limited on the process from market research, conceptualization to creating minimum viable product.

  • The Better the Question

Does rapid mobile adoption and the resulting customer behavior change mean challenge or opportunity for a bank?

Traditional institutions risk being left behind unless they adapt to rapid technological changes.

Vietnam’s population is young and tech-savvy. The median age is 30.9. As of January 2018, 72% of the population were smartphone users and 64% of the population accessed the internet through their mobile phones.

Banks have moved to take advantage of the wide and fast-growing smartphone and mobile internet penetration. Most banks in Vietnam have online banking and mobile banking, which allow customers to view balance, transfer money and pay utility bills.

Much has changed for Vietnamese in the way they use banking services. However, the process of opening a bank account is still the same. In order to open a bank account, customers have to go to a branch to fill out several pages of forms, submit a copy of their ID and sign a contract.

Having to show up physically at a bank branch apparently is a roadblock for customers. According to the World Bank’s Global Findex database, only 31% of the population over the age of 15 in Vietnam have a bank account at the end of 2017.

The discrepancy between the percentage of people with a bank account and the percentage of people with mobile internet means there is a large room to grow for VPBank.

As customers are used to doing a lot of their daily activities on their mobile phone, VPBank thought of providing a product that is lighter in terms of functions compared to its traditional bank account, easy to register via mobile phone, and fun to use for young customers. This would help VPBank to rapidly expand its customer base.

As e-wallets, which are currently providing the basic payments function but have much easier sign up procedures are gaining popularity, the risk is high for banks to become redundant if they do not move fast.

  • The Better the Answer

Embracing changing customer behavior

With a mobile-first mindset, VPBank and the EY member firm reinvent banking for Vietnamese unbanked.

Starting in June 2017, VPBank and EY worked together for 10 weeks from conceptualization to creating minimum viable product of what would become the YOLO app, the first digital bank in Vietnam.

EY teams conducted market research, defining the target customers and use cases, to identify and evaluate business opportunities.

Even though this is the first time such a product was conceptualized in Vietnam, the team benefited from global EY resources and was able to leverage experience from other markets, including India and Singapore.

In addition, the leaders from VPDirect were also experienced in digital transformation in the financial service industry, which enabled both parties to understand one another fast and cooperate efficiently.

Launched in September 2018, YOLO was conceptualized to be part of a user’s day to day life and transactions which may or may not be traditional banking transactions. It’s built to engage with customers using a host of ecosystem partners who provide different services.

Acquiring a YOLO prepaid account requires only name, phone number, and email to register, and the app is available for both Android and iOS users.4 The account is opened within seconds with an instant virtual MasterCard.

The YOLO app provides the functions of any mobile banking app, including paying bills, transferring money, and option for an interest generating account with savings product such as term deposits and a unique super saver (the YOLO super saving product optimizes customers’ idle money with freedom to use the balance at any time).

In addition, customers can book travel tours and accommodations, reserve tables at restaurants as well as order takeouts, and buy flight tickets or book taxis. Customers receive cashback through qualifying transactions and accumulate points that can be redeemed for discounts.

In order to use the money transfer and saving functions, customers can apply for an upgraded account which is like any full-service bank account. For the know your customer (KYC) process, instead of going to a bank branch, customers can request a home visit by an authorized officer, reducing the dropout rates of those interested in full service account.

A physical card that can be used to withdraw cash at ATMs is provided. The conversion rate from prepaid account to full-service account has been encouraging so far.

YOLO thus offers its customers the convenience of a wallet but better experience of being a banking product without the traditional account opening road blocks of branch visit, etc.

  • The Better the World Works

Bringing a new way of banking to the market

Digital helps VPBank better meet customer needs and move ahead of competition.

VPBank’s YOLO targets the unbanked with fast and easy registration, while appealing to young people with its lively interface and by offering integrated services that are relevant to their daily lives. Within first five months of launch Yolo has acquired nearly 500,000 users. The app has helped VPBank acquire customers faster than any other method, and at the same time, changed Vietnamese customers’ perception, first by introducing the concept of a digital bank, where all procedures starting from registration are done digitally and then by raising their expectations of an online banking app.

Customer behavior has changed especially fast in emerging markets like Vietnam, where smartphone penetration and mobile internet penetration have grown in double digit rate in recent years. Only banks that respond fast to this change will win.

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EY - Varun Mittal

Varun Mittal

EY Global Emerging Markets FinTech Leader, Associate Partner