Techcombank winning formula: digitalization, data-driven approach, talent management

After years of pivotal roles with HSBC in Hong Kong, what drew you to Vietnam?

I used to be the CFO for HSBC's Wealth and Personal Banking, covering 19 countries including Vietnam. While I was based in Hong Kong and focused essentially on Hong Kong, Singapore, and China, I was keen to discover other parts of Asia, particularly the fast-growing markets in Southeast Asia. I was also keen to work for smaller organizations, particularly those with a strong entrepreneurial spirit and focus on innovation. Techcombank seemed to check all the boxes.

The fact that the bank is based in Vietnam was a key selling point, as I have always held the country in high regard due to its immense potential. It's a magnificent country with a lot to offer in terms of history and landscape. The population is smart, hardworking, vibrant, and very friendly. I was sure the country would become a poster child in Southeast Asia by transforming itself from an agriculture and manufacturing-led country to an advanced technology-led economy. And I could be a part of that through my contribution in the essential banking sector.

What are some key challenges and opportunities for Techcombank in the current financial market, and what will the bank do to stay ahead?

The environment is indeed changing, not just for Techcombank but for the broader economy. Vietnam is recovering from a period of high interest rates and limited credit accessibility, which persists despite improved banking market operations. The bond market, crucial for economic financing, remains muted.

Techcombank stands out by maintaining credit production levels and implementing a flexible pricing policy, ensuring customers can manage interest payments. Our commitment is to act responsibly and maintain close relationships with customers. Consequently, our balance sheet remains robust in terms of capital, liquidity and credit perspectives.

Regarding sustainable growth in the present landscape, a key characteristic of our goals over the past few quarters is a heightened emphasis on fee-based services and consumer banking. Our investments in digital platforms have facilitated the acquisition of digital bank customers and an increased share of financial services transactions, including cards, remittances, trade and transaction services. Service fees for these products grew by 50-150% in the first six months of 2023, with new acquisitions occurring at three to four times the rate of previous years.

Remarkably, our cost per acquisition remains low, ranging from VND100 to 150,000 ($6.33), comparable to industry benchmarks. This also exemplifies our commitment to sustainable goals as more customers choose us for our unique digital experiences.

It is said that a great CFO needs to become a data champion. What’s your take on this? What does the term “data champion” mean to you from your vantage point as the CFO of Techcombank?

I don't claim to be a data champion, but I agree with the saying. CFOs were typically focused on a very limited number of financial indicators and reporting these numbers with a high level of accuracy. While this remains part of the job, there are new emerging components that are about being able to interpret large volumes of information and make optimal business recommendations. So over time, the job has grown to be less about accuracy and more about extracting insights at the right moments.

Modern banks can be described in terms of three key components. Firstly, there is the interface with customers, which can be through physical branches or digital apps. This is where new products and features are provided. Secondly, there is the brain behind these interactions, which involves clouds and machine-learning processes. This component determines the products, pricing, and channels for different customers. Lastly, there is the core infrastructure and IT operations, ensuring smooth interaction and information flow between the layers. The role of CFOs is evolving from accountants to data management experts and overseeing the seamless integration of these layers.

To support this transformation, my team receives extensive training, approximately 50 to 60 hours per year. The training covers various areas such as Python programming, SQL programming, robotic process automation, data visualisation, and design thinking. Individual projects are encouraged to apply acquired knowledge to address specific business challenges. The role of a finance executive at Techcombank aligns closely with the bank's DNA of technology and commercial focus, requiring a combination of business acumen and deep technological understanding.

How does Techcombank plan to reach its ambitious 2025 targets?

As we’ve discussed, the economic environment has clearly been challenging. Techcombank has faced specific disruptions in the bond and real estate markets, where it held a strong commercial position. In 2023, our focus will be on consolidation rather than pursuing profits in the same manner as previous years. We will prioritize close customer relationships and provide credit support while emphasizing our core strengths. These strengths include new customer acquisition, digital partnerships, data-driven decision-making, operational efficiency and customer-centric initiatives.

That’s why, even in the face of the prevailing difficulties arising from the recent downturn in real estate, bond and other banking and investment products, we proudly maintain our position as the industry leader in return on assets (ROA) at 2.6% and capital adequacy (CAR) at 15.1%. Moreover, we continue to rank among the top banks in terms of current account and savings account (CASA) and profitability, solidifying our standing in Vietnam’s financial market. I am confident that once the current challenges subside, we will experience significant progress and achieve our ambitious five-year objectives.

In fact, if you look back, our portfolio is mostly geared toward affluent high-net-worth customers, aligning with our robust wealth management and investment business model, which consistently outperforms the market. This has always been the case in the past. I'm very confident that it will remain the case in the future. As we complete our transformation plan, we anticipate a return to normal investment appetite in Vietnam, leading to substantial performance improvements. Additionally, we will reap the benefits of our investments in data, technology, and talent.

The FinanceAsia magazine recently chose Techcombank as the Best Bank in Vietnam and the Most Innovative Technology Application Bank in Vietnam. What were some major factors behind winning such accolades?

Winning these distinctions is a privilege sought after by many banks in Vietnam. We take immense pride in Techcombank being honored with these prestigious awards by a reputed organization. It reinforces that our journey to "change banking, change lives" is on the right track and recognized not only by partners and customers but also analysts and international experts.

It's hard for me to say what criteria played a decisive role in the jury's decision. While our impressive financial performance likely played a role, it most likely goes beyond that to be a combination of factors. In my interactions with analysts and researchers, they have highlighted our pioneering role in introducing new technologies to Vietnam's banking industry and our contributions to building the financial market, particularly in bonds. Previously, bonds had limited impact until Techcombank introduced instruments and a platform for bond exchange. Creating new value propositions, such as being the first bank to offer zero fees in 2016, has also had a significant impact on Vietnam's banking market, as other banks have followed suit.

At a broader level, I would say our visibility and influence in the region contribute to our uniqueness. Often when collaborating with us to introduce new platforms, I can see a certain level of excitement in our partners.

Techcombank is really special, I feel; and this assessment is shared by observers and analysts perceive as well.

Techcombank announced a steady performance in the second quarter of 2023. The bank continued to outperform the market in credit and deposit growth, while NPL and CAR stayed at healthy levels. The result shows increases in CASA balances and CASA ratio improved to nearly 35% at the end of the period. The bank’s funding position remained robust, with a regulatory loan to deposit ratio (LDR) of 80.4% as of June 30, 2023, and a short-term funding to medium and long-term loan ratio of 31.6%. Techcombank achieved PBT of VND11.3 trillion ($476.99 million) and TOI of VND18.6 trillion ($785.14 million) in the first half of 2023. Total assets grew 17.4% year on year to VND732.5 trillion ($30.92 billion) as of June 30, 2023.

Techcombank ended H1/2023 with 12.2 million customers, adding around 1.4 million new customers during the period. Of these, 45.3% were acquired digitally and 43.8% through ecosystem partners.