FPT IS and Temenos accompany banks to lead the game in Neobank era

Increased utilities and customer experience, as well as the development of Fintech companies or the emergence of Neobanks have been creating a fierce race in the Banking and Finance industry. Therefore, FPT IS and Temenos have recently discussed optimal approach angles with banking industry leaders.

In the seminar series on ” How to succeed in Neobank era” jointly organized by FPT IS and Temenos last week, nearly 100 participants, including Leaders, Digital Transformation Directors, IT Center Directors, Digital Business Center Directors of more than 30 major banks in Hanoi and Ho Chi Minh City have expressed great concerns about the orientations and strategies in the next period, with regards to optimal exploitation from digital transformation.

A “push” towards digital transformation driven by the emergence of Neobanks

Neobank, a 100% digital bank on mobile devices, a trend that has been popular and success proven in various countries around the world, has started to draw attention in Vietnam, becoming a leading “key factor” in banks’ business competitive strategy. Speaking at the seminar, Mr. Duong Dung Trieu, Chairman of FPT Information System Co., Ltd. (FPT IS), affirms: “Neobank is bringing about big changes and challenges, reshaping the way banks and financial companies provide services to the market. Currently, the banking industry is getting more and more competitive with the emergence of Neobanks, established directly under major banks to approach traditional customer base, such as Cake, Yolo, Tnex; Fintech investment from large corporations such as Sovico, Vingroup, FPT…; development of e-wallets from major telecommunications companies; especially the rapid growth of startups or other Fintech companies with a remarkable increase in number of up to 179% and revenue growth of 77% in just 3 years. This has put the investment and digital transformation strategies into a new period of fierce competition”. According to FPT IS’ senior consultants, among three big issues of an enterprise, namely business, operation, technology, innovating business models with impressive methods to approach customers via digital channels is the first core issue that banks need to resolve.

Mr. Duong Dung Trieu, Chairman of FPT IS, speaks at the seminar.

Representing the world’s leading open platform for composable banking, Mr. Swapnil Deshmukh, Regional Lead for Infinity Digital Banking at Temenos, says: “Neobanks are a demonstration of the trend of digital transformation in the Finance – Banking industry. This is driven by two main perspectives. From market and customer perspectives, Green service models – the need to ensure financial health – high degree of personalization are customers’ outstanding desires and also three great opportunities for the banking industry. Banks that lead the “game”, are those with online, paperless processes to help customers develop stable financial health, delivering highly personalized services and being “present” at all stages of customers’ lives. From banks’ perspective, digital products, open cooperation with Fintech partners, and an ecosystem on integrated platforms are strategies to ensure success”.

Describing Temenos’ approach in detail, Mr. Nicholas Edwards, Head of Account Management, APAC, Temenos Temenos, says: ” Whether you are a neobank or an existing bank looking to compete more in digital platforms, now more than ever, digital sales is one of the most important fronts for innovation in banking. Customers demand convenience in applying for products but it’s also one of the most regulated journeys in our industry. Additionally, the leaders in this space are continually evaluating and improving the customer journeys to reduce points of friction in the process. This requires agility in the digital engagement technologies whilst maintaining stable, packaged core banking systems.  Gartner has published a concept called pace layers which supports innovation in complex environments”.

Mr. Nicholas also says, “Temenos has more experience than any other vendor around the world in building first class digital sales customer journeys, having built thousands of journeys on the digital banking platform. Our experience creates a huge amount of knowledge on how you can acquire more customers because the reality is that if you get this wrong, you will lose that customer in a ‘critical moment of truth’”.

Mr. Duong Dung Trieu and the guests discuss at the event.

Mr. Mohan Naidu, Former Director of TATA Consultancy Services specializing in digital transformation in Finance – Banking industry, and currently Managing Director of FPT UK shares his experience from the flourishing development of Neobanks in the UK. According to Mr. Mohan, in addition to driving factors from the market, clear orientation from the Open Banking Authority in the UK with a strict set of standards allows an official legal framework for banks. These standards are in fact also being applied in multiple regions of the world. Also, according to Mr. Mohan, until 2025, banks will not develop into something like Fintech or Neobank, but in 5-10 years they will learn what Fintech can do, conduct digital transformation successfully, take advantage of the power of technologies, and cooperate with Fintechs to diversify their services. It is important that banks should aim towards delivering more personalized products and financial advices, as well as better financial health to the customers. Mr. Mohan suggests banks in Vietnam should take advantage of the opportunities by “embedding” fintech services in their operations, developing a richer service ecosystem, and establishing a platform providing banking products as services. More importantly, there should be a more flexible and adaptable organizational structure, exploiting data in a better way to better understand the customers and deliver suitable products.

Opportunities to lead the game

The emergence of Neobanks is seen as a big challenge, but on the other hand, offers enormous opportunities for traditional banks. Representing major banks and Fintech companies that are making dynamic developments in the market, leaders of VPBank, OCB, MSB, and Timo discuss their views on digital investment strategies and concerns in the current context.

Speaking of the “relationship” between Neobank and traditional banks, the speakers all agree that this is not confrontational, but parallel, cooperational, and mutual towards the goal of meeting the needs of the market. Mr. Du Xuan Vu, Deputy Director of Retail Division, Director of Digital Banking, Orient Commercial Joint Stock Bank (OCB), says: “Neobank is like the way Covid-19 affects the society, which is to make society change dramatically. At first, it seems that there are full of challenges, but actually there are also great opportunities. However, in contrast to Covid-19, Neobank may not have had an instant impact in the early stage, but it will as time goes by”.

Mr. Vu emphasizes: “People have the need to meet, while traditional banks have technologies, networks, resources and institutions, the undeniable advantages. Nonetheless, neobank is nothing more than a technology, which means traditional banks need to connect their available channels and resources in a better way. In order for traditional banks to thrive together with neobank and fintech, we need to optimize what we have, including platforms, assets, not just technologies”.

Mr. Mohan Naidu, Former Director of TATA Consultancy Services specializing in digital transformation in Finance – Banking industry, suggests: “To lead the game, traditional banks should think a different way and rebuild their technical platforms. Neobank will not be a threat if traditional banks take the time to observe how they develop products, understand how they think about operations and customers, thereby “digitalizing” in a better, more effective way and on a larger scale”. Meanwhile, Mr. Claude Spiese, Senior Consultant of Grant Thornton Vietnam, who has participated in the establishment of Timo, says: “Companies like Timo develop the front-end part very well, however, traditional banks still are the pillar of the back-end part. It delivers close and perfect matching”.

The event attracts the attention of a large number of guests.

According to Mr. Nguyen Quoc Khanh, Chief Technology Officer, Vietnam Maritime Commercial Joint Stock Bank (MSB): “Neobank can be seen as a fomo phenomenon in securities. In the next 3-5 years, since things are changing very fast, Neobank will become something commonplace and traditional”.

Mr. Nguyen Hong Trung, Director of Digital Factory, Vietnam Prosperity Commercial Joint Stock Bank (VPBank), the owner of Neobank CAKE, affirms: “Neobank is not just a challenge or an opportunity, it is a driving force towards change that helps banks re-evaluate its operations entirely based on such model. But it is not just about the model, it’s rather that banks need to specifically determine its development vision, instead of simply following the competitors’ way. Only when assessing the existing conditions, the availability of products, processes, and resources, banks will come up with the correct digital strategy”.

Responding to banks’ strong demand toward transformation, Mr. Duong Dung Trieu affirms, FPT IS has had a 25-year journey alongside banks in Vietnam by building core systems and IT systems for a large number of major banks. Up to now, FPT IS has been driving heavy investment in building a decent technology and business CoE team, together thinking and grappling with customers’ issues. FPT IS is always ready to offer from comprehensive consulting strategies to quick-win solutions including FPT.eSign, FPT.eContract, FPT AI/Chatbot, RPA, etc. to help banks develop perfect customer journeys in the fastest possible way.

Temenos has outstanding capabilities in digital banking solutions, and more than 1,000 financial services institutions around the world leverage Temenos’ leading cloud-native digital platform, which offers composable banking services – built on microservices and accessible via APIs – that can be configured, customized, and extended by partners or by the banks. Temenos has strong global and regional experience – in Vietnam, Temenos has nearly 30 years of experience and over 20 clients. With those capabilities of 2 companies, Temenos and FPT IS certainly deliver effective solutions for banks in the digital race.