On September 8, 2021, a virtual meeting was held to kick of the consultation project “Digital transformation and IT strategy for 2021-2025 with a vision to 2030 for Co-opBank”. This project is in the IT component under the “Strengthening People’s Credit Fund system” (STEP) funded by the Global Affairs Canada (GAC) and jointly implemented by Développement International Desjardins (DID) and Co-opBank. MCG Management Consulting is selected for this consultation services.
Co-opBank’s Chairman Nguyen Quoc Cuong, CEO in charge Nguyen Minh Tuan, other members of the Board of Directors and Board of Management along with heads of all departments at Co-opBank’s headoffice attended the meeting with the MCG team.
In his opening remarks, Chairman Nguyen Quoc Cuong raised the importance of digital transformation and IT revolution at Co-opBank. According to the Prime Minister’s plan and Decision 810 by the Governor of the State Bank of Vietnam, digital transformation in the banking and financial industry has become a critical requirement with a fierce competition between financial institutions. It has become even more so especially during the Covid-19 pandemic which has made online transactions more relevant and essential. For Co-opBank, digital transformation has become unprecedentedly urgent and it will surely focus its resources on modernizing its technologies.
During the meeting, MCG’s consultants shared the digital transformation trends in the banking sector and the digital transformation experiences at some banks in Vietnam. According to the consultants, digital banking means that all banking activities are carried out in a digital environment following a 3-1-0 model which essentially means: 3 minutes for profile completion, 1 second for analysis and approval and no (zero) human involvement in the process. Digital transformation should be divided into three major areas: internal transformation, business model transformation and corporate culture transformation. As they are closely related, digital transformation means transformation in all three areas simultaneously.
There are 10 digital transformation trends including: (1) Changing business model, (2) Changing competition for products and services, (3) Products and services prices reduction, (4) Development of distribution channels for banking products and services through smart devices, (5) Applying biometrics for transaction approval and authentication, (6) Sharing economy for infrastructure, (7) More customized products and services based on customers’ needs, (8) Smarter services, (9) Reshaping service structure, (10) Technology and knowledge transfer.
The consultants also delivered a presentation on the Fintech market. Since 2015, the financial market has witnessed a remarkable development of many small Fintech companies, directly competing with banks in a number of banking activities. The number of non-cash transactions in the past 5 years has increased over 100%, prompting banks to develop many convenient apps for customers. The whole financial market is competing for real-time payments and digital financial channels; therefore Co-opBank is no exception. According to the experts, there are 3 main drivers for the digital transformation at Co-opBank: (1) requirements from the government and the State Bank of Vietnam, (2) the demand of the market, and (3) the actual requirements of Co-opBank’s banking activities.
Regarding the important factors that need to be considered when designing and implementing the digital transformation and IT infrastructure, changing mindset is such an important factor that often gets overlooked. The financial industry is a highly risky industry; therefore processes must be designed and carried out with a high level of caution. Digital transformation must be associated with an open mind to keep up with the advancement of technology. In addition, business departments often work independently following their own procedures, but they will soon need to execute the transformation simultaneously, adapt constantly and update periodically. Regarding digital infrastructure, the experts emphasized that governance policies and technology solutions must go hand in hand and cannot be separated. Currently, banks are focusing on data records as a living mechanism instead of data warehouse as a static mechanism. Therefore, a proper data management policy needs to be developed to ensure information safety and network security.
Regarding the next steps in the project implementation plan, Ms. Ngo Minh Anh – MCF CEO reported that the project had passed the early stage and MCG consultants had worked with Co-opBank’s departments to understand its current status and goals in the digital transformation. In the coming weeks, more data will be collected and updated and the consultants will continue to coordinate with the departments and carry out more in-depth research using the collected data. It is expected that the analysis report will be completed in the fourth quarter of 2021.
Closing the meeting, Chairman Nguyen Quoc Cuong once again emphasized the importance of the digital transformation in supporting Co-opBank to perform its role as a focal point for the safe, efficient and sustainable development of the PCFs network. Mr. Cuong affirmed the commitment of the Co-opBank’s Board of Directors and Managers to utilize and prioritize all necessary resources for Co-opBank to implement digital transformation quickly and effectively.
Nguyen Duc Dzung- International Relations & Project Management department
