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A moneyed market
Ms Nguyen Thi Hoa, Head of the State Bank of Vietnam’s Credit Institutions Licensing Department, shares her thoughts on premier banking services.
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Ms. Nguyen Thi Hoa, Head of the State Bank of Vietnam’s Credit Institutions Licensing Department |
Local commercial banks and foreign banks have been actively developing premier banking services for VIP customers in recent times. How do you view the development of these services?
Commercial banks, including foreign banks and domestic banks, have been actively implementing retail operations containing a range of premier services and products for VIP customers for a couple of years already.
Since the race to dominate the market segment began in Vietnam in 2009, foreign banks like Standard Chartered, ANZ, Citi, and HSBC have pioneered the provision of service packages for VIP customers, and several domestic commercial banks, including Sacombank, VIBBank, and ABBank have followed suit.
Premier banking products and services for VIP customers are full, professional packages of financial and banking services designed for high net worth individuals (HNWIs). Packages include basic banking services such as payment services, credit card services, prepaid services, cheques, safety deposit box rentals, asset management consultancy, and risk management advice, among others. VIP banking represents the pinnacle of retail banking services and satisfies the needs of target customers.
To identify the development trend of these services we need to assess market needs as well as the availability of such services now and into the future.
Demand for VIP banking is indeed increasing and will continue to do so into the future due to the following reasons.
Firstly, Vietnam’s economy is growing strongly, at an average rate of 7-8 per cent annually for several consecutive years. In 2010 the country joined the ranks of middle-income countries. GDP has exceeded $100 billion and GDP per capita stands at more than $1,000. The number of high income earners and the country’s middle class and upper class are all rising.
According to figures released in 2009, eight out of ten economies with the highest growth in the number of wealthy individuals are in the Asia-Pacific region, and Vietnam is one of these economies.
Secondly, according to many economic analysts, Vietnam’s economy will improve a great deal more over the next ten years. It is also one of the 15 economies most attractive to foreign investors. So the number of foreign VIP customers coming to live and work in Vietnam will undoubtedly increase in the future.
Thirdly, in terms of the availability of premier banking services and products, the race for VIP customers is becoming more and more vibrant. Foreign banks are pioneers in providing such services and domestic banks have also actively targeted the market segment.
The features of VIP banking include low risks and high profits, with the segment providing 30 to 40 per cent of profits at many large banks around the world. So banks will continue to actively develop products and services for premier customers, and competition in traditional products and services will also become fiercer.
Do you think the premier banking services introduced at some banks meet customers’ demands?
The premier banking products and services of some banks remain limited due to a number of factors. Firstly, the VIP customer segment has only been focused upon for one or two years. Secondly, although some banks have begun to aim to satisfy the needs of VIP customers, their services go no further than providing card products. Compared with the VIP banking products and services mentioned above, these existing offerings are nothing special.
What factors should banks pay attention to?
In principle, the three basic elements of premier banking products and services are the customer base, primarily consisting of wealthy customers; broad, deep and long-term customer relationships; and high quality products and services designed to satisfy customer needs.
VIP customers will always have a high demand for quality products so there are three factors behind the success of VIP banking services. The first is branding, because VIP customers often prefer products or services from reputable banks. The second is high quality personnel. Staff must possess thorough knowledge and skills in banking, investment, consultancy, diplomacy and customer psychology.
They must be able to create and sustain extensive relationships, satisfying customer needs and preparing expenditure plans for them. The third factor is effective operations. Banks must be able to effectively control costs and establish and maintain flexible infrastructure of large scale to provide a wide range of high quality products and services.
Is the SBV planning to introduce any polices or regulations to encourage banks to develop premier banking products and services in the future?
Policies from the central bank encourage commercial banks to diversify their products and services in order to increase their revenue sources, reduce risks, and attract customers. State management agencies do not need to have strict management policies on banking products and services. The central bank encourages banks to develop products and services under the law and improve their risk management capacity.
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