Despite being unable to put an actual figure on the market value, all banks agree that Vietnam’s premier banking services segment is on a solid path to development.
In a swanky dress and with a stylish hairdo, Ms Le Thi Bac - accompanied by her fiancé - sat down at her table at a charity event hosted by Operation Smile attended by a number of local and foreign entrepreneurs.
There is no direct link between her job - as Retail Banking Branch Manager with Citi in Vietnam - and the charity event, but the former HSBC executive took the opportunity to exchange business cards with a number of VIPs at the gathering. As Mr Henry Hoang, General Manager of IDG Ventures Vietnam (IDGVV), addressed the crowd she talked about Citi’s premier banking services with some wealthy individuals at her table.
Most if not all no doubt received an invitation within a few days from Citi to test its premier banking services.
This is just one of the ways the US financial giant quietly penetrates into the local market, despite the fact that it has been widely known for its corporate banking services since establishing a presence in the country in 1994.
In October 2009 Citi opened its first retail outlet, in Ho Chi Minh City, to provide individual customers with savings and deposit products, including multi-currency deposits, flexible interest bearing accounts, and online banking.
In October 2010 it officially launched its retail branch in Hanoi, challenging traditional rivals such as HSBC, Standard Chartered and ANZ.
As Vietnam’s economy continues to develop the banking needs of its population continually change, with international and local banks launching an array of new products and services to meet this shift in demand.
“Premier banking - a suite of personal financial services that target Vietnam’s high net worth individuals - is one of the latest to be introduced to the market,” said Mr Sumit Dutta, the new CEO of HSBC in Vietnam. The UK-registered bank - widely considered the guru in the local market in terms of retail banking services - also provides its HSBC Premier service to high-income earners in the country.
One of the largest foreign banks in Vietnam, ANZ Bank, joined the market by introducing ANZ Signature Banking in 2010 in Ho Chi Minh City, and recently opened its first lounge in Hanoi, reflecting the growing demand among affluent customers for its personalised banking service in the country.
“The Vietnamese economy is growing fast and more banks are placing a greater focus on this segment and there is a wide choice of priority banking services for affluent customers,” remarked Mr Daniel Peh, Head of Affluent Banking at ANZ Vietnam. ANZ insists that the affluent and emerging affluent customer segment is a key focus of its retail banking and wealth management growth strategy in Vietnam.
While ANZ Signature Priority Banking is now available in six Asian markets and two Pacific markets, HSBC Premier offers customers the exclusive benefits they most expect, which include access to a dedicated Personal Relationship Manager, private banking facilities in upscale premier lounges in over 80 countries and territories worldwide, and a wealth of exclusive offers and experiences.
For Citi products and services, Mr Brett Krause, Country Officer of Citi in Vietnam, said that the bank’s Hanoi branch is equipped with a media wall, interactive sales kiosks and work benches, which enable customers to web surf for information, learn about financial products and services and conduct transactions. In particular, its media wall provides customers and the local community with up-to-date global and local news, including weather, business, sports, foreign exchange, and stock and indices updates.
ANZ Signature Priority Banking also has a relationship manager supported by a team of specialists providing advice on insurance and wealth management products and mortgages. But HSBC in Vietnam concentrates on its advantage: international recognition and local support.
“This is unique to HSBC Premier,” said Ms Lindsay Rajah, Head of HSBC Vietnam’s personal finance services. “Based on globally linked infrastructure like the premier customer directory (PCD), our customers and their loved ones will be well taken care of anywhere they go.”
In addition, she continued, local transfers have been specifically tailored to benefit Vietnamese customers, who are often not eligible to wire funds overseas, absolutely free of charge without any limits.
HSBC’s emergency services are also uniquely designed to assist customers and its competitors are trying to imitate its features. For example, Ms Rajah explained, Standard Chartered Bank now offers card replacement but only domestically, and their instant encashment of up to $5,000 can only be via a branch.
HSBC Premier clearly offers a superior experience, as the bank offers 24-hour card replacement and $2,000 emergency cash through MasterCard anywhere in the world. “If a customer visits our branch for encashment, we can definitely go beyond $5,000 once authorised by the customer’s home country,” she added.
Despite Vietnam experiencing a tough time in its economic development due to excessive inflation, which has affected much of the country’s banking system and people’s financial capacity, foreign bankers believe that now is the right time to launch such deluxe products and services in the developing economy. “This is the right time to be offering such services in Vietnam,” said Mr Peh from ANZ Vietnam. “Vietnam’s development has been very strong over the last few years and the growth trends are expected to remain strong because the economy is one of the fastest growing in the region.”
According to a recent study conducted by McKinsey, the country’s middle-class is expected to grow from 7 million households in 2003 to an estimated 25 million by 2013. “Affluence will continue to grow, particularly among the growing middle classes,” said Mr Peh. “Wealth is increasing and it is a good time to introduce this service to affluent and the growing number of emerging affluent Vietnamese.”
But there are some disadvantages in launching premier banking services in Vietnam, according to Mr Sumit Dutta from HSBC Vietnam, since the launch is not just about clever advertising or marketing campaigns.
“The customer is going to expect truly differentiated services, including better products, more customised services and high quality relationship managers who understand the complexities of the customer’s financial position and the Vietnamese economy sufficiently to be able to offer the right products and services,” he said. “If the bank is unable to meet their expectations, the proposition itself could suffer.”
Therefore, he noted, the bank must have the capacity and proper banking channels, infrastructure and network to provide authentic, efficient premier banking services. “Banks must invest heavily in this service with specific emphasis and also live up to customer expectations,” he insisted.
Though it’s still in its infancy in Vietnam, the premier banking segment has huge scope for development, foreign bankers agree. While HSBC’s estimates are that 10 per cent of deposit account holders in Vietnam fall into the premier banking category, ANZ Vietnam’s Mr Peh predicted that between 5 to 8 per cent of the population would qualify to meet the minimum threshold of investible assets to join any priority banking service in the country.
“What’s more important is the rate at which this segment is growing along with the fast paced growth of the economy and the middle class,” he said. Such comments mean that Ms Bac at Citi and her counterparts at other foreign banks may well attend as many events in the future as they can.