Vietnam's rocketing economy seems to have dropped closer to earth, growing just four percent in this year's first half versus the more than seven percent the nation notched on average annually over the last decade. A pile-up of non-performing loans to state-owned enterprises, corruption and inflation appear to have curbed the country's recent ascent.
But amid this pause in the dynamism, one institution is betting that pioneering new biometric technology will ensure that if, as the saying goes, all boats continue to rise, so will the bank's account deposits.
Mekong Development Bank (MDB), which has provided banking to rice, vegetable, catfish and crawfish farmers and market traders in the fertile Mekong Delta for the last 20 years, has expanded since 2010 into Vietnam's major cities from Ho Chi Minh City to Hanoi, adding government employees and small- to medium-sized business owners in urban centers to its customer base of about 200,000.
On June 15, the bank launched the nation's first fingerprint-enabled debit card. Actually, the small screens on the 33 NCR SelfServ ATMs that accept MDB's biometric-capable debit cards scan users' thumbprints. A user presses his or her thumb on a scanner on the ATM to access funds and account information. The scanners make sure customers' prints match those held on file at the bank. Temenos provided the biometric feature as a modular upgrade to Temenos' T24 core banking system to which MDB converted in January from an older proprietary system.
Here's how it works: Customers first provide their thumbprints to MDB by visiting a branch to sign up for the service. The customer receives a phone call to come pick up the new card after it arrives at a branch three to five days later. When a user inserts the card at a SelfServ ATM, the customer is offered the choice to activate and forever thereafter access accounts via thumbprint by placing a thumb on the ATM's scanner. Or he or she can use a one-time password that's immediately sent via text message to the customer's mobile phone number that's registered with the bank to set up a PIN to use the card.
MDB credits the thumbprint feature with enabling what it says was a tripling of its current account base and twice-as-high deposit balances per debit cardholder versus regular accounts since June. About 90 percent of new debit card customers have chosen the thumbprint method to access their accounts versus trying to remember a PIN. MDB wants to expand biometric authentication for cash-back options at supermarkets and in completing customer documentation inside branches.
The goal is to make it easy for local customers to tap bank products while making provision of those services as efficient and secure as possible. Biometrics can eliminate paperwork, especially for people who lack documentation or identification.
"We are constantly trying to simplify the whole process as much as we can," says Nicholas Chee, deputy CEO and head of consumer business at MDB. "Customers have said that it is very cumbersome to deal with a bank due to the amount of documentation needed, especially for loans. Vietnam, being an emerging market, tends to have more people wanting to apply for a loan than placing deposits in the bank. People are more keen to borrow money to grow their businesses, to grow their produce or their farms, and they still have the tradition of keeping cash or gold bars back at home. Documentation becomes a huge pain for these consumers.
"So we've designed our whole architecture so that we open the customer's bank account at the CRM level, not at the core banking level," Chee adds. "[Oracle EBS] is interlinked with the core banking side to ensure consistent information flow. This will minimize rubbish in, rubbish out and ensure we get it right the first time."
Only about 20 percent of Vietnam's 91.5 million people have bank accounts; only about 10 percent did about five years ago. The government worked to nudge an increase by mandating that state-owned enterprises pay employee salaries into bank-owned accounts. State-owned companies produce about 40 percent of Vietnam's GDP, and they still dominate access to capital. The plan is to double again the number of bank account holders by 2015. By way of comparison, about 20 percent of U.S. households are considered under-banked.
A wholly-owned subsidiary of Singapore's state-owned Temasek Holdings called Fullerton Financial Holdings, which specializes in investing in banks in the region that are partially state-owned, holds a 20% stake in MDB, the highest amount the Vietnamese government allows. Fullerton gets to appoint both the CEO and chief risk officer and applies international standards.
"This differentiates us from other local banks," Chee says.
Bank: Mekong Development Bank
Problem: How to boost bank account usage?
Solution: Offer easy access via biometric authentication.