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Kalidas Ghose is vice chariman and CEo at FE CREDIT. He shares with us his vision of innovation and digital transformation in banking.
How has your organization created an ‘innovation culture’ that supports your product and customer experience objectives?
To understand our innovation culture, we need to look back at the history when we started in 2011 with four people in a small division of VP Bank. It grew exponentially within the first three years, we acquired nearly 50% market share thanks to our extensive distribution network spread across the length and breadth of Vietnam, with the help of 10,000 employees. In 2015, we spun off as a separate company under the brand name FE CREDIT and became the market leader.
Although our momentum continued strongly, we did not rest on our laurels. We recognized that our customers’ behavior is changing at a speed we never imagined before. With the current mobile penetration of 140% in Vietnam, 95% of our customers use mobile phones and spend 3-4 hours a day on a phone. This led us to the decision to put innovation at the forefront of our business with the aim of providing the best customer experience with the help of technology and being the most innovative company in Vietnam. Now, it is safe to say that we have realized our vision. Recently FE CREDIT has been recognized as Asia’s Most Innovative Consumer Finance Brand by the Global Brands Magazine and one of the best Fintech solution adopters at the Regional API Exchange.
Although we started with a model of a traditional consumer finance business, we have always kept a mindset of a startup where we focus on success formula based on technology and build a customer-centric culture based on 4 core values: Focus, Unity, Simplicity and Ownership. We ensured all our departments and units joined hands to deliver the best to our customers.
This has been made possible by the rigorous execution of a very effective set of strategies around a comprehensive financial solutions suite and a highly efficient risk management framework supported by a superior customer service mechanism implemented on a cutting-edge technology platform. Above all, we have hired the best foreign and local talents, with strong expertise to create a team of super capable people. In fact, FE CREDIT can certainly boast of the most experienced and diverse management team in the industry today.
Our digital transformation wasn’t just implemented at the front-end customer interface, it was an end to end digital evolution programme. We are the first consumer finance company in Vietnam to launch a fully digital lending platform called $NAP, that eliminates the need of human intervention at all stages of the entire customer journey. The technologies incorporated in this platform include features such as facial recognition, AI-based optical character recognition (OCR) and Optical Ink Character Recognition (OCR+ICR) to verify the customer’s identity, authenticate the documents submitted by customers and assess their creditworthiness using their phone cameras, voice based virtual assistant, speech to text, device-based scoring, telco data scoring, eSignature, and many more. By using such modern technologies, $NAP reduced the turnaround time for loan approval from 4-5 days to less than 15 minutes.
Together with the launch of our other applications such as FE Card, our credit card management app and $HIELD, the digital insurance application, we are aiming to build a larger ecosystem to embed ourselves at all points of consumption in the daily lifecycle of the customer to help them enjoy faster processing of their applications, convenience of being able to apply for our products anytime anywhere with total peace of mind.
All our platforms ensure a strong risk management process, enabled by top-tier financial expertise, robotic automation of back-end processes, by finding the best solution for each problem area, the application of advanced analytics etc. and then putting them all together. Together, these practices have helped us to serve our customer faster, easier, deliver the right product to them, at the right time and right place. And as a result, we can now increase our revenues while reducing risk as well as operations cost.
What have been some of your key achievements?
We successfully configured a horizontal end- to-end customer journey on a world-class Business Process Management (BPM) platform, to deliver a cutting-edge business model for lead generation, origination, service, collection, etc., and which we believe is a path breaking technology stack. This is in contrast to vertical financial players that are still operating in silos.
• Working with the best of fintech providers, we extensively leverage API layers to access cutting edge Deep Tech and Artificial Intelligence (AI) based services like Face Recognition, conversational AI, alternate data-based scoring etc. Using this model, we developed a market-first lending app, called SNAP, to deliver end-to-end 100% automated loan origination capability. Our technology breakthrough was showcased by International Finance Corporation (IFC) in their API Exchange (APIX) at Singapore Fintech Festival 2018. We are proud to be the first financial institution in Vietnam to offer 100% digital unsecured lending.
• We have digitized over 10 million customer identity and credit records, and are now successfully using Live Face Recognition for approving loan top ups to existing customers. We are further driving paperless transactions and conducting e-KYC along with e-signature.
• We use conversational AI and Chatbot for automating support services to customers and continuously enhancing its ability in improving customer query resolutions.
• A key milestone is our extensive usage of big data analytics by migrating credit and behavior scoring to machine learning platforms. This has resulted in an ability to take on higher exposure with better customers, delivering them top-up loans earlier in their lifecycle, and expansion of target base by using alternate behavioral data in partnership with telcos, e-commerce and utility companies.
• We have effectively created an open architecture banking platform on which we can partner easily with multiple fintechs and offer white label solutions. Five fintechs are already active with us and expansion of this distribution model is gradually leading to higher levels of financial inclusion.
Key business outcomes are:
• We have the largest consumer base in Vietnam and are in the top 3 in ASEAN.
We have 50+% market share, with the highest revenue and the highest profit.
• We are the transformational market leader in Vietnam, and ranked in the top 5 in ASEAN.
What is the biggest challenge faced by your organization as part of your digital transformation journey?
One of the first challenges that we faced was that we did not have any precedents to refer to, being the first mover in digital transformation of consumer finance in Vietnam. While this was challenging, it also gave us the opportunity to think simple and remove all the complications from processes while designing the workflow.
Since inception, we have focused on creating unique solutions with tailor-made benefits for first-time users. The basic principle followed was that our products need to provide solutions to the unique problems of each customer and deliver it in a “Fast and Easy” way, in line with the company’s brand promise.
Our second big challenge during this transition was to digitize the records of 25 million customers, which was available in our archives in physical (paper) form. The national IDs, family books, utility bills and other supporting documents provided by the customers were all stored in paper form and we successfully completed a massive effort to digitize and store them. We use optical recognition technology to match the new records with old records. Face recognition technology is used to match the photos of customers. Often the family book or the national ID in our database may be 5-10 years old, but when applying for a loan online, the customer will upload their latest ID & Selfie pictures. Hence, matching the old photo with the new photo requires very high level of precision, so that wrong decisions are not made in underwriting the application.
Considering that we are a large organization with more than 18,000 employees and 13000+ external points of sale, our staff and partners at every level must buy-in the concept of Fintech and understand the rationale behind our continuous evolutions order to make it work.
How did you overcome the challenges?
We collaborated with global advisory firms like Ernst & Young and leading Fintech companies (e.g. Hyperverge, Docusign, Vymo, etc.) to bring the best practices in technology together on a single platform in such a way that it provides a seamless experience to our customers, as well as helps us convert physical records to digital documents with high precision, leaving almost no room for error. Multiple rounds of product testing based on customers’ feedback helped us refine our product offering which the market could easily accept and use.
Since majority of our customers are unbanked or first-time users, customer education through ‘easy to understand’ communication at the right touch-point at the right time was crucial for all of us at FE CREDIT. When realizing that most of declined or drop-off transactions were due to customers’ lack of awareness about our product features or they are not familiar with the technology, we have changed our communication strategy to make it more customer-friendly with simple instructions while ensuring accurate information is available at customers’ fingertips anywhere, anytime in our apps.
Such small yet meaningful changes resulted in a 20% reduction in declined transactions and drop-offs within one month. As a market leader, we have a duty to lead customer education programs by employing mass media to provide financial knowledge and how digital lending can empower them to self-serve, and manage their personal finances without having to ask for help from friends and relatives.
To make our staff and partners embrace the culture of working in a technology driven organization, we developed an ecosystem for our employees to get trained and manage their work on the go. For example, we have an app for sales staff to help them manage the sales leads, improve productivity, drive higher conversions and manage their time optimally. Similarly, our collections app provides necessary information to support debt collection staff in managing recoveries and help managers monitor their team’s productivity. We have a Training app which provides all training resources to all 27,000 staff and third party sales team of FE Credit, with a variety of modules covering practically all key departments of the company. As a result, any new joiner can get training through mobile app anytime anywhere, without being physically present in the training center.
Among Vietnam’s total population of over 95 million, 50% of Vietnamese people are employed and about 60% are not served by banks. The whole cycle of our innovation journey is to bring these unbanked/underbanked customers into the fold of organized finance and that has been our aspiration and motivation during the past nine years.
This interview is included in the Efma-Infosys Finacle-Digital Banking Report's Innovation in Retail Banking 2019. Download you free copy