Monday Morning Coffee: E-Bank and E-Wallet

In this episode (MMC.002): The rise of E-Bank and E-Wallet in Vietnam. What is the difference between an E-Bank and an E-Wallet?

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Below is a transcript of the episode, edited for readability.

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Granger: Good morning. Welcome to The Lotus Talks. Today, on Monday Morning Coffee, we are going to be discussing E-Bank and E-Wallet in Vietnam. Cam, do you use E-bank and E-wallet?

Cameron: Yeah, I can tell you how many E-Bank I use. I use one. But E-Wallet, that’s a lot more. 


What is the difference between E-Bank and E-Wallet?

Cameron: Well, E-Bank can actually functions as a bank, a digital bank. So, you can deposit money. You can actually use it. You can withdraw money, which is one of the big features…

Granger: Withdraw money in Vietnam? I thought you could only put money into the banks in Vietnam. You can actually get it out? No, I’m kidding.

Cameron: But E-wallet, it’s a little bit more difficult. Of course, you can but it’s a little bit more work. I use Moca Pay for Grab…  That’s one of the main ones I use. It works great, really. It really does. I’ve had some cases where I didn’t have enough money in my Moca Pay, very college graduate syndrome. And the guy, he didn’t accept my money and he just gave me the food for free, which is quite strange. My payment didn’t go through and he just gave me the food and went away.

Granger: Well that speaks to the generosity of the Vietnamese people.

Cameron: Maybe he didn’t know that it wouldn’t go through and then later he would be very upset at me. But he did not come back and try to… You can’t contact them after the period.

Granger: You know, I use Timo. That’s my digital bank and whenever I make a transaction and it goes “Bling! Bling! Bling” on my phone and my watch. I get instant notifications, and I know transaction’s been happening. And I mean, that’s really cool, right?

Cameron: That’s almost like an Omni-channel approach. I mean, okay, my email is going off, my SMS is going off, my Facebook is also messaging me. It’s amazing.

Granger: You’re right, though. It’s really cool. It’s instant. I am always amazed at how fast the Internet is. I mean you can send a text to my kids in the States and literally in, you know, a split second there, they’re reading it. 

Cameron: But that’s one of the big issues here when it comes to penetration. I’ve been in some places in Vietnam where I have no internet for five hours.


How are you going to do mobile banking in Vietnam?

Granger: That’s a really good question. I mean, the Vietnamese government just came out this last week and said that they want to become cashless by 2020. Now, listen to that! The Vietnamese government announced a policy decision aimed to dramatically decrease cash transactions and improve electronic payment methods by 2020. That’s huge. I mean, 90% of this country runs on cash, doesn’t it?

Cameron: It’s something along those lines. I mean, trying to get it to 10% of market transactions and supermarkets market and other shopping malls to 10% of the total transactions. 

Granger: That was just fairly fast. I didn’t follow that. So, anyway, to reduce the cash transactions to 10%, that’ll be huge. Totally cashless by 2020. There’s a rise of E-banking and E-wallets in Vietnam. I think about two-thirds of the population are online. 72% of the population owned smartphones because they never really have landlines here, right? They kind of went from nothing to mobile phones. And that happens in a lot of places in the world.

Cameron: Yeah. I mean, Facebook in some countries in Africa, they subsidize mobile phones so that you can only get one actual web app, which is Facebook. And that was their main source of Internet access.

Granger: But you can also make phone calls on Facebook and you can do video calls on Facebook. Right? Which is a whole another amazing conversation. How integrated that company is. But yeah, I mean there’s a big growth, about 35 startups or platforms here in Vietnam, doing E-wallets or digital banking. There’s a tremendous amount of investment coming online for E-banking. I know that all the banks are getting digital. I mean, they’re all trying to figure out what is their digital plan, right? How are they going to implement changes to their bank, stay current, especially with the younger generation here that is growing and taking over? I mean, literally, the middle class, the younger generation is the most powerful in Vietnam.

Cameron: What is the figure like? 35% of the population are Millennials?

Granger: I think it’s 42% or something and they’re growing.

Cameron: And then there’s Gen Z. 

Granger: Well, you’re one of them, right?

Cameron: Yeah, I am. I’m halfway between a Millennial and Gen Z.


What are some of the most notable E-Bank and E-Wallet in Vietnam?

Cameron: The most interesting part is that a lot of these digital banks, were started by larger banks. So I mean, getting into that market would be very challenging for other players. I don’t know. Do you think that’s feasible? 

Granger: To compete against the banks who are launching digital programs as a startup, is that what you mean? I don’t know. What’s that regulation here on even being a finance company or being a bank? I mean, you have to be a Vietnamese company, right? Or can you be an FDI company here? Well, certainly you can because the HSBC is here and, City Bank is here. So, there are foreign companies here… I think the leader of digital banks right now is Timo

Cameron: Yeah, I do believe that as well.

Granger: Timo was originally started by McKenzie in a partnership with Don Lam at VinaCapital. And Justin was one of the guys that helped start that company.

Cameron: They’ve got 100 million USD right off the bat. In the first funding round, they got a crazy amount of money.

Granger: It was originally going to be Eximbank that was going to be the back end of that, which is, again, what you’re talking about. You need to have a big bank. But it ended up being VP Bank. So VP Bank, really, is the bank that underwrites or backs Timo for the banking side. The digital side is all run by a team of themselves. So that’s a joint venture partnership or strategic partnership in a way. So, what are some other ones? Yolo? Yolo is VP Bank’s, digital products that they came out with after Timo. Have you used Yolo?

Cameron: No, I’m not using Yolo. I’m already locked in on Timo. I would have to know the benefits of switching because why would I change platforms when I’m already so used to it, right?

Granger: Actually, that’s a good point. And that’s the point I think for a lot of marketers, a lot of businesses, you kind of want to get them early, get them young and hold onto them, right? Loyalty.

Cameron: Yolo, I might as well try it. You only live once, right? That could be their branding.

Granger: That’s funny. And then, TP Bank, they have something called Live Bank. And there’re ZaloPay, Moca Pay, and Viettel Pay on the E-wallet side. There’s just a lot of growth going on here. So, I don’t know what’s going to happen.

Cameron: Well, you see all these other E-wallets trying to start up and they’re trying to carve out a space for their own. You know, what you can do when you can’t compete with a company size? You can compete with a company based on added perks and benefits, right? Of course, Grab, you know, I generally don’t pay for Grab Food because I have so many Grab points that I can just redeem. 

Granger: Are you talking about the membership points?

Cameron: Yeah, membership points. I mean that’s another thing. Why would I switch when I have 200,000 points on Grab?

Granger: That’s loyalty, right? The loyalty and retention of your current customer base. So what are the advantages of using an E-bank or E-wallet? What are they for you?

Cameron: For me, it’s the ease of access, speed… I could be in my apartment and realize, oh, I have no money on me, but I can just deposit some into my Moca Pay and I can have my bubble tea or anything I would desire in a short amount of time.

Granger: One of the things I thought that was pretty cool too is that I think Timo, there are no transaction fees. So if I want to go withdraw money, I can withdraw money and they don’t charge me that dollar or that 2 dollars or that 50 cents. And if I want to use it online to buy something from Lazada or Tiki or Shoppee or one of the e-commerce sites, I don’t get charged a fee for using the card. That’s a big advantage.

Cameron: And that includes international banks too. Like Standard Chartered, you get no withdrawal fee. I don’t know the applicability of using it outside of Vietnam, but…

Granger: Well, you can’t use it outside of Vietnam.

Cameron: Yeah, that’s one of the issues.

Granger: Timo and a lot of these cards, you’re only able to use inside of Vietnam, right? Because they’re Vietnamese and they’re on the Vietnamese system. So that would be a disadvantage or a challenge, for sure.


What does the future hold for E-Bank and E-Wallet in Vietnam?

Granger: The government is supporting it. There’s a regulatory sandbox that’s being developed for fintech companies that’ll help the growth of it for sure. VNPT and Viettel, two of the countries’ major telecom providers have also been given a green light to explore the deployment of mobile money, which can potentially be transferred between mobile users and even those without smartphones. So, that would give more distribution capability to the country, which would be phenomenal. Some big challenges are the Vietnamese population, about 96 million, there are only about 4 million authenticated E-wallet users today. It’s a small amount, isn’t it?

Cameron: It’s really getting out. I mean, I think it’s like around 32% of the population that still lives outside of cities and outside of that environment. So I think penetrating that market is going to be very difficult.

Granger: It’s a long tail challenge. But really, inside the city where you have the concentration of millennials and generation Z guys like yourself, you’re going to be the fastest adopters, right? Adapting and adopting to them. 

Cameron: I mean, I don’t know about the applicability since I don’t know in Hai Phong, do they use a completely different system? I mean there is limited Grab In Hai Phong, you try to get a grab, that might take you like 10 minutes or it might take you an hour because there’s no one working. I mean all these other urban sectors have a completely different infrastructure in some cases. So, trying to work with that, how do you ensure that you’re penetrating and really developing in all the other major metropolis. 

Granger: Yeah, but that’s always the infrastructure issue, right? You know, to that point, only half the population has access to bank accounts. So if you think about 96, 98 million and only half of them actually have bank accounts,  then how many of them are going to trust a digital bank, right? Because they’re scared of the risks of malware or just how to use a smartphone and do your banking. And this is a country where people put money in walls, right?

Cameron: Put it onto your mattress. It’s fine.

Granger: I heard the stories where they literally would take bricks out, they would put the money in the walls and they would re-mortar up. And apparently, there’s just a tremendous amount of people that does that here. I think it’s a big part of the culture here. And that goes to trust also, right? So I think the size of technology, vulnerabilities and risks, there’s a cultural transformation that has to happen in a lot of education for people, at least my age or older to adapt to this new technology, and trusting banks and using digital transactions as opposed to “Well why would I? I just keep it in my safe at home.”

Cameron: Yeah, I mean that is definitely a contrapositive but looking at my generation, I definitely see.. I mean, one of my coworkers just went out today and got a Timo account. So it has definitely grown up.

Granger: How old is your coworker?

Cameron: Same age as me. 23. 

Granger: Okay. 23. So put the millennials and generation Z, she is going to be much more apt to do that because you guys grew up on technology.

Cameron: I just see growth too because I’m basically an evangelist for Timo at this moment in time. That’s how they should be working. I mean that’s how they’re working by word of mouth, you know, that’s the best type of marketing that you can possibly get. Having this positive of customer relationship, and experience. So hanging out with my friends at a bar, I can just Timo them money if they have the issues, they don’t have cash on them…

Granger: Yeah, I think you can do that. I mean, certainly, I’m sure with Yolo or the others, you can do that. In China, they use WeChat, right? They pay for everything on WeChat. It’s unbelievable. They transfer money between each other. They pay for cabs or drinks. It’s probably the most sophisticated, most highly penetrated digital app in the world for payment. And you know, I think that’s probably where we’re going to get to everywhere. How fast that happens here is yet to be seen.

Cameron: I mean, inter-banking transaction. So like, I want to transfer, my friend has a Yolo account and I have a Timo. How easy can that be handled? That’s the goal, right? If the infrastructure’s there, then perfect. 

Granger: Yeah. It’s amazing. If you transfer to just about anybody at any bank in Vietnam, and you put their bank account number in their name really pops up instantly. It’s so fast and that infrastructure’s very mature here.


Thought of the week

Granger: I’m surprised. I mean, it’s one of the most impressive things about Vietnam that I have seen. Well, listen, everybody, thanks for joining us today. Will Vietnam succeed in becoming cashless by 2020 or 2021 is yet to be seen. But since you brought up Timo, and certainly I know Timo pretty well, I am going to do a Friday Notes on Timo this Friday. And we’re going to do a little research and talk about Timo. I expect you’re going to do a lot of research too. 

Cameron: I’m on it. I’m going to use it.

Granger: That’s all for now. We’ll see you Friday on Friday Notes where we’ll have a quick talk about Timo, one of the most prominent E-banks in Vietnam. And we’ll see what comes up between now and then. Have a great week, everybody. Goodbye. 

The Lotus Talks is produced by The Vietnam Group. This episode was produced by Granger Whitelaw, Cameron Lynch and Toan Tang.

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