Foreign banks accelerate retail expansion in Vietnam

HSBC hopes to expand its card business and market share in Vietnam after launching the HSBC TravelOne credit card

Many foreign banks are promoting new strategies to quickly expand their retail market share based on the strength of their large network and service quality on the basis of cooperation with leading brands.

Expand cooperation, increase incentives

UOB Bank Vietnam has just announced a strategic partnership with Vietnam Airlines to provide UOB Vietnam credit cardholders and Vietnam Airlines Golden Lotus members with many special benefits and privileges when traveling. This Singapore-based bank aims to capture the growing demand for domestic and cross-border travel, especially in the summer.

In Vietnam, UOB focuses strongly on establishing partnerships with leading companies in the key areas of tourism, catering, and retail, including Lazada, Shopee, Starbucks, CGV, Be, GrabFood, and high-class restaurants to bring customers the best deals.

Along with completing the acquisition of the retail segment from Citigroup in four main markets of ASEAN, UOB is trying to expand its retail banking market share in these four markets, including Vietnam. Accordingly, the bank is trying to seize cross-border payment opportunities and anticipate asset flows with its wide regional presence. UOB is confident that, from secured loans and deposits to card and asset management services, UOB's strengthened and expanded business network will provide customers with unparalleled regional reach and visibility through a network of branches across the region as well as on digital channels personalized to their own lifestyles and needs.

UOB has established more than 40 strategic partnerships with well-known brands in the region to provide benefits and perks, even more exclusive and personalized for both existing and new customers. These partnerships, which include eight co-branded credit cards with major consumer brands across ASEAN, in addition to more than 1,000 domestic offers, all are specially designed according to the unique preferences of customers and are built on a network of partners with the same orientation as the bank in which the focus is on building a widespread presence in the region.

Similar to UOB, to expand its unsecured lending business, HSBC Vietnam One Member Limited Liability Bank recently launched an HSBC TravelOne credit card specifically designed to serve travel enthusiasts. Accordingly, HSBC connects with a wide network of partners including international airlines and hotels. Vietnam is one of the first market groups HSBC introduced this product. The TravelOne credit card is an important step to strengthen the bank's strategy of developing personal finance and wealth management services by meeting the borrowing needs of the growing middle class in the ASEAN region, which is expected to grow rapidly. The bank aims to achieve strong revenue growth in the unsecured lending business in Southeast Asia.

According to Pramoth Rajendran, Country Head of Personal Finance and Wealth Management Services, HSBC Vietnam expected the new card product to boost the bank's card business further and help HSBC expand its market share in Vietnam.

Great potential

Regarding its strategy to expand unsecured lending in the Vietnamese market, HSBC said that Vietnam was expected to become the world's 10th largest consumer market by 2030, surpassing Germany and the UK. The global HSBC research data showed that Vietnam was in the top five Asian countries forecasted to have the fastest growth in the consumer market this decade (2021-2030), owning a population with an income of more than US$20/day in terms of purchasing power parity (PPP). Vietnam's high middle class (individuals with incomes in the range of US$50-110/day) is forecast to increase by 17% per year on average from now to 2030.

According to Booking.com's Travel Confidence Index, Vietnam ranked second in the world in terms of eagerness to travel again after the pandemic, with 85% of Vietnamese tourists planning to travel within the next 12 months. Notably, 62% of survey respondents plan to take one or two trips this year, while 45% prefer to visit famous places within a 3-8 hours flight from Vietnam. Additionally, 45% of Vietnamese tourists plan to travel because they planned it before the pandemic but had to postpone it due to Covid-19.

On that basis, HSBC's newly launched card brings many travel and lifestyle benefits to meet the pent-up travel needs of customers, which have shown signs of rapidly increasing after the Covid.

Pramoth Rajendran's observations also showed a spike in spending on airlines, travel agents, and hotels in the first quarter of 2023 compared to the previous year. The total number of active credit cards issued by HSBC has grown strongly at a double-digit rate year-on-year.

UOB Bank said that it currently serves about 200,000 customers in Vietnam and was working to expand its customer base in this market. Jacquelyn Tan, Head of Personal Financial Services, UOB, said that the acquisition of the retail segment from Citigroup has helped UOB capture the moment when consumer spending recovers after economies around the world reopen after the Covid pandemic. As consumers search for the best deals in food, travel, and retail both at home and abroad, the extensive regional network enables UOB to cater to the unique lifestyle needs and preferences of its customers across ASEAN.

In a recent report of VCBS Securities Company, the analysis department pointed out that the potential from retail customers in Vietnam was very large when the percentage of adults with bank accounts is currently at 66%, lower than other countries in the region. Domestic banks are racing to develop digitalization to increase customer experience to increase the number of individual customers using the service. Some banks have reached a large customer network thanks to the effective application of the chain ecosystem model, thereby providing a service platform for partners, from businesses, and agents to retail customers. Having a large number of regular individual customers also helps banks to have a richer source of mobilized capital and maintain a low cost of capital advantage.