Techcombank has set a CASA (current account savings account) target of 55% by 2025 by investing in digitalization and increasing lending to retail customers and SMEs.
At its recent annual general meeting, CEO Jens Lottner said he was optimistic about the bank’s ability to achieve the targets despite market volatility.
Lottner said though Vietnam’s economy has recovered, higher borrowing costs, tighter credit and slower GDP growth in the first quarter of 2023 remain challenges.
The challenges for the banking sector include the high-interest rates, tight liquidity that has pushed up the cost of funds, compressing the net interest margin, and the volatility in the bond and real estate markets.
Techcombank has entered the third year of its five-year transformation journey, and stuck to its medium-term targets that focus on three pillars: Data, Digital and People.
According to Lottner, the bank’s digital transformation accelerated significantly in 2022 due to heavy investments in digital technologies.
In 2022 the lender deployed digital platforms for its retail and business customers, including the Techcombank Mobile and Techcombank Business apps. Around 90% of customer transactions are conducted via the bank’s digital platforms.
“Techcombank is investing in digitalization to create seamless experiences for customers in both online and offline channels,” Lottner said.
“This process requires investment, technology capability and integrating various systems and platforms across the bank.”
“Techcombank is now at an inflection point, and ready to accelerate.”
The bank is employing artificial intelligence to create human-like interactions with customers over digital platforms, analyze data to understand the needs of individual customers and offer each customer the right products and services throughout their financial lives.
“The technology application helps reduce the customer acquisition cost while enhancing customer value,” Lottner explained.
Techcombank has been adding around one million new customers a year and plans to add another 2-3 million by 2023, primarily through digital channels.
Techcombank plans to allocate more of its credit quota to retail customers and SMEs to diversify its credit book while reducing exposure to the property sector, thus improving risk diversification.
By increasing lending to retail and SMEcustomers, Techcombank aims to broaden its exposure to growing sectors such as fast-moving consumer goods, auto, utilities, and others.
But Lottner said this strategy would be flexible and depend on market dynamics.
As demand returns, the strategic shift to retail and SMEs is expected to resume in the second half of the year.
Techcombank has set a CASA target of 55% by 2025. Increasing the CASA ratio is the bank’s top priority. In 2022, it had a CASA ratio of 37%.
Lottner remained optimistic about the real estate and bond markets.
“As customer confidence returns and interest rates fall, appetite among affluent customers for bonds, stocks and real estate will rise. The need to transact and move money in and out of assets will lead to a shift from term deposit accounts back into CASA.
“Techcombank is working hard to strengthen its wealth proposition through better products, more experienced relationship managers and advisory processes to ensure its products are ideally suited to the individual risk-return expectations of every customer.”
Techcombank is strengthening its offerings in transaction banking for SME customers while enhancing its credit underwriting capabilities.
Techcombank is launching new initiatives to drive the acquisition of account relationships.
It plans to launch new cash and liquidity management and treasury management services on the corporate banking side. For merchants, the bank is preparing to launch a series of new offerings in the coming months while it is also releasing a host of new digital features and functionalities to drive online retail customer engagement, as well as new rewards and loyalty platforms.
“I am confident that we should be able to go to 55% CASA ratio if we continue to follow our strategy,” Lottner said.
In 2023 Techcombank continues to invest in digital transformation and transition to the cloud to meet customers’ evolving needs.