“Asia, and what is happening in Asia from a business perspective, is really the future. I think we as Europeans highly underestimate the development in Asia, I don’t think we have a deep understanding of the business and the culture here. There are a lot of things we can learn from Asia, and not only the other way around, also in terms of innovation and technology, where Asia leapfrogs Europe in a rapid pace. Don’t come here only to try to transfer knowledge from Europe in terms of business and culture, also come here to seize what is happening in this market and bring back to Europe.”
Vlad Savin: How can innovation improve Vietnam’s financial inclusion and how do you leverage technology to achieve better stakeholder outcome?
Annica Witschard: Similar to the Philippines, Vietnam has a very large population that is unbanked, only somewhere between 25 to 30% is banked as we speak, and there is a need for people to get included in the financial system. There is a growing middle class, a growing young population that requires financial products one way or the other. Traditionally in Vietnam, there are barriers to walk into a branch office of a bank, it feels intimidating, and this is when new, innovative financial products can come in. Most of our customers have never experienced a financial product before, normally they will buy a mobile phone on installments over 6 months and that would be their first experience.
Adding to that, we see a trend across all Asia where people do their banking over the smartphone, instead of visiting a branch office, leading to a great opportunity. People download our app (we have around 6 million downloads) and they experience a financial institution in a more user-friendly way. As most use other digital apps that involve payments, they get to understand these new financial products much faster. To take this first step to get customers included in the financial world is critical and there is also of course a big responsibility in that, the financial literacy part is critical. This is how things can leapfrog in this market, in the Nordic market where I come from, everyone used to bank with their neighborhood branch, and then later on switched to the digital environment. Here the digital financial environment in itself is the financial introduction, which is very interesting from our perspective. The innovation is what creates financial inclusion in Vietnam, similar to China where QR payments and e-wallets took off several years ago. It’s cheaper, simpler and a lot more accessible.
Vlad Savin: You have worked in Sweden in the financial services industry most of your life, then went on to lead Home Credit’s Philippines office for the last 4 years, and just taken the CEO role of the same company in Vietnam. Why now and why Vietnam?
Annica Witschard: It is a big step moving from Europe to Asia, but it is impossible not to get excited about this market, the Southeast Asia region is developing extremely fast. There are so many opportunities. After 4 years in the Philippines – both me and the family found that it’s too exciting not to stay, everything is growing here, in respect to both development and innovation. With regards to Vietnam, there are many differences with the Philippines and many similarities as well, and it felt as a significant opportunity to be here and be part of its growth, from a business standpoint.
Vlad Savin: What is Home Credit’s business model in Vietnam, and what makes it stand out from the norm?
Annica Witschard: We target the middle class, unbanked population and normally our first interaction with the customer is through retail, point of sales loans. For instance, someone buying an air-conditioner or a new laptop and decides to divide the payment in to 6 affordable monthly installments. By using our services, the customers build credit history and over time we can offer them other financial products, i.e. credit cards or personal loans. Approx. 70% of our customers are returning clients, and we see this as a confirmation of our product’s value, where simplicity and practicality plays a key role. We see a great opportunity within the mobile world, which we leverage to create more inclusion and bring additional products for these unbanked potential customers. A key value add at Home Credit is simplicity, less papers, less personal interaction in the backend, and number two is transparency and responsibility, which are essential attributes to make people understand what they are committing to.
Vlad Savin: What are some strategic goals that you have set out to accomplish in your leadership here in Vietnam?
Annica Witschard: Obviously we are looking to move more towards online because this is the future, have less offline interactions, and continue the digital transformation of our business, both from the customer perspective but also internally in our own systems. Vietnam is a fast-moving market, and with digital technology you also need to move fast. Being agile and flexible is necessary to keep up with the rapid development in the market. For me leadership is all about collaboration, creating an environment where people collaborate more, and to do that you need to make people more empowered. One big advantage in Vietnam is that the population is very young, tech-savvy and very adaptable to change, which is key for creating an environment that is collaborative. My leadership challenge is that people are traditionally quite hierarchical in their mindset, preferring to escalate decisions to a higher level even though they can deal with specific situations themselves, and this is obviously counterproductive to collaboration and flexibility.
My Nordic background sometimes clashes with the more hierarchical Vietnamese business culture, and this is a challenge that motivates me to also question my own leadership style and be more adaptable in my approach. Both hierarchical and flat organizational structures have pros and cons, therefore finding a middle ground where I can bring value in my leadership with respect to culture as well as in what I am seeking to achieve.
Vlad Savin: If you were to communicate one message today, that is important to you Annica, what would that message be and who is it for?
Annica Witschard: Asia, and what is happening in Asia from a business perspective, is really the future. Asia has limitless opportunities as a growth market, and we are focusing on capturing the full potential of it. As we expand our operations across Asia, we continue to study and understand the business as well as the culture.
There are a lot of things we can learn from Asia, and not only the other way around, in terms of innovation and technology, where Asia leapfrogs Europe in a rapid pace. Don’t come here only to try to transfer knowledge from Europe in terms of business and culture, also seize what is happening in this market and bring ideas back to Europe.
Some western businesses have tried to undertake very similar operations as Home Credit in Asia. Why Home Credit has succeeded is because we did not implement the model from Europe, but we have really looked at this market, learned and understood how to apply our knowledge best in a new environment.
Vlad Savin: If you were to hold a roundtable discussion tomorrow at your office bringing together government representatives and thought leaders from public and private sector, what will be the number one item you would place on the agenda?
Annica Witschard: I think it is about how regulators, the government and businesses can work together to enable more people to be involved in the market and be more financially included. Vietnam’s regulatory system has, like in many other markets, evolved over years to improve business environment. In the area of financial inclusion and digitization the ambition is clearly very high, but there are still things to do to operationalize the transformation both from business and government side.
To this note, we currently implement a gamified program we use to teach and improve the population’s financial literacy, working closely with schools and parents and it is very well received.
Vlad Savin: How confident are you in the future of Vietnam on a scale of 1 to 10? And why?
Annica Witschard: I am very confident in Vietnam, I would say 7-8. Vietnam will come out of the Covid crisis relatively strong to other markets. The country and the government have managed the crisis really well, however it will be challenging to keep the borders closed. Vietnam is investing in building infrastructure, the population is young and well educated in terms of information technology, which is key for the future growth. More and more value chain distribution and investments are coming into Vietnam, so absolutely great in these areas.
The regulatory environment is clearly moving forward, yet is still challenging, but that is valid for a lot of countries in Asia. Aside from that, I would say Vietnam is one of the safest markets to invest in and be in for the foreseeable future and this is a market that will be able to steadily sustain its growth.