Investing in technology to sustain growth

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Saigon Co.op applies data technology to select industries with high efficiency and stable growth in difficult times. Photo: T.L

Technology - a "painkiller" in difficulties

Working in the "hot" field of finance and banking, Mr. Luu Trung Thai, Chairman of MB Bank, has clearly felt the impact of the difficult economy on the health of businesses over the past time. In the past twelfth months, MB has faced two major problems. Firstly, deposit rates increased very strongly while lending rates had to increase more slowly and only with a slight margin. The second is the problem of bad debt, overdue debt. "The bad debt of the whole industry was about 1.8% before, but now it has approached the figure of about 2.7%, causing the risk cost to increase very quickly" - Mr. Viet shared.

Faced with that situation, MB had to immediately adjust to cut costs and be more cautious in making lending decisions. In particular, the bank must calculate options, especially investment in technology to increase productivity but maintain efficiency. "Thanks to that, MB has maintained its not-so-bad results," said Mr. Thai.

At the perspective of retail businesses, Mr. Nguyen Anh Duc, General Director of Ho Chi Minh City Union of Trade Cooperatives (Saigon Co.op), said that in order to cope with the decrease in purchasing power, Saigon Co.op has had to focus on growth in depth, sacrificing products and services that are not doing well, customers that are not working well to focus on what works based on data analysis. As a result, the growth rate in the first six months of Saigon Co.op is relatively positive.

At the same time, Saigon Co.op implemented internal efficiency reform, saving under the motto “Do more with less” and conducting in-depth research to take advantage of the benefits of Saigon Co.op. recent support policies to create a push for products, industries or business areas.

Mr. Le Hong Viet, General Director of FPT Smart Cloud, said that through working with businesses, he realized that businesses are changing their investment models. “A lot of companies are starting to downsize their business and want to preserve capital so they can wait until the day to 'rise up' again. Accordingly, businesses aim to find partners who can accompany them in the long term through smarter investment models, helping to preserve capital and create more flexibility," said Viet.

In that context, FPT is providing a platform using artificial intelligence (AI) with a contact center for financial companies, with 80% automated and 20% performed by humans. Mr. Viet said that businesses have focused more on innovation and improving labor productivity through investments in technology.

Despite of the difficult economic situation and the reduction of expenses, FPT maintained a large growth rate. In the first seven months of 2023, the company's revenue grew 22.5%, profit increased 19%. "This is possible because the company has changed its investment model, reduced large projects, switched to a rental model, customers pay wherever they go...", Mr. Viet said.

Taking in advanced the recovery

Not only helping businesses overcome the past difficult period, the investment in technology is also considered to create momentum for the upcoming growth period. Mr. Luu Trung Thai said, based on factors such as domestic interest rates are well controlled and tend to decrease; Exports recovered, public investment grew, FDI was good..., it can be seen that the recovery of the economy is coming. As for consumer sentiment, MB's data shows that the demand for consumer spending is also increasing. Before those signals, MB is focusing on investing heavily in data and digital transformation to attract customers, thereby creating new revenue on platforms.

According to Mr. Thai, MB is aiming to become a digital enterprise with digital platforms contributing 50% of the bank's revenue in the next four years. Currently, after 4 years of implementation, MB's revenue on digital platforms has reached about 20%. This has helped MB maintain an average growth rate of 20% in revenue over the past five years and profit with an increase of 35% in a year, while the bank has not grown in terms of branch size as well as staff size.

In fact, digital transformation has proven effective in terms of investment and labor productivity. However, the issue of cost is still a big barrier that slows down many businesses, especially small businesses. From practical experience, Mr. Thai said, the digital transformation process is about building platforms and must start from small things, then carry out testing. The test shows good results, then move on to the next stage of investment.

Mr. Nguyen Anh Duc recognizes digital transformation as an inevitable trend that businesses must go. “In retail, people think investing in e-commerce is going to cost a lot. If we don't participate, we will lose everything. Therefore, businesses need to choose their own path to participate in e-commerce "- Mr. Duc acknowledged.

Mr. Le Hong Viet shared that many FPT customers do not understand digital transformation properly. “A lot of people think digital transformation is the story of technology, but it's actually only a third of the problem. The other two factors are business processes and people, especially leaders, in which the human factor is the most important," emphasized Mr. Viet.

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Mr. Viet also noted that digital transformation is not expensive because today's technology is much different. “Business does not have to invest a lot in the beginning, but it's like a lego puzzle game. Enterprises design what they need, then buy technologies in the market to combine them into solutions, then inject the knowledge content of enterprises into it and can reap the benefits after only three to six months, Mr Viet shared.