Core factors for Vietnamese banks to reach out globally

To better understand the journey of building a world-class banking brand, Banking Times had an exclusive interview with Professor John Anthony Quelch (J.Q.) - the world's leading expert in the field of global brand strategy and marketing, who has held leadership roles at prestigious universities such as Vice President of Harvard Business School, London Business School, China-Europe International Business School (CEIBS), Miami Herbert Business School..., and is currently Vice President of Duke Kunshan University (China).

The Professor has had the opportunity to visit Vietnam many times. What impressed the Professor about the country and people of Vietnam, as well as the spirit of innovation and development potential of the Vietnamese finance and banking industry?

Vietnam has gone through many events and difficulties in its history. That is what further highlights the enduring kindness and exemplary hospitality of the Vietnamese people - this is what impressed me the most.

Banking is inherently a conservative and cautious sector, and that makes perfect sense. However, the development of Fintech and AI is opening up opportunities for Vietnamese entrepreneurs to bring financial services to more people, while providing financial services in a better, faster and lower cost way.

What are the key factors that help Vietnamese banking brands reach out to the global market, Professor?

First, you need to answer an important question: “What do you bring to the global market? Why does the world need you?”

For a brand to be successful internationally, the organization must solve a real problem, or provide a better, cheaper or faster solution than its global competitors. That is the difference – the valuable difference – that helps a bank establish its position.

So the first strategy is often to focus on the overseas Vietnamese community – in other words, Vietnamese businesses and people living in other countries.

The second strategy is to focus on trade relationships – where exports go and imports come from – and ensure that Vietnamese banks play a full role in facilitating those transactions.

A third strategy that could be considered is to focus specifically on countries in the neighbouring region such as ASEAN, as they are likely to have closer ties with Vietnam. In essence, there is no reason for a bank to expand internationally if it does not have something truly significant to offer its current or potential customers.

What, according to the Professor, are the core elements that make a bank brand strong enough to expand globally?

Thus, a bank that wants to expand regionally and internationally must build core competencies including: effective risk management, modern banking technology, standardized service quality, and most importantly, brand reputation based on transparency and trust.

In the context of Vietnam implementing the Credit Institution Restructuring Project, according to the Professor, is the goal of having 2-3 banks in the Top 100 Asia and 1-2 internationally listed banks feasible?

I think it is entirely possible, especially if the Vietnamese economy maintains a high growth rate, and cross-border trade continues to expand. However, to achieve that stature - to become true international "players", banks need to expand their scale, through mergers and acquisitions (M&A) - this is the practical way to create competitive strength. In addition, international listing is also an important step, not only to raise capital but also to increase transparency and standardize governance. However, it should be noted that if the stock is not highly liquid, listing will not bring much real value.

Also on the above goal, could the Professor share more of his views on whether the Government and the State Bank can do anything to help potential banks to rise up and enter the Top 100 regions?

I think that the Government has recently loosened restrictions on foreign investment, and that, in my opinion, could be very helpful – as with Japanese banks currently investing in Vietnamese banks – they may want to expand their investment shares thanks to the strength and potential of the Vietnamese economy. Therefore, creating favorable conditions to attract more private capital for expansion is one of the important tools that the Government can implement.

But the second factor, which is even more important, is the factor of trust. No one wants to cooperate with a Vietnamese bank if they do not trust Vietnam. Therefore, it is very important that the Vietnamese Government is internationally recognized as a trustworthy partner. This will create the necessary “umbrella” for businesses to easily promote international cooperation and expand abroad.

You know, I think Korea is a good example in Asia – of course Korea is a more developed economy than Vietnam – but the way Koreans have managed their country’s global brand, as well as their individual company brands, is really a model worth learning from.

What role does brand positioning play in enhancing the competitiveness and sustainable development of Vietnamese banks?

Brand positioning is the heart of marketing strategy. Vietnamese banks are currently operating in a fairly competitive domestic market, so they already have a certain understanding of domestic brand positioning. However, when expanding internationally, the level of competition will be fiercer, requiring a sharper and more differentiated positioning.

Brand positioning requires three elements: (i) Clearly defining the target market; (ii) Identifying a point of difference that is truly valuable to customers in the target market; (iii) Provide a compelling reason for them to believe in that superior commitment.

According to the Professor, what are the biggest challenges that Vietnamese banks will face when they want to build an international brand in the current unstable context?

The current environment is truly challenging for “new players”. One of the biggest barriers is the lack of trust from the international market. In a volatile environment, investors tend to hesitate to take risks, and emerging banking brands are often assessed as not having enough operating history to build trust. Therefore, trust and reliability are vital factors - and they must be built sustainably. To succeed, Vietnamese banks must demonstrate their reliability, risk management capabilities and compliance with international standards. This requires serious investment in people, systems, and transparent management strategies.

And as I just mentioned, international expansion is often easier when times are good, rather than when times are tough. So in the current context, my advice is that in addition to clearly identifying specific target markets as I mentioned above, each bank should focus more precisely on identifying what products or services they can offer that are truly attractive to people and businesses in those target markets.

Because if you can't demonstrate relevance, and if you can't give a clear reason why an individual or business customer should switch from their current bank to a Vietnamese bank, there will be no strong enough incentive for customers to choose you. You also shouldn't try to "buy" market share by taking unreasonable risks. That will not only get you into trouble internationally, but it can also have consequences domestically, with your current shareholders, right?.

What can Vietnam learn from successful banking brand positioning models around the world, Professor?

A classic example is HSBC, they position themselves as “The world’s local bank”. That means in any country HSBC operates, they can provide “local knowledge” to international customers who want to do business in that country. At the same time, for domestic customers who want to expand into the international market, HSBC can provide “global knowledge”. It is the combination of “local” and “global” that creates a unique position. For Vietnamese banks, we can learn from this spirit to become a financial bridge, for example between the Vietnamese market and Vietnamese communities abroad, or between ASEAN and East Asia.

What advice would you give to Vietnamese bank leaders in building a brand that is both culturally and socially relevant to the country and attractive to international investors and customers?

Perhaps a sensible strategy would be to start by establishing separate international business units, or building a dedicated account management team to serve corporate clients with internationalisation needs. This would allow banks to maintain operational flexibility while testing global business models on a smaller, less risky scale.

However, as banks reach greater scale and global ambitions, such as HSBC, they need to develop a common corporate culture that transcends national boundaries.

As I have emphasized, “a strong brand is a promise”, and for that promise to be trusted across different markets, the organizational culture must act as the “glue” to ensure consistency in service, ethics, and customer experience. This is the foundation for building long-term trust - a vital factor for any bank that wants to conquer the international market.

Finally, what is the reason that made the Professor accept to participate as a Senior Advisor to Banking Magazine? Is it because the Professor wants to share the aspiration to help bring world knowledge to Vietnam, and at the same time bring Vietnamese knowledge to the world?

The Vietnamese economy has grown very well in the past two or three years with strong GDP growth and high foreign direct investment compared to other emerging economies. Therefore, it is very important that the banking industry maintains this momentum to continue to realize Vietnam's economic potential.

Therefore, having the opportunity to serve in this role and bring a small part of knowledge from international experience to help the Vietnamese banking industry continue to develop professionalism and improve the management system is very meaningful. I think this is the right time to support Vietnam.

- Thank you, Professor!

By Do Le