On August 31st this year, Vietnam’s government made an announcement, which perhaps could be compared to the one made three and a half decades back.
In 1986, Vietnam launched a political and economic renewal campaign (Doi Moi) that introduced reforms intended to facilitate the transition from a centralized economy to a “socialist-oriented market economy.”
Doi Moi combined government planning with free-market incentives. The program abolished agricultural collectives, removed price controls on agricultural goods, and enabled farmers to sell their goods in the marketplace. It encouraged the establishment of private businesses and foreign investment, including foreign-owned enterprises.
Vietnam’s economic growth, based on tourism and manufactured exports, was among the world’s fastest during the decade-long tenure of former Prime Minister Mr. Nguyen Tan Dung, and state-managed economic liberalisation has continued under General Secretary and President Mr. Nguyen Phu Trong.
Even as the success of Doi Moi reforms are evident, Vietnam’s government decided to take the next leap forward. In August, Vietnam Prime Minister issued Decision No. 942/QD-TTg approving the e-government development strategy towards the digital government in the 2021-2025 period, with a vision towards 2030.
This is the very first time that Vietnam has issued a strategy on developing e-Government and moving towards the digital government. What this essentially means is the increased shift towards businesses- large and small to digitalise their manual processes.
Companies are doing this with the help of cloud- which allows them to opt for using technology through subscription instead of investing large sums upfront. Vietnam with a population of 96 million is now turning into a digital savvy economy.
According to an eConomy SEA 2020 report by Google, Temasek, Bain & Co, around 69 per cent of the population own smartphones with 41 per cent joining digital services during pandemic time of whom at least 80 per cent intend to continue the services with belief that the technology has really helped them during pandemic.
“What could be better news for any organization that wants to reach its digital savvy customers and diversify its revenue stream, by harnessing the power of advanced technologies,” asks Vaibhav Sakorikar, ex-CIO, Chief Information Officer for Post & Telecommunication Finance Vietnam.
Sakorikar, with his over decade long stint in Vietnam’s banking sector and in his earlier stint of over two decades in international markets,managed to obtain regulatory approvals for the first ever hybrid cloud implementation for a Conglomerate Group’s Consumer Finance firm.
The benefits of cloud are multifold. “Many organisations, due to budget constraints and a long winding capital investment cycle for researching, selecting and procuring the right technology were unable to launch innovative solutions.
But now with cloud computing, firms can do quick experiments on a pay-as-you-use basis, freeing up their resources for innovation, exploring new opportunities and quickly launching new products & services with minimum capital investment,” points out Sakorikar.
Whereas other organisations, who were ahead on their cloud computing journey but were wary of scrutiny and approval from local regulators in the absence of well-defined national policies, are now confident to go ahead with cloud computing technologies, he adds.
Overall, awareness and promotion of cloud computing will bring huge benefits to the digital economy, which is one of the main reasons for the government to lend its weight behind the technology push.
Banking sectors have gone through a series of infrastructure renovations and with the advent of cloud computing this trend will continue to evolve.
Traditionally, Financial Institutions (FIs) would build, operate & maintain their own legacy data centres and the business specific (Retail, SME, Corporate) proprietary applications and infrastructure. “You won’t believe, one of the global multinational banks operating in 100+ countries, where I was working before, used to manufacture its own ATMs,” reminisces Sakorikar.
Then came the trend of centralisation, standardisation, consolidation and virtualisation where banks started to offer shared services within their organisation.
“Some of these services were co-located to third party data centres, but the servers were still owned by the FIs that were leasing these co-location facilities. Of late, with the blessing of banking regulators, banks started moving their infrastructure to private cloud,” stated Sakorikar.
However, the core operations still remained very much within their owned or co-located data centre facilities. Very recently with the adoption of cloud, many banks are exploring or experimenting core-on-cloud strategies with different flavours of digital banking initiatives.
“To avoid single vendor dependencies, few banks are also considering the best-of-the-breed, hybrid cloud model with part of the workload still continuing to be managed on-premises,” explains Sakorikar.
The advent of COVID-19 pandemic has turbo-charged the adoption of tech and digital transformation initiatives of companies. However, the ride is not as smooth as expected.
“There are many challenges around data, talent and technology but the biggest challenge for an enterprise, I would say, is the organisation culture, mindset and approach to digital transformation.
It is not about digitalising certain processes or implementing system x or y. It is about understanding changes to the consumer behaviour and what problems and hurdles customers face due to, let’s say lockdown, social distancing or supply chain disturbances.
It also pertains to how organizations fine tune their product and services, such that customers can seamlessly access them as part of their daily journeys. Firms can achieve this by slowly moving to the market place approach in collaboration & partnership with other ecosystem players,” points out Sakorikar.
Even as organisations look at that “wow” moment of technological innovation which adds to their business “oomph”, industry watchers believe that the journey starts from the top. “If an organisation considers digital transformation as a journey, it is important to embark on it as soon as possible.
There is no silver bullet, but the natural choice is to start with the transformation that directly benefits end customers. It could be value-creating activities to differentiate an organization’s product and services from competitors and/or value-delivery activities to deliver those products & services in a most convenient and a secure manner,” opines Sakorikar. Organisations should learn along the way, build upon experiences and take pivots and detours as necessary.
Examples of value-creating activities could be data and advanced analytics that could analyse consumer behaviour and give recommendations on next-best actions or tailor products and services such that they can add more value to target customer segments.
Value-delivery activities could be improvements to the onboarding process, eKYC, reduction/elimination of the paperwork and straight through processing of service requests resulting in faster turnaround time.
“This is easier said than done, as it often becomes difficult to prioritize, since various initiatives compete for the same sets of resources. “So analogous to filling a jar with rocks, pebbles and sands, an organization should plan to move towards data driven decisioning systems, while quickly launching small improvements,” advices Sakorikar.
Digital Transformation & Banks
Surveys from various consulting firms revealed that as high as 70 per cent of businesses around the world accelerated their pace of digital transformation, as they were unable to conduct their business seamlessly during the pandemic. This goes in line with the quote from the American abolitionist movement leader Frederick Douglass “if there is no struggle there is no progress”.
For example, businesses can use cloud computing to optimise their operating cost by elastically scaling resources up or down with changes in consumer demand. Automation can help to take care of repetitive tasks which do not require human judgement.
Digital channels can be used to minimize and eliminate physical interaction wherever possible. Analytics can be used to make better underwriting decisions, or to personalize products and services. Machine learning models can be used to identify changes in consumer behaviour. Collaboration tools can be used to work remotely and to engage with partners and suppliers. NLP & conversational AI can be used to assist customers and sales personnel, opines Sakorikar.
Uncertainty is not only about managing risks and building resilient enterprises but it is also about giving tremendous opportunity to re-innovate business models through the right use of digital technologies.
Digital transformation often involves technologies that an organization has never experienced before. A successful transformation requires eliminating data silos, and building an enterprise view of customers. Also, digital transformation often brings a lot more transparency and may result in redeployment of financial & human resources. This often creates insecurity among stakeholders who are afraid to lose control over the traditional way of doing their business.
Going back in memory lane, one such incident was the digital transformation of a highly error-prone, manual credit-management process. After transformation this process was envisioned to extensively use advanced technologies in cloud native collaboration with multiple fintech players. Transformation was carried out successfully but with stiff resistance from many stakeholders, according to Sakorikar.
There is always a cost benefit trade-off, depending on the digital maturity of the organisation, the processes being transformed and most importantly the purpose being served. Also, it is easier to realise benefits quickly from greenfield implementations rather than the cases where many legacy systems are involved, states Sakorikar.
Therefore, it is prudent for any firm to first revisit and rationalise their application portfolio, re-engineer their prioritised business processes and eliminate data silos, before undertaking any digital transformation efforts. Any such efforts, if not planned and executed well, will not only cost financially but may also create a long lasting, detrimental effect on employee morale, productivity and support for future initiatives.
As Vietnam gears up to life in the post-COVID pandemic, cloud computing could be the new golden star in its economy.