Commercial banks hunt for young borrowers

Many commercial banks are now trying to win the hearts of young people, who could be big borrowers in the future.

Eximbank and JCB have launched a new card product ‘Young Card’. The customer must have income of VND5 million a month to be eligible.

“JCB wants to lead in providing card services to young people,” said Tomoaki Yamaguchi, chief representative of JCB Vietnam.

The institution from Japan hopes its market share in Vietnam will increase from 10 percent to 20 percent in the next two years. Targeting youth is an important strategy.

As for Eximbank, its Okada Kenji explained that the bank now targets youth because it wants to expand the custom, while young people are the future of the bank.

VP Bank, when launching YOLO, a mobile phone app, also targets youth, or next-generation clients.

Shameek Bhargava from VP Bank said the targeted clients of YOLO are aged 18-35 in large cities and provinces, using smartphones and digital services.

Youth tend to spend more money on consumer goods, tourism, technology products and entertainment. A report showed that Z generation, or those born after 1995, spend VND13 trillion on food only each month. In Vietnam, there are 14.4 million people belonging to Z generation.

Young people living in urban areas are more optimistic than the previous generations and they spend more money. However, what attracts banks is their trend of borrowing money for consumer needs.

A report shows that 41 percent of Vietnamese had no transactions with banks as of the end of 2017. The number of credit card holders only accounted for 4.1 percent of Vietnamese adults, just half of Thailand and one-fifth of Malaysia as estimated by the World Bank. Meanwhile, 90 percent of payment transactions are implemented in cash.

A PwC report showed that the group of young clients are seeking financial & banking services which are convenient, consistent and easily accessible.

However, analysts commented that banks are now meeting difficulties when accessing youth because there are many choices, not only from omni-channel services introduced by banks, but also from fintechs. 

The existence of too many sale promotion programs and service providers also leads to customers’ lower loyalty.

A research study found that 82 percent of millennials (born in 1980-1998) do not hesitate to change banks and 83 percent of them shift to use the services of rivals.

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