EMERGING CUSTOMERS REACHED
HDBank is a listed top-tier Vietnamese retail and business bank serving 10 million customers, especially low-income consumers and micro, small and medium enterprises.
HDBank operates 308 branches and transaction offices, over 20,900 points of sale, and employs more than 14,761 staff across the country. MSME customers comprise 49% of HDBank’s total loan book, with 45,000 individual MSME customers.
Limited access to formal credit has a stark impact on the Vietnamese business sector. In 2020, 41% of Vietnamese businesses reported difficulty accessing credit. This issue is more acute for micro, small and medium enterprises (MSMEs), which have greater difficulty obtaining bank loans than larger enterprises, and account for more than 98% of all business in Vietnam, 40% of GDP, and 50% of employment.
HDBank’s strong focus on MSME customers extends to low-income rural communities. Agricultural lending represents 20-25% of their retail loan book, with these loans often used to support farming investment in better crops and animal husbandry methods. Key markets include areas that have traditionally faced financial exclusion, including the central highlands region (36%), South-Eastern region (35%) and Mekong (23%).
Retail consumers are served by the group’s subsidiary, HD Saison, the third largest consumer finance company in Vietnam. HD Saison primarily targets those earning less than USD180 a week, offering vehicle, cash, and consumer durable loans. HD Saison’s cash loans are frequently used by customers to accommodate economic and health shocks.
Together, HDBank and HD Saison cover all 63 cities and provinces in Vietnam, with most of its new transaction points targeting customers in rural, remote and isolated areas who have limited access to modern banking and financial products. The bank is poised to grow its network via agent partnerships, allowing customers to access services such as bank transfers, deposits, and repayments, using non-bank infrastructure such as post offices or retail outlets.
HDBank is exploring ways to offer further financial inclusion products, including health and life insurance policies, leveraging cross selling opportunities through its digital lending platforms.
Read more about the importance of improving financial inclusion to MSMEs in Vietnam, especially those owned by women, in our HDBank Impact Note:
The LeapFrog Difference
LeapFrog invested in HDBank in 2021 and is committed to supporting the bank’s growth, with a particular focus on efforts to improve financial inclusion for Vietnam’s emerging consumers and MSMEs.
LeapFrog support will strengthen the bank’s capital base and increase lending to retail and MSMEs, including women-owned or -led businesses. LeapFrog will work with HDBank to further tailor services to meet the unique needs of women entrepreneurs, which may include developing new credit underwriting tools to help women meet collateral requirements, training bank staff to counter implicit gender biases, as well as flexible delivery channels and bundled services that help time-poor women.
Technological improvements will also be a major focus for the group. Research shows 71% of Vietnamese bank customers are open to purchasing banking products or services through digital channels, but only 23% have completed the purchase of a bank product online or through a bank’s mobile app. LeapFrog’s Customer Experience Launchpad program plans to work closely with HDBank to overcome customer apprehension towards digital services, improve customer retention, and design products for those with low financial and digital literacy.
LeapFrog will work with management to broaden product offerings, especially in insurance, where LeapFrog has extensive experience. At present, the bank offers life insurance to only 5% of their retail customers, indicating considerable room for growth. HDBank aims to grow the number of its rural customers— mainly small-scale agri-based and informal businesses— substantially over the next five years.
LeapFrog will work with HDBank to evaluate its current agent banking network and identify areas of focus, like microfinancing, and microinsurance. It will also help HDBank enhance its ESG practices by introducing IFC Performance Standards, and support a commitment to end its exposure to coal by March 2022.
Through these initiatives, HDBank can continue playing a leading role in addressing low financial inclusion in Vietnam, and lifting millions out of poverty.
Investing in Asia
HDBank is one of a number of exciting investments LeapFrog has made across Asia. Read more about our work delivering profit with purpose in Asia.