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Banking & Finance

Knowing your customers is key

Released at: 10:20, 24/05/2016

Knowing your customers is key

Recognizing the behavior of customers has been the most important step in providing them with better services.

by Sy Nguyen

Foreign business leaders these days often used the word “awesome” when talking about the outlook for Vietnam’s economy. As free trade agreements are signed, from the ASEAN Economic Community (AEC) and the EU - Vietnam Free Trade Agreement (EVFTA) to the TPP, the opportunities for growth are promising.

Meanwhile, the government continues to break down barriers to further facilitate both trade and investment. While many challenges still need to be faced, stakeholders are optimistic that Vietnam is getting ready for substantial and sustainable growth. 

Purchasing power on the rise

There is a marked propensity among customers to save. At the same time, however, disposable income and discretionary expenses have been growing steadily. More and more customers become receptive to the idea of leveraging their income to finance the purchase of useful durable goods and avail themselves of various services to improve their lifestyles.

By 2020 Vietnamese consumers are forecast to spend a significant 40 per cent plus more than in 2016. This is a result of population growth but also increased purchasing power. Around 50 per cent of Vietnam’s population is in the 16 to 41 age group and their financial habits differ remarkably from those of their parents. The trend is to spend more.

Dynamics of the consumer finance market

In the business of consumer finance, knowing customers’ behavior is key. With Vietnam’s rapid development its younger generation are in tune with the times and to understand all Vietnamese generations one needs to know the country’s history and the impact on its people. For the consumer finance industry it is important to understand the behavior of Vietnamese Baby Boomers and Generation X’ers. They are now between 16 and 41 years of age and comprise almost 50 per cent of the population.  

Vietnamese baby boomers

Most Vietnamese Baby Boomers - born between 1975 and 1990 - are now well-established in their careers and have families with young children. They comprise almost 30 per cent of the population. Having grown up in hard times and with traditional values, they have been the first to pick the fruit of Vietnam’s rebirth. With one leg they stand in tradition and with the other leg stand in the 21st Century. They aim for quality of life. They don’t look back, but ahead. They work hard for their family to create a life of comfort and pleasure.

While their parents grew up in a world where survival meant saving, Vietnamese Baby Boomers have more and more money to spend. They pioneered the digital age and witnessed an explosion of products that enhance lifestyles. They are the first brand-conscious buyers in the country. They keep a close eye on each other’s career status. They spend on better living conditions, go for material wealth, and invest in their children’s education. Baby Boomers form the largest market for consumer finance products. They save, but prefer to spend.

Vietnamese Millennials: generation “9X”

Many Vietnamese Millennials - born between 1990 and 2000 and representing 20 per cent of the population - have already started their careers. The older ones are starting families. Their philosophy is flexibility and freedom. In the main cities, “9X” couples tend to move out of their family homes. They want to have their own place to live. They stand with both legs in the modern era and embrace change.

The needs of Vietnamese Millennials are clear: from a stylish motorbike to the latest smartphone. With settling down comes new needs for consumer durable products: from a TV to a fridge and a washing machine. Their brand awareness dominates, as they are keen users of social media and active in comparing what’s on offer online. They go for good deals: high quality, low price. They are the fastest growing market segment in the consumer finance industry. Millennials want a credit card to enable them to satisfy their immediate buying needs. Many will qualify to get one within the next five years.

Growth results in increased spending

It is expected that with the country’s growth salaries will also increase, meaning more purchasing power and less risk for providers of consumer credit. With steady economic growth and a positive outlook and 50 per cent of the population spending their earnings on elevating their living standards, Vietnam has a sound investment climate where consumer lending is concerned. FE CREDIT is fully aware of these demographic developments and trends. A wise investor jumps on the bandwagon and enjoys the ride. 

Over the past five years FE CREDIT has served nearly 3 million Vietnamese customers in Vietnam, who despite earning a decent income are often neglected by banks. FE CREDIT has achieved its market leading position thanks to pioneering the provision of the most advanced products and services from personal loans, two-wheeler loans, consumer durables loans, and credit cards. FE CREDIT is expanding its distribution channels, in particular digital media, improving its IT systems and continuously developing its risk management practices by benchmarking with the world’s best practices.

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