Koh Hoe Shin, Chief Partnership Distribution Officer, Manulife Vietnam, sits down for a candid chat on the importance of multi-channel approach, the expected growth of bancassurance in Vietnam, successful partnerships and his views on fees and renewals of partnerships.
Bancassurance in Vietnam is set to grow exponentially in the coming years. Mr Koh shares three reasons why this is so:
Firstly, the customer base of banks is expected to increase tremendously as Vietnam undergoes rapid digitalisation. The country is encouraging cashless payment, so even more people will be opening bank accounts in the years to come.
Secondly, as banks experience the tightening of credit growth from the State Bank of Vietnam, they need to find new sources of revenue. “So a lot of banks are focusing on bancassurance business,” he said.
And thirdly, consumers generally prefer a one-stop solution - to be able to go to the bank and fulfil most of their financial services needs.
Managing channel conflict?
As the man in charge of partnership distribution, he is well placed to answer the often-asked question of “How to manage channel conflict?”
He said the best way to manage channel conflict is to respect the customer’s decision.
“Each channel has its unique value proposition. Various channels cater to various customer segments. Manulife is a multi-channel approach company. We embrace and believe that we need to give customers a choice, and we respect the customer’s decision. This is how we manage channel conflict,” he said.
Keys to a successful partnership?
As for building a successful partnership, he said one of the first keys to a successful partnership is the mutual understanding of the value & culture of the partners.
It is also essential for both partners to get the commitment from senior management, and to understand the value and culture of each other.
Once there is a commitment to driving this piece of business, integrating all the different aspects of operation, product offering, system as well as people support are critical for a sustainable partnership.
At the end of the day, it boils down to execution capability. “What we have realised is that a lot of people may have the desire, may be committed. But when it comes to execution, they do not have the ability to execute well. So one of the fundamentals in fostering a good partnership is that you must have the execution ability and also a collaboration mindset to work closely for a win-win situation,” he said. And to have the execution capabilities, it is important to find the right people with right talent, right knowledge who understand both insurance & banking segments.
Renewals of non-proprietary distribution channels?
As for the renewals of non-proprietary distribution channels and the fees involved in securing such agreements, Hoe Shin said there is a risk as in any partnership or business. “You just have to be aware of the risks and proactively mitigate any risks,” he said.
However, he added that partnership agreements now tend to be longer-term in nature. Using bancassurance as an example, he said that agreements are typically set at 15 years.
“How much needs to be paid depends on valuation then and the value each partner expects to derive from the partnership. But for 15 years, with the kind of relationship and integration built up, it is not easy to start all over again. So when a partnership is good, chances of renewing will be high as most would rather renew with the incumbent,” he concluded.
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