The future of financial protection & investment in Vietnam | Prudential Vietnam | EP 361

Key Concepts:

• Financial protection and investment in Vietnam
• Trust in the insurance industry
• Protection gap (health, retirement, mortality)
• Digital transformation
• Financial literacy
• Long-term capital commitment
• Middle-class growth
• Intergenerational wealth transfer
• Aging population
• Gen Z customer expectations
• Sustainability and ESG (Environmental, Social, and Governance) investing
• Solvency and risk management

1. The Future of Financial Protection in Vietnam

• Main Topics and Key Points: The discussion centers on the future of financial protection and investment in Vietnam, particularly in light of a young, increasingly wealthy population and the challenges of an aging society and low financial literacy.
• Key Forces Shaping the Future (Kevin):
  • Restoring Confidence and Trust: Addressing the market's recent issues by focusing on sales and service quality. Trust = Sales Quality x Service Quality.
  • Innovation: Developing relevant and simple offerings to close the protection gap (health, retirement, mortality).
  • Digital Transformation: Utilizing technology to simplify decision-making for customers and employees.
  • Holistic Health: Offering solutions that encompass physical and mental well-being.
• Challenges Compared to Other Asian Markets (Kevin): Vietnam faces similar challenges to neighboring countries, but the magnitude of the protection gap is larger.
• Customer Expectations and Digital Solutions (Kevin): Customers expect increasing financial literacy and access to information. Credential aims to increase awareness and provide the right solutions.

2. Credential's Long-Term Commitment and Investment in Vietnam

• Main Topics and Key Points: Credential's long-term investment in Vietnam reflects confidence in the country's growth potential and commitment to closing the protection and investment gaps.
• Long-Term Capital Commitment (Connor):
  • Credential has been in Vietnam for 25 years and is a "must-win market" for the group.
  • Over $1 billion USD (27 trillion VND) invested in the company.
  • Total invested assets, including customer premiums, amount to approximately 200 trillion VND (8 billion USD).
• Investment Strategy (Connor):
  • Investments are managed by Espring, focusing on the future of Vietnam.
  • Targeting investments in securities, corporate debt, and infrastructure.
  • Supporting the growth of memes and emerging businesses to become worldwide players, aligning with Resolution 68.
• Example: The stock exchange in Ho Chi Minh has grown from 2 companies in 2000 to 1,600 companies currently.

3. Shifting Customer Needs and Adaptation Strategies

• Main Topics and Key Points: Vietnam's rapidly growing middle class is shifting priorities towards education, retirement, and long-term financial security.
• Middle-Class Growth (Manish):
  • 13% of the population was middle class in 2023, doubling to 26% in 2026, and projected to reach 55% in 2030.
  • This translates to approximately 50 million potential middle-class customers in 5 years.
  • Disposable income is expected to grow by 8-10% annually.
• Changing Consumption and Investment Patterns (Manish):
  • Shift from spending on necessities to wellness, lifestyle, and financial planning.
  • Increased focus on education, retirement, and intergenerational wealth transfer.
  • Less than 10% of the population invests in financial investment products (excluding bank accounts).
• Credential's Strategy (Manish):
  • Offering the right products for the right segment through the right channel.
  • Diversified portfolios, such as the newly launched investment-linked product (ILP).
• Addressing Structural Challenges (Kevin):
  • Aging population and declining birth rate are seen as opportunities for Credential.
  • Focus on increasing financial literacy through programs like "Cha-Ching," which has reached over 60,000 students and 2,000 teachers across 372 schools.

4. Counterintuitive Customer Behaviors and Practices

• Main Topics and Key Points: Despite technological advancements, Vietnamese customers still value the human touch in financial planning.
• Human Touch (Manish):
  • Customers want the convenience of digital experiences but prefer human interaction for important financial decisions.
  • Example: Even with automated taxi services, drivers still call to confirm.
• Flexibility and Convenience (Manish):
  • Flexibility, convenience, and a one-stop shop outweigh price considerations.
  • Customers prefer products that combine protection, investment, health, and critical illness.
• Sustainability and Responsible Investing (Manish):
  • Increasing demand for sustainable and responsible investment options.
  • Customers want to know where their money is invested and its impact on the country.

5. Financial Strength and Trust

• Main Topics and Key Points: Credential emphasizes its financial strength, disciplined risk management, and stable investment returns to build trust with customers.
• Financial Strength (Connor):
  • $1 billion USD in shareholder assets, the most of any insurance company in Vietnam.
  • Solvency position is more than 100% above regulatory requirements.
  • One in four dong paid by the industry comes from Credential.
• Investment Management (Connor):
  • 190 trillion VND invested with Espring, utilizing the same investment techniques as the group.
  • The group manages over $250 billion USD in assets globally.
  • Espring has outperformed the index over the last 17 years with ILP funds.
• Building Trust with Gen Z (Manish):
  • Gen Z values transparency, accountability, speed of service, and personalization.
  • Initiatives include speech-to-text, AI for video recording, electronic KYC, chatbots, digital signatures, and cashless claims.
  • Gen Z wants to know the company's purpose, values, and commitment to sustainability and inclusivity.

6. Sustainability and Lifetime Partnership

• Main Topics and Key Points: Credential aligns its investments with sustainable development goals while securing protection and returns for customers.
• Sustainable Development Goals (Connor):
  • Insurance companies should invest in sustainable funds and reflect society's values.
  • Credential launched the "Green Future Fund," which has outperformed the index since its launch.
• Long-Term Investments (Connor):
  • Focus on investments that will last 20-40 years, such as railways, highways, technology, ports, and green energy.
  • Working with the IAV (Insurance Association of Vietnam) to invest in infrastructure projects.
• Just Energy Transition Partnership (Connor):
  • Credential and Espring are the only asset owner and asset manager represented in the partnership, which aims to invest $15 billion USD in green energy in Vietnam.
• Rebuilding Trust (Kevin):
  • Focus on the core purpose of life insurance: helping people.
  • Stick to what Credential is good at and be focused on its mission.
  • Having the right management team and employees who believe in the company's purpose.
  • Doing the right thing in the right way with the right people.

7. Product Launch and Peace of Mind

• Main Topics and Key Points: The new product aims to provide peace of mind by offering a one-stop shop for investment, protection, and intergenerational wealth transfer.
• One-Stop Shop (Manish):
  • Customers prefer a single platform that addresses various needs.
• Investing in the Future of Vietnam (Connor):
  • Premiums will be invested in the nation's future, benefiting customers, families, and future generations.
• Values and Decision-Making (Kevin):
  • Customers should choose solutions from brands that make the right decisions for them.

8. Learning from the Audience

• Manish: How do you filter everything that's happened in the industry in the last few months or last couple of years to then considering the innovation the new products that are coming in and how do you sort of segregate the two and how can therefore we customize and we build better journeys and better propositions.
• Connor: What are we not covering that a customer holds dear? How can we get a product to fill a need that's there that we're not seeing as a company?
• Kevin: What will give them the peace of mind?

9. Notable Quotes:

• Kevin: "Trust equals to sales quality and service quality."
• Connor: "Prudence will be here for a long time."
• Manish: "People still want that human touch."
• Connor: "We believe that, you know, we're the the asset owners on behalf of our customers and insurance companies should reflect society and should be investing where society believes those investments should go"
• Kevin: "Quality attracts quality."

10. Synthesis/Conclusion:

The discussion highlights Credential Vietnam's commitment to providing financial protection and investment solutions tailored to the unique needs of the Vietnamese market. Key takeaways include the importance of rebuilding trust, embracing digital transformation, focusing on sustainability, and understanding the evolving expectations of customers, particularly Gen Z. Credential aims to achieve this through long-term capital commitment, disciplined risk management, and a focus on investing in the future of Vietnam. The new product launch represents a step towards offering a comprehensive solution that combines investment, protection, and intergenerational wealth transfer, ultimately providing peace of mind to Vietnamese families.