Manulife locks in bancassurance deal

08:09 | 02/11/2015
This September, Manulife Vietnam officially became the exclusive long-term partner to distribute bancassurance solutions for Saigon Joint Stock Commercial Bank customers in Vietnam. This is Manulife Vietnam’s very first exclusive bancassurance deal, and marks an important milestone in the company’s strategy for diversified distribution channels. VIR’s Thu Tra spoke with Jude Gomes, head of Partnership Distribution at Manulife Vietnam, to understand more about the insurer’s bancassurance strategy in Vietnam.

What is your evaluation of the potential of bancassurance channels in Vietnam’s life insurance market?

The banking industry is relatively new in Vietnam, and consequently bank distribution emerged only in the latter part of the last decade. Since its launch, bancassurance has developed gradually but steadily and is now the second most important distribution channel of life insurance companies, following the agency channel. Across key Asian countries such as Thailand, Indonesia, China, Singapore, and Hong Kong, the contribution from bancassurance to the total production of life insurance companies varies from 30-60 per cent, denoting momentous growth over the last decade. 

In Vietnam, despite being relatively new, bank distribution has certainly shaped up in a very big way over the recent past, and certainly has huge potential. Banks can reach customers that traditional agents cannot, due to the branch infrastructure and transactional interaction that can be leveraged, and this aids financial inclusion. Like other developed and frontier markets, as banking penetration increases and with market maturity, bancassurance will become a significant channel for the life insurance industry. 

Most importantly, Vietnam has witnessed the Ministry of Finance’s continued focus and positive intervention in developing and expanding distribution channels which, in addition, will be a major boost to shape up bancassurance as a strong alternate channel.

Can you explain why bancassurance has become a trend?

Bancassurance is one of the most critical channels for the distribution of life insurance products in mature as well as developing markets.

This provides banks with an opportunity to earn fee income. The global banking industry is beset with diminishing net interest margins. Distributing life insurance products complements the banking products without incurring any additional capital expenditure and helps banks to augment fee-based income. By offering a larger suite of products and services, banks are able to position themselves as a one-stop shop of financial products for their customers, thereby helping to increase the “stickiness” of their clients, while creating cross sales opportunities and multiplying profits.

Insurance companies on the other hand need to diversify their distribution to minimise the risk of concentration in a single channel. Bank partnerships provide insurance companies with access to a wider and more defined customer segment, as well as offering more price competitive solutions to the end consumers.

On a macro level, Vietnam’s populous market is supported with a high growth economy. The country is seeing a surge in the middle class, leading to an increase in demand for banking and financial services. With banks offering more holistic product portfolios, the relevance of insurance is increasing. These growing needs of customers can be addressed by bancassurance.

The progress and developments in the market provide Manulife the confidence to continue increasing our investment in developing bancassurance business in Vietnam.

The exclusive bancassurance deal with SCB marks a giant leap forward
for Manulife Vietnam’s expansion nationwide

How significant is this exclusive deal for Manulife Vietnam and Saigon Joint Stock Commercial Bank (SCB)?

This long-term exclusive agreement accelerates Manulife Vietnam’s growth strategy, deepens and diversifies our insurance business, and gives us access to service a wider range of customers.

The strength and vision of Manulife Vietnam and SCB are highly complementary, particularly our shared focus on providing extraordinary experience for our customers.

Most importantly, SCB is one of the leading commercial joint stock banks in Vietnam. An exclusive partnership with Manulife will enable SCB to offer its customers customised and differentiated need-based solutions crafted exclusively for the bank’s clients. It helps transform SCB as a one-stop shop in distributing all financial products.

What solutions will Manulife provide SCB’s customers in Vietnam through the agreement?

Manulife believes in and lives the value of customer centricity which differentiates us from the rest of the competition. As an organisation we do not believe in pushing products, but we do assess the needs of our clients to determine the best solution for each individual customer.

Considering the low protection existing in this market, Manulife will provide protection, savings, health, investment, and retirement-based solutions covering the entire gamut of financial requirements for the bank clients.

Why did SCB choose Manulife over other competitors?

SCB is among the largest banks in Vietnam with a solid management and leadership team. Consolidation in the banking industry is limiting the number of banks and the resultant landscape for bancassurance. For these two reasons, the deal with SCB has been extremely competitive, with major insurers keen to win this partnership, sometimes aided by external consultants acting as facilitators.

Manulife was selected for our professionalism, ethics, the bandwidth of the leadership team, as well as our demonstrated and proven track record of being able to execute and build businesses in this complex and competitive market, both with foreign and large sized joint stock banks. Principally, the value system of both the organisations matched, which was instrumental in scripting this long-term exclusive deal.

As you shared above, Manulife will continue to invest in bancassurance. What is the shared bancassurance strategy for Manulife Vietnam and Manulife in Asia?

This exclusive partnership with SCB comes hot on the heels of similar regional distribution arrangements with DBS and Standard Chartered Bank earlier this year. In April, Manulife was chosen as DBS’ exclusive bancassurance partner for the four leading markets, Singapore, Hong Kong, Indonesia, and China. In September, we were selected as the exclusive MPF (Mandatory Provident Fund) partner of Standard Chartered in Hong Kong. Both these partnerships are long term 15-year agreements. In Asia, Manulife is now partnering with two out of the three largest banks.

Manulife has strategised to create a balanced multi-channel distribution platform to meet our customers’ needs across all the markets it operates in Asia. Our partnership with SCB demonstrates our commitment to the Vietnamese market and complements our strategy of diversifying our distribution channels. Specifically, we will expand and develop our bancassurance channel through long term strategic partnerships with large, financially-strong and value-driven banks.

The deal with SCB is the first exclusive bancassurance deal of Manulife Vietnam. Are you confident about the effect that this deal will have on the company’s business?

Across Asia, recently, Manulife has been increasingly ambitious in bancassurance, entering into exclusive partnerships, and has acquired some of the largest deals. Our journey has continued in Vietnam as well, with Manulife Vietnam signing its first exclusive partnership with SCB, creating one of the largest bancassurance partnerships in Vietnam. 

This partnership will help Manulife Vietnam maintain leadership in the bank channel distribution sector as well as gain market share by having access to SCB’s customers. This partnership will significantly increase production volume for us, enhance revenue for the bank, and most importantly help us protect a larger number of Vietnamese families.

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