David L. Rogers, a member of the faculty at Columbia Business School (left), and Paul J. Bailo, senior advisor for top US companies like Apple and Bank of America

How do well-established organisations streamline the acceleration of their innovation processes?

Bailo: Large companies such as Citi, J.P. Morgan, and American Express often have venture capitalist groups to incubate and pilot new ideas. They invest in innovation labs and startups, sometimes retaining them for their portfolios or selling them.

It’s important for Vietnamese companies, including banks, to consider how they can get ahead in fields like robotics and AI. Partnerships with academic institutions and memberships in innovation labs can help companies stay ahead of the curve and future-proof their operations.

While having internal innovation groups can be beneficial, they often face challenges due to differing mindsets within the organisation. External venture capitalist firms and partnerships with universities can be more effective in driving innovation. This is because they operate at the cutting edge and can provide the necessary freedom and perspective needed for breakthroughs.

It’s about creating a conducive environment for innovation that goes beyond the traditional boundaries of an organisation.

What specific actions should Vietnam take to advance digital banking?

Bailo: Vietnam should create a government office dedicated to digital transformation to drive policy and regulation, similar to the new office established by the White House. This could help in defining clear governance rules for digital banking.

The country needs to look beyond the banking industry to identify best practices in customer experience design. Vietnam can learn from the way regulated industries like banking in the United States differentiate themselves through customer journey optimisation.

Moreover, establishing a document akin to the US Department of Defence governance on data would set a foundation for ethical data practices. Essentially, it’s about building an infrastructure that supports fintech growth and digital innovation, from incubators to entrepreneurship programmes, which currently seems to be lacking based on the available research.

Vietnam should also consider creating incubation hubs for fintech innovation, leveraging insights from global banking leaders to enhance customer journeys and experiences.

Considering the power centralisation in many organisations, how can middle-managers effectively persuade their leaders to embrace this approach?

Rogers: The traditional top-down management style is outdated and can’t adapt quickly to change. Modern management should empower individuals at all levels to make decisions and innovate.

Leaders should set the vision, outcomes, and priorities, then enable others to generate ideas based on data and drive innovation. Centralised planning is too slow for today’s fast-paced world.

Can you provide examples of how different financial organisations have adapted to digital innovations?

Rogers: In the United States, some banks are intensely focused on digitising their core business, expanding into new financial services like cybersecurity solutions, and fostering growth through robust startup accelerators. An example of this is MasterCard, which partners with early-stage fintech startups, integrating them into their network to connect with global banks and merchants.

A local example is MB in Vietnam, which created a marketplace within their app that goes beyond traditional retail banking, allowing customers to access various services, not just their own. It’s a prime example of looking beyond conventional services and being willing to partner with other companies.

With a significant portion of Vietnam’s business sector being small- and medium-sized enterprises (SMEs), what advice do you have for them to embark on digital transformation with limited budgets?

Bailo: The principles of efficiency, customer-centricity, and technology leverage apply to businesses of all sizes. It’s not the size of the company that matters, but the mindset. SMEs should focus on using technology to keep the customer at the centre of everything they do, which can drive efficiency and revenue.

The key is to be resourceful with the available technology - many tools are free or almost free - and to use the smaller size as an advantage to stay close to the customer and be responsive to their needs.

Collaboration and capital from larger businesses, combined with mentorship, can significantly aid smaller companies. Additionally, SMEs should distinguish whether they are small because they serve a niche market or if they have the potential to scale. For those with the potential to scale, joining venture capital initiatives or accelerator programmes can be very beneficial.

What is the distinction between SMEs and their approach to digital transformation?

Rogers: SMEs serving a limited market should still pursue digital transformation but tailor it to the needs of their customers. Simpler organisations have the advantage of agility and can implement change more easily. They can experiment with creative solutions without the need for expensive technologies and grow from there.

For companies that uncover a scalable business model, opportunities for expansion will arise, leading to potential partnerships or participation in accelerators.

For example, Amazon began by selling books and has now expanded into a multifaceted enterprise with most of its profits coming from cloud services, not retail. This shows that starting small doesn’t limit growth and profitability. SMEs should continuously look for new customer problems to solve and be ready to pivot and expand their services.