Digital banking sold as ‘piece of cake’ to young Vietnamese

Since its launch in 2021, Vietnamese digital bank Cake has experienced impressive growth, with customers now totalling 5mn — more than any of its branchless peers. 

In 2024 the bank turned a profit, becoming Vietnam’s sole profitable digital-only bank. Its revenue totalled $60mn last year, up nearly 200 per cent on the previous year, while its transaction volume surged over 100 per cent to $4.7bn.

“When we started Cake, we wanted to make banking easy and simple — a piece of cake, or easy as cake,” says chief executive Quang Nguyen.

He attributes this success to the bank’s use of technology and its commitment to serve a particular segment of the market: young people.

“The way to succeed in Vietnam was to [determine] who we want to serve. We want to serve Gen Z and millennials,” Nguyen says. Together, the two generational brackets make up roughly 98 per cent of its customer base.

“We also thought: what can we do differently? We don’t have thousands of branches and relationship managers. So we decided to invest a lot in AI and local talent,” he adds. 

Cake, which is backed by one of Vietnam’s largest private banks, VPBank, focuses on unsecured lending and small loans, as well as other services like savings and investments. It serves both consumers and merchants, which means households and microbusinesses.

As of 2024, the bank says it applies generative AI across all of its operations — from onboarding and credit approvals to customer service and internal automation.

Through its automated, AI-backed credit scoring system, it boasts the ability to process up to 700,000 credit applications per month. Nguyen says that Cake can approve small loans in just two minutes.

Set against a banking market dominated by Vietnam’s “big four” state-owned banks — AgriBank, BIDV, VietinBank, and Vietcombank — Cake’s current and future success is likely determined by its niche position. Currently Vietnam has no standalone digital banking licence; rather, digital banks partner with established banks, like Cake and VPBank.

“We try to avoid direct competition with traditional banks. Sometimes we overlap but, above all, we [set out] to understand the Vietnamese market and who we wanted to serve,” Nguyen says.

Using embedded finance, whereby financial services are integrated with non-financial platforms, Cake is able to gather alternative data from a range of sources. It then uses its understanding to provide suitable financial products to its customers. One partnership it has is with local ride-hailing app Be.

“Customer consent is paramount,” Nguyen affirms. “We cannot accept data from our partner but we can work together with our partners to understand the customer and develop an AI model to understand them from their side.”

As over two-thirds are Gen-Z, the majority of Cake’s customers are tech-savvy. But Nguyen is keen to point out that even internally the digital bank’s spirit is very young.

“Our core operations are low, while demand is strong. This is a blue ocean for us.”

“The vibe is very dynamic,” he says. “We are a young team. All our staff is local — whether it is in tech, AI or our marketing team. We have a very strong vision: to leverage AI to revolutionise banking services in Vietnam.”

“Our core operations are low, while demand [for our services] is strong. This is a blue ocean for us,” he says.

Cake’s target is to expand its customer base to 15mn-20mn within the next five years. Nguyen is clear-sighted about how to do this: the bank needs to improve efficiency and to refine the customer experience, which means investing more in AI.

“The customer journey needs to be automated, the automation needs to be smoother and operational costs need to be lower,” he says. “When we scale, let’s say, to 10mn or 20mn users, we don’t need to add 1,000 more people but we do need to add 1,000 more virtual agents,” he adds.

In terms of the need to increase Cake’s human staff, AI engineers for example, Nguyen won’t commit to a number but simply says: “it’s very small”.

While the bank’s expansion focus remains solely on Vietnam, Nguyen maintains that the bank aims to surpass other digital banks in south-east Asia in terms of revenue and efficiency. One segment it has targeted is rural areas, which would also involve expanding its reach beyond young people.

“There are a lot of challenges,” he concedes, as technology and AI are ever changing and the demand for digital banking services increases. “If we go into rural areas, we need to think about educating [future] customers,” he adds.

On top of that, he is keenly aware that the bank needs to invest in cyber security to maintain customer trust among existing and future customers. Cake will also need to work hard to retain its in-house talent in a fierce labour market. All the while, the bank has its eyes set on an aggressive expansion strategy and smoother automation processes.

Nguyen admits: “It is not easy to be a digital credit engine, using AI and technology and managing customer risk.”