Digital Banking is an opportunity for banks to increase revenue and productivity, save costs and access to potential customer market in Vietnam. However, digital banking is also facing fierce competition from Fintechs and Bigtechs.
At the conference on “Digital banking and the specific ecosystem” held in the morning of June 14th, financial expert Dr Can Van Luc said that the digital banking concept is being mistaken by many people with the concept of digitising traditional banking operations. Under the concept of digitising traditional banking operations, banks will digitise all existing banking operations and services. However, this understanding is not enough.
“Digital banking is also a new business model, a new approach with new values rather than digitising existing things,” Dr Luc emphasized. He cited the definition given by UOB and said that it is a fairly complete concept, in which digital banking is to interact with each other on financial services in the digital age.
Many opportunities are open for banks if they develop towards digital banking, such as raising revenue, productivity and saving costs; approaching potential digital customers market in Vietnam; increasing access to information, data, connection, cooperation (especially with Fintechs); leapfrogging in business, enhancing competitiveness and creating breakthrough ability compared to competitors.
Opportunities also contain challenges, Dr Luc stressed that the legal framework is currently incomplete and often behind the rapid development of technology. The competition from non-financial institutions such as Fintechs and Bigtechs will also put considerable pressure on digital banking. In addition, there are other challenges such as system security, human resource, and requirement for major changes and investment in the Information Technology (IT) system.
With the current situation of Vietnam’s digital banking, Dr Luc said that Fintechs and Bigtechs are actively and gradually competing with banks. In the digital economic trend, payment intermediaries which are not commercial banks have been developing relatively fast, including financial technology companies (Fintechs), telecommunications companies and IT companies (Telcos, Bigtechs), mainly in the field of payment and peer lending.
The competition between traditional and non-traditional business models is inevitable. “However, it should be noted that Vietnam still has great potential to develop banking services in particular and financial services in general. So far, only 40 percent of people have banking accounts in the country”, said Dr Luc.
In addition, in fact, the customer segment targeted by each group is also different. For example, Bigtechs like Vingroup focus on their customers first, then develop outside; Fintechs target small customers, etc.
According to Dr Luc, digital banking is a unique opportunity for banks and the economy to breakthrough. He believed that digital banking is not a trend, it is an inevitable development trend.
