According to the World Bank, Vietnam had the lowest amount of non-cash transactions in the region at 4.9%, while this rate in China was 26.1%, in Thailand was 59.7%, in Malaysia it was up to 89%.
Exist or not exist
Right from the beginning of 2020, when the COVID-19 epidemic broke out, many banks had embarked on the race to develop digital banking. Accordingly, technology would replace many of the operations that bank employees were currently doing, such as data entry, data processing, interaction with customers in transactions.
Therefore, in recent years, the banking sector had witnessed the birth of many new models, such as mobile banking and online banking. The application of technologies to banking activities had also increased. Some banks had even initially applied artificial intelligence (AI), robots and big data in collecting, analysing, and forecasting the market to build business plans and strategies as well as analyse customer data. All that was to support the assessment, classification of customers, making decisions on disbursement, lending, in turn, contributing to shortening the time from many days to days.
In particular, banks would take advantage of Big Data’s value on customers’ spending and payment practices to offer appropriate financial solutions. Thanks to technology, many banks could create services tailoring to each customer. In particular, the branch network expansion model would no longer be suitable because of its high cost and ineffectiveness in the context of increasing digital transformation in banks.
Some banks even put the issue of digital conversion with very high morale, which was the issue of ‘exist or not exist.’ In particular, it was possible to score some names such as Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), Tien Phong Commercial Joint Stock Bank (TPBank), and so on.
Nguyen Kim Anh, deputy Governor of the State Bank of Vietnam (SBV), said that to apply the advanced achievements of the 4.0 revolution actively, SBV supported to promote digital transformation in banking activities in the near future, such as perfecting mechanisms, policies, legal framework; building infrastructure development in a synchronised manner; implementing QR code payment standards, chip cards.
Completing digital infrastructure
In the digital banking ecosystem, digital payment was of special importance, attracting the top attention of credit institutions and payment intermediaries. This was also one of the primary goals that the government and SBV had paid attention to in recent years.
According to Pham Tien Dung, director of SBV Payment Department, there were 32 units licensed by SBV to provide payment intermediation services, of which 28 out of 32 units provided payment gateway services; 29 out of 32 units provided e-wallet; 78 organisations deployed payment services via Internet; 44 organisations deployed mobile payment services.
In recent years, digital payment had grown strongly (over 150 percent in value and 100 percent in quantity). Mobile payment was becoming a new trend with the application of new technologies such as QR Code, Near Field Communication (NFC), card information digitisation (Tokenisation), Biometric Authentication in Vietnam.
However, digital payment in Vietnam still had some shortcomings and limitations. In particular, Pham Tien Dung had emphasized on the limitations of payment infrastructure, currently concentrating mainly in urban areas, not yet reaching rural areas, remote areas, mountainous areas, and islands. Therefore, it was necessary to continue investing in digital payment infrastructure to strengthen the connection and integration between service providers and payment systems to create the basis for implementing the digital banking ecosystem. That was the goal of SBV and the banking system which received special attention in the next time, Dung said.
Pham Tien Dung also affirmed that the development strategy of Vietnam’s banking industry to 2025 with the orientation to 2030 also set the goal of promoting non-cash payment, keeping the proportion of cash on total means of payment below 10 percent by the end of 2020 and eight percent by the end of 2025. One of the orientations and solutions to develop non-cash payments of SBV in Vietnam in 2020 was to deploy technology infrastructure; to integrate with industries and fields of building ecosystems to enhance supervision and ensure the safety of digital payment activities.
In addition to continuing to invest in digital payment infrastructure, it was necessary to complete soon the national database on population combining biometrics and demographics, consolidating the basic infrastructure system of cryptocurrencies, correspondent banks, electronic authentication (eKYC). So that the digital banking ecosystem could be complete soon.
