Digital technology has been creating new impetus for banks to develop modern products and services. At this point, most banks are aware that digitisation is not a sideline or complementary activity, but needs to be the focus of bank operations.
Increasing customer experience
Master Pham Xuan Hoe, deputy director of the Banking Strategy Institute, believed that banks themselves were aware that they must carry out a comprehensive change in their way of operating and providing products and services, otherwise they would become a weak link in the financial system. That change must start from building a digital strategy for their operation model because only digital technology can meet the needs for integration of customers quickly, conveniently and safely.
It is the difference between the traditional business model and the digital one, where trust, convenience, and personalisation will be the foundation for the relationship between banks and customers.
According to an IBM expert’s analysis, considering various aspects, from infrastructure and back-office systems to distribution channels, services and marketing methods, of transforming from traditional banking models, digital banking models are divided into many forms. Among them are digital banking distribution channels. In these models, user experience is an important factor and is obtainable by providing new online and mobile applications.
Internet Banking and Mobile Banking have become must-have services of banks. Therefore, in order to attract and serve the rising demand of customers, banks have updated many new features and utilities. For example, Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) shared about its mobile banking application, VCBPAY, launching in August 2018, that it did not only provide basic features such as bank transfer, phone recharge, QR code scanning, service payment, but it could also split bills to meet the demand of young people and send requests for payback.
During Lunar New Year, Vietcombank added a function to book transport tickets on its mobile banking application, and launched the “New Year lucky money” feature, which allows customers to choose lucky money envelopes and wishes to send to friends and relatives far away. Military Joint Stock Commercial Bank (MB) has also officially provided customers with air ticket booking service through its application.
Many banks have launched the function of periodic money transfer, future money transfer with a fixed payment date in the future on their applications such as VCB [email protected] of Vietcombank and VietinBank iPay of Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank), which helps customers save time and money. In January 2019, LienViet Post Joint Stock Commercial Bank (Lienviet Post Bank) officially coordinated with Mai Linh Group JSC to launch taxi fare payment service through Vi Viet.
Saigon Thuong Tin Joint Stock Commercial Bank (Sacombank) has just introduced its financial management application, Sacombank Pay. Vietnam International Joint Stock Commercial Bank (VIB) has launched a brand new digital banking website where customers can fill in registration form, monitor and manage the application process and activate online services without the need for human intervention. It also has built-in smart calculation and product suggestion tools to support customers in calculating interest rates and preparing financial plans according to personal needs.
An expert reasoned that a digital bank is not necessarily a bank that cuts its branches or has good user experience applications. A true digital bank is a bank that is able to meet the daily financial needs of its customers, whenever they need it, and gain their trust to become an indispensable tool. ‘Therefore, the future belongs to organisations that understand customers, recognise and meet customer requirements,’ he said.
In order to establish and provide products and services based on digital technology, build a digital bank in the strong development of technology; banks need to choose a suitable strategy.
One of the strategies is cooperation between banks and fintech in the form of partnership. Some examples are the cooperation between Vietcombank and M_Service in money transfer; MB and Viettel; VIB and Weezi to introduce MyVIB Keyboard, an application to transfer money through social network; Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Fastcash to introduce [email protected] mobile feature to transfer money via Facebook and Google+.
At the end of 2018, Vietnam Prosperity Joint Stock Commercial Bank (VPBank) cooperated with SAP SE to provide solutions to digital banking and mobile banking. Accordingly, it deployed SAP OmniChannel Banking (OCB) software along with services including SAP (PE) Premium Support Service and SAP Application Maintenance (AMS) to transform its banking and other service platforms. Vietinbank signed a cooperation agreement with Opportunity Network (ON) to provide a platform for connecting its corporate customers with over 15,000 corporate members of ON in 113 countries.
Dang Duc Huy, director of Retail Banking Division of Saigon Joint Stock Commercial Bank (SCB), mentioned cases of banks separating their distribution channel into an independent branch performing on the digital platform. It offers different products, services, and sales policies, and only re-uses the back-end system of the parent bank. Some examples are Hello Bank of BNP Paribas and First Direct of HSBC. In Vietnam, it is the case of Timo of Tien Phong Joint Stock Commercial Bank (TPBank) and Yolo of VPBank, which are operating in the digital banking model as a subsidiary.
Orient Joint Stock Commercial Bank (OCB) presented another strategy when becoming a leader in the digital banking revolution with the development of OCB OMNI, the first omni-channel bank. Explained by an expert, omni-channel technology is a higher development of multi-channel technology with the distinct difference of providing seamless experiences to customers, regardless of channels and devices on which they are trading.
The goal of digital banking is to optimise the traditional banking activities and services. However, from experts’ perspective, whether a model is suitable depends on each bank’s development orientation and targeted customer segment. In addition, financial resources are an element to be studied and considered since converting the model from traditional bank to digital bank incurs many initial costs without immediate benefit.
