The fourth Industrial Revolution was taking place, affecting all industries and fields in life. Banking and finance would also have to follow this trend. In the past, there were services only provided by banks or credit institutions such as loans. However, recently there were Fintech startups, which makes banks need to change to compete better.
At the symposium: ‘Promoting digital transformation in banking sector’ within the framework of the High-Level Forum on Industry 4.0 held on October 2 and 3 in Hanoi, many experts in the field shared their opinion.
According to Nguyen Hong Son, deputy Head of the Central Economic Department, the potential for digital transformation in the banking sector in Vietnam was huge. There had opportunity, potential and development orientation of the government. The problem was how to turn those potentials and opportunities into reality.
Nguyen Kim Anh, deputy Governor of the State Bank of Vietnam (SBV), said that the banking industry was facing great opportunities and challenges, requiring a transition to a new business model that integrated technology in its operations. Also, it was essential to digitise business processes in an intelligent, automated way, enabling banks to conduct business on the supply of products efficiently on a digital platform, exploit data effectively to increase experience and customer engagement.
According to Bruce Delteil, vice President of McKinsey & Company, there would be two main factors creating the changes in the finance and banking industry in this 4.0 period. They were TechnologyData and Policy.
With the factor TechnologyData, in this era, the number of data was increasing. Technology to exploit and process this data was also entirely developed with artificial intelligence and cloud computing. Besides, new technologies had been introduced to bring new business models. These business models would involve financial institutions. This combination would bring about breakthrough changes in the market.
In terms of the policies, the changes in this area came from the trend of transparency of all activities. For example, banks would be more transparent about fees or allow more parties to access customer data. More and more changes in the direction of transparency would make competition between banks, old-style financial institutions and new financial models such as digital banks and Fintech companies more balanced.
Vietnam was also experiencing dramatic changes in the financial sector. The difference came from consumers being ready for new services. Technology and ecosystems in the industry were also available, along with the positive change from state policy.
According to a 2017 survey of McKinsey Asia, each user in Vietnam usually used two to three services that the bank provided. The proportion of users who made online transactions was also higher thanks to the excellent Internet connection quality. Users still believed that payment institutions and banks could ensure the safety of operations. Particularly for payment activities not through banks but payment services, electronic wallets accounted for 16 percent. They were mainly located in the payment of bills and shopping.
Moreover, to take advantage of opportunities, continue to grow in the near future, banks need change. This change might be reorganising itself into platforms. These platforms could be independent in business, independent in technology, human resources and governance to serve customers. As each platform became independent, it could be developed at a swift pace and on a large scale.
Besides, banks also need to invest in recruiting and training human resources, especially in technology and data. The data management also needs taking seriously, towards stability and being able to meet all requirements. Finally, it was necessary to strengthen cooperation, create alliances and ecosystems both inside and outside the industry to take advantage of the advantages of the sharing economy.
