Nhip Cau Dau Tu magazine has recently held a Vietnam Banking conference themed “Breakthrough from Digitalisation”. At the conference, the main contents focused on policy issues, the practical transformation situations of banks from traditional to digital model and the inevitable trend of Vietnamese banks from traditional to digital model. The conference also discussed the initial successes of a domestic and international bank in this process.
The values that digitalisation brings to the business community, consumers and the Vietnamese economy were also highlighted.
According to assessment of the Ministry of Science and Technology in 2018, the banking sector was one of the leading industries in the application of scientific and technological advances in management and business.
Nguyen Thi Thu Hang, representative of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) said that customers are spending more time interacting online. Online payment and technology in the banking sector has made a breakthrough.
Currently, 94 percent of Vietnamese banks have implemented digital transformation. In particular, the majority of Vietnamese banks have deployed digital banking at the transformation level of process and communication channels, and the transformation of new data platforms has been implemented at a number of pioneering banks.
Specifically, many banks have launched some innovative banking services, such as Tien Phong Commercial Joint Stock Bank (TPBank) with LiveBank automatic banking service, Vietcombank with Digital Lab digital transaction space and a large-scale conversion project, Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) with new generation Corebank with high performance, integrated multi-service and modern Enterprise Data Warehouse (EDW), Vietnam Prosperity Commercial Joint Stock Bank (VPBank) with Timo digital banking application, Military Commercial Joint Stock Bank (MB) with ChatBot virtual assistant application which offers 24×7 customer service on social networks.
However, consumers still pay less attention to the digital improvements of banking services. According to Hang, only 20 percent of customers regularly trade on electronic banking channels.
Meanwhile, digitalisation is helping consumers cut much costs in transaction. Dung shared that the transaction cost has fallen to only eight to 10 US dollar per customer per month, while the traditional transaction cost reached up to 60-70 US dollar per customer per month.
In the context when more than 100 fintechs are operating in Vietnam, banks also benefit. According to Reet Chaudhurysenior expert Mc Kinsey & Company, the banking industry should link with fintechs to develop together.
CEO of M-Service (MoMo e-wallet) Pham Thanh Duc shared that MoMo has directly cooperated with 20 banks in Vietnam to take advantage of each other’s strengths. Regarding this cooperation, Duc said that “It is an effective and close partnership with banks”, a win-win relationship.
Duc said that in Vietnam there are only five or six e-wallets which are operating actively, and only three or four e-wallets have a high number of users. This is a very fierce and picky industry. Thus, Duc believed that this is not a fragmented segment.
Deputy general director of Napas Nguyen Hung Nguyen said that the story of fintechs at the present time is similar to that of banks many years ago in expanding network. Regarding the relationship between banks and fintechs, Nguyen said that “The inevitable trend is to cooperate and share”.
CEO of M-Service said that banks have paid more and more attention to technology. Fintech companies like MoMo appreciate the understanding and efforts of banks in the process of digitalisation and prioritising digital transformation. Some banks are even ahead of fintechs.
Le Anh Dung, deputy director of Payment Department at the State Bank of Vietnam (SBV) said that the potential of digital banking in Vietnam is very huge because the rate of using smartphone is increasing, young population until 2030 is larger than other regional economies, and young people are now very “quick witted” to technology.
The advantages in digital transformation will help banks cut costs, increase revenue, and develop products faster and easier. Nevertheless, banks also face many challenges, lack of high-quality labour source, and security risks which arise from frauds, etc. Banks also lack of capital for investment in the transformation, and competition is increasingly rising among banks, etc.
The role of banks in the next 10 years
Deputy director of Payment Department at the SBV shared that “Banks will still exist and develop, they will expect to become digital companies with banking licenses, meeting both technology trends and customer services with full financial services.
According to Duc, banks can take advantage of their resources to buy advantaged technology and thus fintechs can hardly exceed banks. With the assumption that the payment industry in the next three to five years will be very busy, MoMo will still focus on payment. Duc believed that in the next three to five years, there will be no major changes to the picture.
Mc Kinsey’s Company’s Reet Chaudhuri said that banks will increasingly become involved and interact into customers’ lives. The question is how banks integrate to meet customers’ needs.
