Emerging technologies, changing consumer demand and legal corridors are gradually reshaping the world banking industry, including banks in Vietnam. The Bao Dau Tu had a talk with two experts from PwC, John Garvey, global leader in Financial Services Consulting and Grant Dennis, general director of PwC Vietnam Consulting Company around this topic.
What is the latest trend of the global financial industry? Where is Vietnam located in this ‘storm’?
John Garvey: Banks are focusing on three outstanding issues.
The first issue is competition on digital technology platforms and the way to deal with drastic changes in the market.
The second is how to convert current personnel, making them adapt to the digital age.
Thirdly, in many markets, a great concern is how to rebuild trust between banks, regulatory agencies and the public.
As can be seen, banks are making great efforts to carry out digital conversion, especially in terms of people. PwC has been advising many traditional banks to convert their personnel.
Grant Dennis: Trends in Vietnam are quite similar to world trends. It can be seen that banks are following the trend of digitising, applying new technology to change their activities towards customer-centred, to provide faster and more quality services.
Following the global trend, network security is also a big challenge for Vietnamese banks. Activities of preventing money laundering are similar between Vietnamese banks and banks in the world. Trends in Vietnam are not too different from global trends.
How is Fintech influencing the banking system? Fintech businesses are friends or foes of banks?
John Garvey: There are three main trends in the world.
First, most fintech companies, instead of becoming competitors, are becoming partners of banks. Through this cooperation, the fintech will indirectly be subject to the regulations that are affecting the bank. The bank is responsible for ensuring compliance throughout the value chain including parts that fintech operates.
Second, fintech companies that do not cooperate with banks tend to become pure digital banks. At that time, they were governed by regulations like other traditional banks.
Third, in some countries, authorities are granting special licenses to the ‘fintech bank’ form, allowing them to provide certain services.
I want to give a practical example related to Apple Pay. Apple determined that they did not want to be subject to the same rules as banks, so they decided to cooperate with the bank. Similarly, banks realise that Apple Pay will not take away their revenue stream, but will become a channel to promote more payment transactions. This is a concrete example of how banks and fintech decided to cooperate with each other, although at first they did not know if they were rivals or partners.
So in Vietnam, what is the prospect of fintech industry?
Grant Dennis: Fintech has attracted a lot of attention recently thanks to its contribution to promoting payment channels, personal finance and new investments. The legal framework for the operation of fintech companies is gradually being finalised so that fintech services are more accessible and reliable. The State Bank of Vietnam has also set up a steering committee on fintech to encourage the growth of fintech companies.
Currently, fintech in Vietnam is at a relatively low level of development compared to other Asian countries, reflected in the fact that there are fewer fintech startups. Part of the reason is that there is not enough capital to invest in this area. In addition, fintech desperately needs cloud computing technologies to work successfully, but there are still many security concerns.
John Garvey: Concerning cloud computing technology, I think the problem here is how to convince supervise and inspection agencies to accept the use of public clouds and how banks know how to check control and enhance security for cloud technology. Therefore, it is very important to remove the identification information of individuals and organisations from the data stored in clouds. Recently, for example, the Singapore Monetary Authority has allowed banks to use public clouds on condition that the data is anonymous. Such changes will require more efforts to complete the infrastructure, service design, and regulations on information security.
How has technology forced banks to become customer-centric?
John Garvey: Banks around the world are doing several things to achieve customer-centric goals. The first is to focus less on product but towards modelling customer life cycle value and adjusting management structure based on this model.
Secondly, banks are inclined to put all forms of distribution, from branch transactions to telephone and mobile transactions, under common control.
Thirdly, regulatory agencies in many countries are promoting fairness and transparency in lending, complaints, and investment consulting. All these changes require better control, as well as changes in culture and business models.
Finally, digitising focuses on customer experience. Integrating fintechs and using social networks have been improving customer experience, increasing the ease of use and the ability to solve problems.
