The need to change mindset
Vietnam currently has a lot of favourable conditions to develop digital banking with more than 96 million people, a golden population structure, and high ratio of people using smartphones, etc. The digital transformation trend of banks is also increasing. May banks have connected different ecosystems on the Internet; launched mobile banking applications; and applied Artificial Intelligence (AI) and Big Data in market forecasting, customer classification and disbursement decision making, etc.
General director of Orient Commercial Joint Stock Bank (OCB) Nguyen Dinh Tung emphasized that digital transformation is an inevitable trend, but it is not a simple problem. First of all, it is necessary to change the mindset in order to have a clear direction to complete the set goals. For example, for OCB, if the bank wants to turn digital banking activities into a real business instead of being an added service, the investment must be very carefully made. In addition to the issue of investment capital, technological infrastructure, there is human resource issue, etc. to ensure the smooth and effective implementation of the digital transformation.
Sharing similar point of view, director of Digital Banking at Tien Phong Commercial Joint Stock Bank (TPBank) Tran Hoai Nam believed that technology can be bought by any company, bank or country. Therefore, technology is not an advantage of TPBank or any other company or bank. However, the key to the success of digital banking transformation is not from technology but from the change in mindsets of banks and customers.
“We are living in a period when customer behaviours change extremely, breaking all traditional habits,” said Nam. He pointed out the practical challenge that forces banks to participate in digital transformation.
TPBank’s shortening of ATM card issuance time from eight days to only eight minutes is the change to its traditional process. Regarding this issue, Vietcombank’s leader also said that the bank has even sent an internal message on “Digital transformation or Die” to ensure all of the bank’s employees are determined to work with leaders to successfully carry out the digital transformation.
With increasing determination, Vietnam’s banking technology is also considered to be not weaker than many other countries, but what leaders of some commercial banks are worried the most when deploying digital banking is the risk in mechanism. Chair of Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) shared that the bank is coordinating with a partner from South Korea to bring Vi Viet to the country for piloting QR Code payment. Although careful studies have been made to ensure that the bank does not violate the law on risk management, international payment, consumption limit, Thang is still wondering if there are other regulations if Vi Viet is implemented widely. Because, in fact, the regulations on digital banking, electronic wallets and eKYC, etc. are not clear.
Concerns about mechanism risks
Not only LienVietPostBank, in recent years, some banks have asked the State Bank of Vietnam (SBV) to allow the application of eKYC. However, up to now, only TPBank has been approved for pilot the application. Talking to reporter, a leader of a major bank proposed to soon allow the application of eKYC to promote comprehensive finance, helping customers access banking services easily and conveniently.
Being an insider, general director of OCB understood why eKYC is not yet able to be implemented. Accordingly, it is not only due to the law but also the readiness of the market. For example, businesses now have digital certificates, electronic invoices, but are businesses ready for this? Digital records have the good sides and the bad sides. They are good as they create transparency, but they cannot be edited. The most difficult thing to apply eKYC in Vietnam is that the data is not standardised and inconsistent. Certainly, some businesses will take advantage of this situation to forge data, rig documents to open accounts for money laundry.
However, according to Tung, with the growing trend of electronic transactions, the development and completion of regulations on electronic identification and authentication are practical requirements. On the other hand, the rapid development of technology is also preventing those frauds.
“In terms of law, the mechanism for eKYC application should be carefully studied to ensure fraud protection and also to create favourable conditions for banks to increase online transactions,” said Tung.
Understanding the concerns of the management agencies as well as banks, Dr Vo Tri Thanh member of the National Financial and Monetary Policy Advisory Council shared that building a legal framework ready for digital transformation is not a simple task. There is currently no best practice for Vietnam to fully apply, not to mention that there are things that have not been fully anticipated. That puts pressure on the management authorities in making decisions and legal framework for technology to balance the effectiveness and limit risks.
Dr Thanh said that “although there is not yet a common standard and uniform view of this issue in the world, we cannot wait”, adding that we must take certain risks and keep things under control.
Leader of the SBV’s Payment Department also acknowledged that eKYC is one of the biggest problems of banks in the digitisation process. However, the SBV’s deputy Governor Nguyen Kim Anh said that the SBV will issue a decree replacing Decree 101/2012/ND-CP on non-cash payment to facilitate the development of electronic payment, and amend Decree 116/2013/ND-CP on money laundering prevention in the direction of allowing the application of eKYC. After the eKYC issue is thoroughly handled, the SBV will continue to remove some other problems about opening payment accounts, sharing data, etc.
Experts expect the problems in mechanism to be soon removed, resolving the psychological bottleneck for banks to boldly accelerate the digital transformation in both quantity and quality, thereby meeting the needs of people, reducing operating costs, and increasing service revenue for banks.
