A mobile money pilot project has been submitted to the prime minister for approval, marking a bold step for the development of payments using telecommunication accounts in Vietnam, Governor of the State Bank of Vietnam Le Minh Hung said at the dialogue between the PM and the business community on Saturday.
Besides, the central bank was also hastening procedures to propose the government the issuance of amendments to Decree No 101 on accelerating cashless payments.
Mobile money allows mobile subscribers to use their telecommunication accounts to make payments up to a limited value.
Last year, three big telecommunications service providers in Vietnam Viettel, MobiFone and VNPT registered to added payment intermediary to their business lines, paying the way for participating in the mobile money market.
In Decree No 11/CT-TTg issued in early March about solutions to remove difficulties for production and business to cope with the COVID-9 pandemic, the PM asked the central bank to propose the mobile money pilot project for approval.
The use of mobile phone accounts to pay for goods and services initially got the PM’s approval in January 2019.
Minister of Information and Communication Nguyen Manh Hung previously said that mobile money created a 0.5 per cent economic growth for countries which allowed it.
According to a report of the BIDV Training and Research Institute, mobile money was present in 90 countries with nearly 870 million registered accounts, 272 apps and a daily transaction revenue averaging $1.3 billion.
The institute said that it was necessary to develop a proper framework and enhance security for mobile money.
Vietnam had around 129.5 million mobile subscribers, around half using 3G and 4G, and 43.7 million or 45 per cent of the country’s population using smartphones.
Many advanced technologies were being developed and applied such as biometric authentication, QR Code, tokenisation together with the development of population database for electronic know-your-customer (e-KYC).
There was also significant room for mobile money in Vietnam with just around 63 per cent of adults (from age 15) having bank accounts, the institute cited the central bank’s statistics as saying in November.
Mobile money would also help promote financial inclusion, the institution said.
The government targeted to reduce the ratio of cash payments to less than 10 per cent by the end of this year, from 11.33 per cent in 2019.
Mobile money would significantly contribute to accelerating cashless payments in Vietnam where cash in circulation still accounted for 20 per cent of the country’s gross domestic product.
Mobile transactions forecast to increase by 400 per cent by 2025
HA NOI Mobile banking transactions in Vietnam were expected to increase by 400 per cent by 2025, according to the Fintech and Digital Banking Asia Pacific co-released by Backbase and IDC on Monday.
The report also predicted a 50 per cent growth in new accounts by the top eight banks, using intelligent automation in account origination. In addition, 25 per cent of banks in Vietnam would actively pursue modern digital core platforms.
The top two priorities among the eight biggest banks of Vietnam to 2025 would be core banking and payments systems, the report pointed out.
Riddhi Dutt, director of Backbase’s Asia-Pacific office in Singapore, told Vietnam News Agency that Vietnamese banks were investing heavily in digital platforms to promote growth but smaller banks looked to succeed first.
Vietnam was strengthening the development of fintech companies as well as digital banking, he said, adding that clear evidence was that the number of fintech companies rose from 40 to 150 in the past four years.
The country is also focusing on developing cashless payments and providing new services which targeted the group of customers who had no or little access to traditional banking services.
According to the report, joint-stock banks, in particular, were poised to win a larger market share thanks to enhanced features in their mobile offerings, including gamification, improved data security and customer journey designs for integrated omnichannel customer experiences to crack the psyche of customers.
Accelerating innovation through fintech partnerships was also important, the report stressed, pointing out that fintech partnerships, both locally and regionally, can add a competitive edge. “In a digital world, the bank is no longer the sole creator of value for its clients. Today, competitive strength comes from having good connections with other players and from adding or sharing value.”
The report also pointed out that the 2020-25 period would be a period of accelerated pursuit of digital-first banks across Asia Pacific. “Digital-first banking is even more important now as the COVID-19 situation has intensified customers’ needs for availability, access and control of digital channel interactions.”
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