The service segment is now considered as one of the development strategies and a new growth engine for banks. The increase in revenue from services has helped the banks diversify its revenue sources, reducing the burden of risks and the dependence on credit.
In fact, the nine-month financial statements of many banks show the growth from service activities. For example, the financial report of Military Commercial Joint Stock Bank (MBMBBank) for the third quarter of 2019 showed that in the first nine months of the year, the service activities brought in profits of 2.312 trillion dong, up 37%. At Orient Commercial Joint Stock Bank (OCB), the net profit from service activities also increased sharply, up to 87 percent over the same period, reaching 391 billion dong, contributing to a significant source of income for this bank.
Similarly, revenue from services of Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) rose by 21.1 percent to 2.131 trillion dong. Tien Phong Commercial Joint Stock Bank (TPBank)’s net income from fees increased by 72.3 percent to 757.5 billion dong, thanks to all income streams including payment services (up 67.1%), bancassurance (69.5%) and other fees (66.3%).
The third quarter financial report of Asia Commercial Joint Stock Bank (ACB) showed that bancassurance was a bright spot when reaching 414 billion, accounting for 29.3 percent of total fee income (compared to 12.6 percent in the same period last year). The income from securities investment of Vietnam Technological and Commercial Joint-Stock Bank (Techcombank) grew by 5.2%. Bancassurance was also the driving force for the profit growth of Vietnam International Commercial Joint Stock Bank (VIB) in the last three quarters, net income from fees increased by 148.4%. At Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), the fee income in the three quarters of 2019 increased by 42.9%, the income from foreign exchange transactions continued to be the strongest in the whole system with 2.54 trillion dong (up 57.65 percent over the same period in 2018).
Recently, Vietcombank also signed an exclusive cooperation agreement with FWD Insurance Group (Hong Kong) for 15 years of banking distribution. Vietcombank Chair Nghiem Xuan Thanh also emphasized that the bank would focus on boosting service revenue from products and services associated with digital transformation.
Talking to reporters, an expert also said that the restructuring of the service revenue in the near future would continue to have more positive signals, as this helped the bank improve its capital efficiency and reduce risks, especially in the context that credit growth target was no longer as wide as before.
Digital transformation in the bank is integrating technology into all operational levels, digitising most business processes in the direction of automation, intelligence, operation, and supply of productsservices on a digital platform, optimising data mining to increase experience and engagement with customers.
Some of the results of digital banking development in Vietnam today are LiveBankTPBank’s automated banking service, VietinBank’s Corebank replacement strategy project, YoloVPBank’s digital banking application, and Digital chatbot of MB. “Digitalisation will help save time and improve customer experience when using banking services, expand sales channels, reduce costs and increase efficiency, thereby the revenue from the banks’ services will also be proportional,” the expert said.
2019 is determined by Vietcombank as a strategic year of digital transformation. Pham Anh Tuan, Vietcombank Board Member, shared that Vietcombank was aiming at the 3.0 bank, also known as open bank. This is a model of cooperation in which the bank seeks to build or integrate an ecosystem with customers, partners, service providers and devices to promote the creation and exchange of services that everyone can capture the value. This could potentially open up a whole new financial services ecosystem, in which the role of banks can change dramatically.
“For example, becoming a platform provider for white-label services (a digital marketing product that allows rebranding, re-pricing and reselling under your own brand), product provider or additional services for larger customer base. The specific challenges will vary geographically, identified primarily by the development of legal regimes around data management,” a representative of Vietcombank said.
However, Dao Mong Longdirector of SHB Operation centre also stated that deploying new digital services and utilities was like building a roof. That was just the last piece of information technology a bank needed to make.
“Saying digital banking sounds good, but to do it, first of all it has to be built a lot, even replacing the entire technical infrastructure. The longer banks exist, the more difficult they are due to the old foundation built in series in the past five months, and many more and more backward. The new construction requires financial capacity of the bank. “- SHB representative gave more information.
The bank is implementing a series of projects with the goal of being customer-centric and reducing operating costs, increasing revenue and sustainable profit, including: Increasing customer experience with integration of advanced modern technologies such as artificial intelligence (AI), machine learning, chatbot… Or as centralised data warehouse system (DW-BI): the system is designed to support in Data storage and analysis and intelligent analysis systems support SHB in internal management as well as build better products and services for customers.
This year, SHB also aims to achieve ISO 20000 certificationthe only IT service quality measurement standard in the world, helping identify and evaluate the key processes related to translation management of effective IT service. Achieving ISO 20000 certification, this bank will basically complete the overall and comprehensive model of professional, effective and confidential IT service management in accordance with international standards, bringing the highest peace of mind for customers.
