After Vietnam Technological and Commercial Joint Stock Bank (Techcombank) launched free service policy, the market began to welcome more commercial banks to join this strategy.
Last week, in turn, Vietnam International Joint Stock Commercial Bank (VIB) and Southeast Asia Joint Stock Commercial Bank (Seabank) announced the implementation of a free service policy for individual customers, simultaneously applying for ATM withdrawals and online internal and external money transfer.
Specifically, at VIB, from April 8, new customers are free to transfer money online and to withdraw money at 17,000 ATMs nationwide, regardless of internal or external network in the first six months.
Exemption of these fees also applies to existing VIB payment accounts with a period of less than six months.
For existing customers who have opened accounts for more than six months, VIB will continue to waive the above two types of fees and the fee at the counter if the average account balance in the last six months reaches five million or more.
Free cash withdrawal and money transfer transactions are domestic transactions, excluding international transactions.
Meanwhile, at SeABank, this bank applies the programme to all new customers and existing customers with SeANet/ SeAMobile services such as free internal and external money transfer for customers using SeANet and SeAMobile services; free to open and use SeANet and SeAMobile services.
In the context of a number of “big banks” started to increase service fees in 2018 recently, the fact that some smaller banks decided to free the service is considered a new move and expecting to expand.
Previously, the market noted that Techcombank fired the first shot in this direction, and they quickly reaped success.
At the end of September 2016, Techcombank launched the programme “E-banking with zero dong”. Accordingly, the bank waives the transfer fee for all online transactions via [email protected] I-bank, and [email protected] mobile of individual customers.
Two years later, in early October 2018, Techcombank continued to expand its policy of zero dong of transaction fees to corporate customers. Accordingly, enterprises will be fully exempt from Techcombank internal and external transfer when using electronic banking [email protected] Ebank.
While some banks are trying to increase a series of service fees, cutting some types of popular transactions to expand the fee collection, VIB, SeABank or Techcombank going against that trend has been gradually creating a competitive battle in the system.
It is a competitive war that benefits customers, and of course the bank gain profits.
Looking at their financial statements, the figures for recent reports show noticeable changes.
Normally, transaction fees are recorded by banks in the income from payment services and cash, one of the components of the bank’s service income.
And the actual item of Techcombank since the implementation of the free service policy (Q4/ 2016) has not recorded a sudden decline, even an uptrend.
Specifically, if taking the comparison time from Q1/ 2016, by the end of 2018, Techcombank’s income from payment services and cash has increased by 81 percent, from 281 billion dong to 508 billion dong. Net profit of this segment also increased by over 32 percent to 306 billion dong.
In 2018, this amount recorded a profit of 1.245 trillion dong, a slight increase of nearly 5 percent compared to 2017. It contributed up to 35.2 percent of total net interest income from the bank’s service activities.
It can be said that this battle for zero dong transactions has been benefiting both service users and providers.
Nielsen’s 4/2018 personal financial reports show that, along with convenience, ease and quickness, transaction fees are one of the factors that customers care most about banking services.
Free transactions will help them reduce a significant monthly fee. Besides, this also creates a comfortable psychology in the process of using banking services.
As for banks, this is considered a step back to get two steps forward.
Firstly, the free transaction will help banks attract and create a large personal customer base for banks to promote cross-selling products and services. In particular, the greater the attractiveness of individual customer base is, the more resources that develop other services, typically insurance brokers.
As for Techcombank, only in the first nine months of 2018, the number of new customers has increased by 87 percent over the same period last year. And Techcombank representatives once said that to develop that platform in the traditional way was more expensive than the free policy they were making.
Secondly, the rapid increase in the number of customers also means that a large amount of money is circulated through the bank.
As a result, the bank will attract a large amount of Current Account Savings Account (CASA) with low interest rates, creating a low-cost business source for banks. This is also a premise to help banks compete for lending interest rates. This fact is very evident at Techcombankthe first member to expand the policy of zero banking service fees over the years.
With these benefits, with new factors such as VIB and SeABank, it is forecasted that the war of zero dong will be more dramatic in the future. By the way, customers will have more benefits.
