Talking in advance on the talk “Digital bank promotes the development of specific ecosystems” held by BizLIVE on June 14, Vo Tri Thanh, financial expert, said that one of the major challenges for digital transformation and non-cash payments in Vietnam was “underground economy”.
Secondly, geographically, large areas of the banking and digital banking market were still in provinces. Technology infrastructure and trading habits required a long process to change.
At this seminar, Nguyen Chien Thang, Senior director of Digital Bank of Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) also said that customers’ beliefs and habits, not technology, were the main obstacle in the process of digital transformation and digital bank development
To create trust and change habits, Tran Hoai Nam, director of Digital Bank of Tien Phong Commercial Joint Stock Bank (TPBank), raised the question that the market needed large firms to create a big wave to entice customers and commercial banks including TPBank to enter that wave to promote.
Who are the “large firms” to create that big wave in Vietnam?
At first, the answer may be directed to the largest commercial banks in Vietnam, “big 4″, including Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Vietnam Bank for Agriculture and Rural Development (Agribank).
In terms of coverage, these four members account for 50 percent of the market share of both deposits and loans. Accordingly, the coverage in this group is large in both customer and geography.
These are the largest firms of traditional market shares, but not quite the pioneering commercial banks in digital transformation and digital bank. Many products and utilities of some private joint stock commercial banks and fintech companies are more sensitive and outstanding.
However, the prospect of showing the position of “Big 4″ is opening up, to promote the goal of creating trust and changing the habits of customers.
At the end of 2018, VietinBank completed the project to replace Core Banking system, which considered a premise to carry out the digital conversion strategy in the period of 2018-2020. In 2019, Vietcombank also placed a focus on digital banking development strategy, which emphasized at the recent annual general meeting of shareholders.
But the answer is still ahead if the above-mentioned “Big 4″ really became the leaders of the wave of digital banks in Vietnam.
In the present, according to Can Van Luc, if compared with the speed of digital conversion of banks in the world and even with the current fintech firms in Vietnam, the conversion rate of Vietnamese banks was probably much slower.
Some Vietnamese commercial banks were even passive with digital conversion and digital banking, in the direction of “natural” and “self-coming”.
Wave from high range
Talking to BizLIVE, there was an opinion that the “big one” that TPBank representative raised issue was not really a specific commercial bank, or a specific fintech or bigtech.
Here, the “big one” could be understood as the role of pioneers, direction creator and the safe legal corridor, with supportive policies and conditions, thereby pulling fintech banks and companies into action to create a common wave.
At the talk, Can Van Luc emphasized that this role reflected in the vision and orientation of the government, with the focal point of consultation, management and implementation of the State Bank of Vietnam (SBV).
Luc cited that at the beginning of this year, at the Resolution No.01 and No.02, the government gave directions on the plan to allow cash deposit into electronic wallet (e-wallet) without bank payment account; this would be a condition to help e-wallet increasingly develop in the future.
Within the framework of a government resolution for many years, it was very rare to have a product or orientation to develop a specific financial service that had such an “honorable position” in the direction and executive documents of macro scale.
In the face of the reluctance of credit institutions to MobileMoney model, the government also quickly oriented SBV to research and allow pilot; In the face of the emergence of peer-to-peer lending, the government also requested SBV to have a pilot and management project.
In recent years, “The Industrial Revolution 4.0″ was also a permanent “keyword” in many government directives and administration on economic management and development.
For SBV, first of all, legal frameworks had been completed. At the same time, many media programmes and policy forums held by SBV. Database of digital conversion results, digital bank development and especially in electronic payment (e-payment) channels, cashless payment was constantly being updated to the public.
In a recent exchange with BizLIVE, Governor Le Minh Hung said that the leaders of SBV frequently exchanged with commercial bank representatives, fintech companies to capture and consider in detail the practical requirements in this field before the rapid development trend of technology.
SBV was also developing a comprehensive financial development project, linked to the overall national strategy, which was expected to be submitted to the government and announced soon.
This project aimed to improve the legal framework; develop financial and technological infrastructure; diversify financial products and services; develop consumer protection and financial education mechanisms; prioritise vulnerable objects (micro businesses, small and medium enterprises, poor people in rural areas…) to support and help these people to better and more effectively access financial and banking services; build a mechanism for coordinating the mobilisation of overall resources for efficient financial implementation.
This was also a covered project that members of the market were waiting for, in the goal to join together to create a big wave of digital transformation and development of digital banks in Vietnam.
According to BizLIVE, this project was expected to be submitted to the government this month. Thus, SBV would take the initiative in advance of the roadmap, because previously calculated, it must be completed until 2020.
