Illustrative image (Photo: HSBC)
Speaking at the Financial Services – Retail Banking Forum in Ho Chi Minh City last week, Vu Viet Ngoan, former chairman of the National Financial Supervisory Commission, said the habit of using digital products had become more prevalent than ever in Vietnam.
More than 30% of the population uses banking apps, second globally only after China (41%), according to Ngoan.
Vietnam’s banking and financial sectors would continue to play a key role in establishing a “fully digitized, human-centered system”.
He also pointed out that the digital transformation in the country would be an important process of how banks and financial institutions analyze, interact and satisfy their customers.
The government has set a target of increasing financial inclusion to cover more than 80% of the adult population by 2025.
Phan Thanh Duc, dean of the management information system faculty at the State Bank of Vietnam’s (SBV) Banking Academy, said Vietnam had recorded a surge in digital payment everywhere from online marketplaces to small convenience stores and even vegetable and fruit vendors.
Le Duc Anh, director of the Ministry of Industry and Trade’s Centre for Information and Digital Technology, pointed out that technologies such as blockchain, AI, cloud computing, machine learning, and customer data collection, management and analysis were being adopted.
The banking sector had invested over VND15 trillion (US$639.22 million) in digital transformation as of the end of last year, according to a report by the SBV.
Digital payments have been growing at 40% for the last four years, one of the world’s fastest digital transformation rates.
According to the report, more than 95% of Vietnamese banks have a digital transformation strategy. Around 90% of banking transactions are handled through digital channels with 74.6% of adults having a bank account.
As of March around 3.71 million mobile money (or mobile payment) accounts had been opened, over 70% in rural, remote and disadvantaged regions across the country.
Non-cash payments have also seen significant growth, with 82 credit institutions offering internet-based payment services and 51 offering mobile payment services as of the end of last year.
There are 48 licensed intermediary payment organizations.
Digital transformation has helped banks bring down the cost-to-income ratio to 30%, on par with regional and international standards.
But experts say the legal framework for digital financial services is inadequate.
It is vital to improve institutional frameworks and upgrade infrastructure, they say.
The lack of human resources with up-to-date skills is another major challenge to digital transformation, they warn.
Organized along with the forum was a fair introduction the advancements needed for the financial industry’s digital transformation.
The event was hosted by the Vietnam Association of Securities Business, the Vietnam Digital Communications Association, and the International Data Group.