As cash flow is the basis of a digital economy, the financial-banking sector has a key role in the national digital transformation strategy. Transforming the banking sector rapidly, safely, and sustainably is prerequisite toward creating a digital economy.
Statistics from the State Bank of Vietnam (SBV) show that 95% of Vietnam’s banks have been mapping out building a digital transformation strategy, and 39% have implemented the strategy or integrated digital transformation into their business and IT development orientation.
Under the banking sector’s plan for digital transformation by 2025, with a vision to 2030, the SBV expects at least 60% of credit institutions to draw 30% of their revenue from digital channels.
Digital transformation in banking doesn’t simply mean applying new technologies such as Artificial Intelligence, Blockchain, and automation at the micro level. It means transforming the entire operation model, strategy, and culture of the sector.
Vo Tan Long, Deputy General Director of PWC Vietnam, said, “The operating costs of a bank include the office rent and staff salaries of all its branches, which accounts for 70% of the bank's total operating costs. Those costs can be reduced by expanding other channels, such as digital and self-service, and minimizing dependence on physical branches.”
But digital transformation is being hampered by an incomplete legal framework, the major bottleneck in the process.
This involves the Law on Electronic Transactions and the authentication of electronic signatures, digital signatures, and electronic contracts in banking transactions.
There are also limitations in building synchronous and centralized digital infrastructure, standards for technical connections, data standards, shared databases, and cyber security infrastructure.
In addition, cooperation between fintech companies and banks is raising concerns about cyber security and information security, as cybercrimes increase and become more sophisticated.
Tran Thai Binh, IT Director of Saigon Thuong Tin Commercial Bank (Sacombank) said, “I think banks can realize the target of having 90% of customers doing banking transactions and payment online. Especially after the COVID-19 pandemic, they won’t want to go to the bank to do these activities anymore. The biggest challenge is digitizing all banking activities.”
Experts say by 2025 the number of bank personnel and branches will decrease while the number of customers and the amount of revenue will increase because banks will cooperate with fintech companies to form an ecosystem offering more diverse services.
Vietnamese technology companies can be outsourcing partners not only for Vietnamese banks, but also for regional and global banks.
Bui Dinh Giap, Founder and CEO of akaBot, Vietnam's leading Robotic Process Automation (RPA) platform, noted, “Banks will work with fintech companies to provide accompanying services such as loans and microfinance. That will develop strongly in the next 3 years.”
Giap said, “With a strong digital transformation and banking vision, Vietnam will be one of the leading countries in Asia in digitalized banking and many other fields.”
Vietnam’s push toward digital banking is in line global trends and the State Bank’s policy of promoting cashless payments. It will help the banking industry grow and provide new convenience for customers.