Banks rush to implement digital transformation ecosystem
VIETNAM, September 18 – HÀ NỘI – The local banking sector, currently undergoing drastic restructuring, will have more opportunities to improve its financial capacity as well as learn modern business and management models from British partners after the UK-Vietnam Free Trade Agreement (UKEVFTA) is taking effect, according to banking insiders.
UK banks can establish representative offices, branches, 100% foreign-owned banks and joint ventures with capital contributions not exceeding 50% in Việt Nam.
Until August 1, 2025, UK financial institutions can seek approval from the competent authority of Việt Nam (State Bank of Vietnam) to purchase shares in a joint-stock commercial bank of Việt Nam, up to 49 % of the share capital of this company, with the exception of the four commercial banks in which the government of Việt Nam currently holds the majority of the capital.
UK investors are also permitted to transfer financial information across borders and process financial data. In addition, UK investors can provide cross-border advisory, intermediation and other ancillary financial services (including credit reference and analysis, wealth management, acquisition advice and corporate strategy).
The UKVFTA was signed on December 29, 2020 and entered into force temporarily on December 31, 2020, before officially starting on May 1, 2022.
Digital transformation is an irreversible business trend in the 4.0 era. Banking and finance are no exception to this trend, according to banking experts.
According to the State Bank of Vietnam (SBV), at least 95 credit institutions have drawn up digital transformation plans.
In recent years, the use of banking transactions on digital channels is no longer unknown to the greatest number.
According to experts, the bank’s digital transformation journey consists of three stages. The first is digitization – converting the traditional process into a digital process; the next is digital transformation – digitizing every part of the business, improving the customer experience; the last is ultimately digital reinvention – combining technology and digital platforms to drive revenue and results through innovative strategies, products and services.
Most banks are in stage three, so there are already plenty of plans to go deeper into digital transformation. Therefore, many banks have decided to establish a digital banking ecosystem, from opening accounts to registering, issuing and managing products. Services such as accounts, credit cards, loans can all be done online.
The percentage of people accessing digital platforms is increasing as Việt Nam has a young population structure and a rapidly increasing smartphone usage rate.
According to Adsota’s report on Việt Nam’s digital advertising market in July 2020, Việt Nam has 43.7 million people using smartphones, which is 44.9% of the total population. Việt Nam is among the 15 markets with the highest number of smartphone users in the world.
UK-based HSBC opened a full-service branch in HCM City and took the lead in implementing digital penetration and new technology solutions which are key areas of banking for individuals and businesses. companies, according to an HSBC report.
Similarly, in the retail space, HSBC Vietnam was the first bank in the market to roll out an end-to-end digital journey for new customer onboarding and mobile banking.
HSBC Vietnam has introduced Omni Channel Collections Solution, a dynamic service that helps businesses, especially those looking to expand e-commerce, to provide multiple payment options on a single platform.
“We are very proud to be the first international bank and the fifth market in the world for HSBC to launch this innovative solution in Việt Nam. This ambitious, holistic and digitized solution has proven that banks and Fintech companies can thrive in partnership and will help boost digital payments in line with the Government of Việt Nam’s strategy to encourage cashless transactions,” Hanh said. Nguyen, country head of global liquidity and treasury management. , HSBC Vietnam.
According to Tim Evans, Managing Director of HSBC Vietnam, two important post-Covid-19 issues to ensure that the financial sector maximizes its potential are sustainable finance and digitalization. The State Bank of Vietnam (SBV) has recently launched initiatives to support the development of green finance and digital transformation. It has set a target of 60% of banks having access to green capital and lending to green projects by 2025.
Đỗ Quang Vinh, Board Member, Deputy General Manager and Head of Digital Banking Division of SHB, said that digital transformation is seen as a long-term project, with very complex elements and requiring coordination between many many units.
The bank has transformed customer management to offer a variety of financial solutions as well as the application of technology in operations, which saves staff time and costs as well as increases productivity.
Nam A Bank said that in 2022, it will continue to focus on increasing investment and applying technology, creating new stages in digital transformation and continuing to perfect the digital banking ecosystem: Robot OPBA, Open Banking and ONEBANK, meeting the needs of transactions anytime, anywhere.
MSB has also cooperated with the world’s leading consulting group, Boston Consulting Group (BCG), in the implementation of the Digital Factory project with an investment of approximately 2 trillion VNĐ (83 million dollars).
However, to solve the above problems, banks need to invest up to tens of trillions of VND per year for digital transformation. Vinh said that SHB has invested a lot of resources and budget to upgrade Core Banking (central bank), upgrade cards, deploy investment banking, Lending Solutions (LOS), deploy Omni Channel systems and associated computer systems and apply the most modern solutions.
According to Lê Anh Dũng, deputy director in charge of the payment department at SBV, said that in the first six months of 2022, non-cash payment transactions increased by 77.2% in quantity and 29.8% in value compared to the same period. from last year.
About 68% of Vietnamese adults have a bank account, and 5.5 million accounts and about 8.9 million bank cards now use the eKYC (Electronic Know Your Customer) process.
Speaking at a seminar on digital transformation a few months ago, State Bank Governor Nguyễn Thị Hồng said that the banking industry will enhance the security and safety of electronic payments, effectively implement implement major payment systems and will operate payment intermediary service providers to ensure smooth and secure operation.
She said many national banks have 90% of their transactions done on digital platforms, surpassing the 70% target set for 2025.
Half of banking services are expected to be digitized and 70% of transactions will be done online by 2025, she noted. —VNS