Banks ignite ‘zero-dong service’ competition

After Techcombank announced its ‘zero-dong service’ policy, in which its clients pay no fee for some kinds of services, other banks have followed the move.

VIB Bank and SeA Bank last week announced exemption of service fees for some kinds of services provided to individual customers, including cash withdrawal from 17,000 ATMs throughout the country, online remittances and inter-network money transfers.

Banks ignite ‘zero-dong service’ competition

VIB clients, for example, have enjoyed fee exemption for online remittances and cash withdrawal from ATMs since April 8. This will be valid for the first six months of bank accounts’ operation. The fee exemption is also applied to existing VIB payment accounts with the duration of less than six months.

As for existing clients whose bank accounts have been active for more than six months, VIB will continue offering the exemption for the two kinds of services. In addition, they also do not have to pay fee for withdrawing money at the counter, if the average balance of the accounts in the last six months is VND5 million or more.

The fee exemption allows the bank to attract more clients who pay for other services. In the first nine months of 2018, the number of clients increased by 87 percent compared with the same period of the year before.

The free-of-charge transactions of cash withdrawal and money remittance must be for domestic transactions, not international.

Meanwhile, SeABank applies a fee exemption policy to all new and existing clients for SeANet/SeAMobile services. SeANet/SeAMobile service users don’t have to pay fees for money remittances within the network or to other networks.

While some banks began raising service fee in 2018, other banks, though having smaller scale, decided to exempt service fees.

Techcombank is the pioneer in the movement, and has reaped initial success.

In September 2016, Techcombank launched the ‘zero dong E-banking’ program, under which the bank does not collect fees from individual customers’ online money transfer services via F@st I- bank and F@st mobile.

 

Two years later, in 2018, Techcombank began applying the ‘zero-dong service’ policy to business customers, under which clients using F@st Ebank are exempted from fees for transferring money within the network or to other networks.

Some analysts said that Techcombank, VIB Bank and SeA Bank are ‘swimming against the current’ by offering free services, while other banks have begun collecting fees from more services to increase revenue.

Techcombank’s finance report, however, showed that revenue from payment and cash services since Q4 2016, when it began applying the fee exemption policy, has increased.

Revenue increased by 81 percent, from VND281 billion to VND508 billion, from Q1 2016 to the end of 2018. The net profit of the service increased by 32 percent to VND306 billion.

The fee exemption allows the bank to attract more clients who pay for other services. In the first nine months of 2018, the number of clients increased by 87 percent compared with the same period of the year before.

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