VietNamNet Bridge - Commercial banks have to compete with many rivals, from financial companies to fintechs, companies that provide financial services based on technology platforms. 


Deputy Governor of the State Bank Nguyen Phuoc Thanh, when speaking at a year-end conference some days ago, advised commercial banks to develop retail banking, or they would have to yield to rivals. 

FE Credit, a finance company, has recently issued FE Credit international credit cards to clients who have borrowed money from FE Credit in HCM City and Binh Duong province.

An analyst said the finance company launched credit cards because it understands the weak point of commercial banks. 

Banks only lend money to medium- and high income earners, when they cannot reach customers with low incomes who also have high demand for loans.

Commercial banks have been advised to develop retail banking, or they would have to yield to rivals.

Sources said that Home Credit plans to issue international credit card to provide consumer loans this year.

The company is reportedly cooperating with a foreign bank which has advantages in retail banking, 100 percent foreign owned, to implement the project.

The cooperation of the two big players is expected to warm up the consumer retail market.

Meanwhile, the manager of another finance company said his company was speeding up the issuance of cards in a plan to penetrate the consumer retail lending market.

An analyst said that many finance companies plan to launch credit cards in 2016 to push up consumer lending. And if this happens, the credit market share held by commercial banks will shrink.

FE Credit card holders enjoy many preferences. They don’t have to pay annual fee, can easily get cash from all ATMs (auto telling machines) at a fee of one percent, can withdraw cash free of charge, and can ‘consume first, pay later’.

Meanwhile, banks set very strict requirements which are believed to be unattainable for customers who have demand for loans.

Some bankers said they were surprised about the strong rise of finance companies. The manager of a mid-tier commercial bank admitted he never thought that finance companies would cooperate with card issuance institutions to provide loans.

In principle, subprime loans, with no strict requirements on borrowers, bring high risks to lenders. 

However, the banker admitted that, the shortcomings would be fixed once lenders cooperate with international finance groups.

Another banker said that commercial banks will have to upgrade service quality and create new products to compete with finance companies.

Meanwhile, a senior executive from ABBank noted that complicated lending procedures and slow disbursement will prevent potential borrowers from contacting commercial banks. 


DNSG