Ms. Nguyen Thuy Duong, Deputy CEO, Country Financial Services Leader, EY Vietnam

Digital banking will be the future of Vietnam’s banking system, especially amid the development of Industry 4.0. The Vietnamese Government is now in the process of building national financial inclusion strategies with Industry 4.0 in mind, which are expected to be enforced in 2020. This should be the foundation for deploying digital technologies in Vietnam’s banking and finance sector. The financial inclusion roadmap includes changes in the legal framework, financial infrastructure development, IT application, and the diversification of financial products and services.

Digital transformation is taking place in Vietnam’s financial services industry, with a host of non-bank innovators offering both customer-facing and back-office fintech products and services. While banks are applying “Mix n Match” strategic models in their digitization process, Vietnamese fintechs are offering point solutions in product areas such as payments, remittances, savings, personal financial management, small and medium-sized enterprises (SMEs), lending, and insurance.

With a large population of young smartphone users, a high level of internet penetration, high consumer growth, a low unemployment rate, and a low ratio of banked citizens, Vietnam is becoming a promising market for digital transformation. There exist huge opportunities and bright prospects for the country’s digital banking and financial services development. In fact, many banks and financial organizations, having foreseen the trend, have embarked on the application of digital technologies and the modernization of business models.

Aligned with the government’s objective of creating a cashless economy by 2020, it has been paying special attention to establishing a strong legal framework and introducing laws and decrees to enhance the digitization of financial services. From my standpoint, I would like the government to soon apply a regulatory sandbox and supportive legal framework in digital financial services while stimulating a cooperative environment between local banks and fintechs. The government should also focus on infrastructure investment for the digital transformation of banking services.

Mr. Dang Thanh Son, Partner, Baker & McKenzie Vietnam

The development of fintech in recent years has brought about a wave of cooperation between banks and fintech companies globally. This cooperation aims to eliminate intermediary costs, increase efficiency in economic activities, and spur growth. Implementing digital technologies in banking will provide citizens with more opportunities to access financial services, especially citizens in rural areas.

The Vietnamese Government has made notable efforts in pushing for legislation that encourages the digitalization of accounting and banking. However, regulations on fintech in Vietnam are still primitive.

According to figures from several organizations, Vietnam is currently among the top countries in Southeast Asia in terms of using cash in transactions. The market for cashless transactions therefore still has a lot of room to grow.

One of the key problems in pushing for the digitization of banks is that each will have to invest in accounting and digital infrastructure to provide advanced solutions that are accessible and user-friendly. Aside from that, personnel in the banking sector have to acquire new skills relating to technology, language, and workflow to adapt to Industry 4.0.

In terms of legislation, the State Bank of Vietnam (SBV) needs to have more regulations to encourage foreign-invested tech companies to participate in fintech, as opposed to limiting foreign investors. Such legislation must be clear and aim to level the playing field between banks, intermediary organizations, and fintech companies. This equal cooperation will be a foundation for the development of fintech in Vietnam.

Along with issuing regulations to guide financial activities, the government should also establish a legal framework that follows a sandbox model, to allow tech companies to participate more in the payment services business.

Ms. Nguyen Thuy Duong, Financial Sector Specialist, Asian Development Bank (ADB)

The decreasing cost of technology, particularly AI and big data, are enabling new fintech solutions that are commercially viable in emerging markets. These solutions can drive operational efficiencies in the banking sector and enable banks to reach a new customer base where transaction costs were previously too high. Vietnamese banks are therefore increasing their investment in banking innovation and digital banking services (for example by setting up innovation hubs and running hackathons). It’s also necessary to stay competitive both in Vietnam as well as regionally and globally. There are significant market opportunities for innovative banks in Vietnam to improve the customer experience and reach new customers by investing in the digital banking experience. The most innovative banks will be those that grow and become market leaders.

The potential for digital banking is reflected in growing investment. The ADB will help the government develop digital banking in the context of the digital economy by working with the SBV, promoting industry collaboration in fintech and identifying pain points particularly related to financial inclusion and matchmaking, and piloting fintech solutions in partnership with banks and industry to help them scale up, such as Kiu using cloud ERP. The ADB is also working on other regional fintech pilots that could be suitable for Vietnam, with the potential to extend credit to agricultural SMEs and farmers through IoT, AI, and data analytics of satellite imagery.

Mr. Nguyen Ngoc Dung, Vice President, Vietnam Ecommerce Association

Banks in Vietnam are now pioneers in the application of information technology in the digital age. Non-cash payments, in which many banks have made great efforts over recent years, have grown slowly. Meanwhile, fintech in Vietnam is quite developed because the world is now flat. Advanced technologies found in Vietnam are on par with those around the world. The low growth in non-cash payments is not due to lack of advanced technology, economic development, or the habits of Vietnamese people, but is a barrier for the e-commerce industry.

For example, e-commerce is growing stronger in Hanoi and Ho Chi Minh City than in other localities because barriers are few for many people in terms of bank access and they have many bank cards. The payment problem remains, however, as some barriers to using bank cards for online shopping are difficult to address.

In addition, merchants who want to connect payments via payment gateways or e-wallets face difficulties in charges and other issues. Fees relating to organizations such as card issuing banks, card organizations, and payment intermediaries require coordination between parties for them to be cut. Buyers would purchase more online because they realize the benefits of doing so. The role of banks, payment organizations, and associations in localities and provinces in helping people access information on cards and payment methods is very important.

The “Cashless Payment Day” program held in June was a way to effectively communicate with people around Vietnam. In addition, at a recent conference I attended, speakers agreed that mobile money is a good solution for digital banking development and many issues were discussed relating to this solution. Implementation needs to be fully-coordinated among ministries, service providers, and associations.

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