Vietnamese banks should adopt an integrated, long-term approach to modernizing payments, according to a recent report from PwC.

In its “Emerging Markets - Driving the Payments Transformation” report released on July 19, PwC analysts wrote that Vietnamese banks are investing more in their information technology (IT) infrastructure.

“Driven by customer needs, more and more Vietnamese banks are investing in their IT infrastructure to enable the issuance and acceptance of new payment methods and instruments," said Mr. Tran Quoc Dung, Partner, Technology Consulting Services, at PwC Vietnam. "They are directing more resources to digital banking and exploring ways to leverage cloud computing and social media.”

“Going forward, it’s important that Vietnamese banks uphold an integrated, long-term approach to modernizing payments.”

The PwC report looks at the dynamic nature of emerging markets, especially regarding payments, and the challenges created that have never confronted the developed world but which also open up opportunities for innovation and growth.

Nearly 90 per cent of people under 30 years reside in emerging markets and the same demographic also accounts disproportionately for online transactions. Most of the 2 billion people not using banking reside in emerging markets and 89 per cent of payment executives in emerging markets believe that products and business models need to change to meet future customer expectations. The report also revealed that a new breed of mobile and FinTech innovators are disrupting the payments market with innovative customer-centric business models.

“Given the large unbanked population and the growing regulatory agenda to engage these people into the financial system, emerging markets are in a unique position to drive growth in the payments industry,” said Mr. Hugh Harley, Financial Services Leader for Emerging Markets at PwC. “FinTech companies can work as a catalyst in the growth story, enabling these new platforms to be leveraged for the benefit of the wider population.”

The PwC report also noted that the payments landscape in emerging markets is expected to transform on the backbone of accelerating growth in electronic payments given the advent of new and disruptive market players and alternative business models.

The growth of economic power within emerging markets and their potential to leapfrog developments in mature markets will aid the creation of a state-of-the-art payments ecosystem, which will set the pace for markets worldwide.

The key factors shaping this transformation will be the impact of technology, shifting customer expectations, changing global demographics, the rise of e-commerce, and growing regulatory supervision. The transformation will also be characterized by convergence across markets focusing on products and solutions and by technology and business/operating models linked to payments, which will be global in nature and reach.

The report showed that cutting-edge technology will reshape the next-generation payment systems, with both FinTech and established players driving innovation. The payments ecosystem will also be redefined by regulatory interventions, which are balancing the disruption of alternative payment service providers (PSPs) with the reliability of traditional players.