This trend is indicative of behavior in Vietnam, which has shown significant advances in digital banking use since McKinsey’s 2014 survey, with digital banking penetration increasing to 48 per cent since and digitally-active customers buying 1.3 times more products than non-digital customers.

The digital banking penetration rate of 48 per cent is lower than the median for Developed Asia of around 97 per cent and 52 per cent for Emerging Asia. The percentage of digitally active customers (those who use digital banking on a fortnightly basis and have made e-commerce purchases in the last six months) has grown significantly since 2014, growing four times (to ~30 per cent in 2017). This trend shows the increased relevance of digital channels for day-to-day customer operations. 

Further, digitally active consumers bought ~1.3 times products compared to non-digital consumers in the past 12 months and own ~1.6 times products, indicating a strong correlation between digital engagement and value generation. 

The survey results highlight a significant opportunity for digital banking entities: approximately 60 per cent of customers in Vietnam would consider opening an account with a branchless digital-only bank, and those willing to bank digitally would be willing to shift ~30 per cent of their total wallets to the digital account.

The survey covered around 17,000 respondents from 15 Asian markets, with a number of broader findings across Asia. Digital banking penetration has doubled in Emerging Asia, growing 1.5 to 3 times since the last survey in 2014. Smartphone banking penetration has grown at a faster pace than overall digital banking, jumping two- to four-fold in many Emerging Asian countries. 

Nearly half of Emerging Asian respondents not using digital banking today are likely to do so in future, meaning digital banking penetration is expected to accelerate significantly. The percentage of digitally-active customers has grown significantly since 2014, doubling in Emerging Asia and growing 1.2 times in Developed Asia. 

These trends demonstrate the increasing importance of digital channels for day-to-day customer operations across the region and highlight a significant opportunity for digital banking entities. 

Approximately 55 to 80 per cent of customers in Asia would consider opening an account with a branchless, digital-only bank, while 35 to 50 per cent of consumers change their purchasing decisions based on evaluations done on digital channels. 

“For banks, these changes represent both a challenge and an opportunity,” said Mr. Vinayak HV, Partner at McKinsey & Company and Head of the Asia Pacific Digital Banking Practice. 

“What’s clear is that they cannot rely on their existing business models and need to consciously invest to change their businesses in line with rapid changes in consumer sentiment and behavior. Many are already doing this or looking to both protect their existing share and capture newer opportunities. Meanwhile, shifts in consumer behavior is also creating opportunities for newer attackers both platform players and emerging fintechs.” 

McKinsey’s proprietary Asia PFS Survey has been conducted every three years since 1998 and now covers around 17,000 respondents from 15 Asian markets. Each new survey is refreshed to address changes in customer behavior, reflecting themes like digital banking and the use of fintech or non-banking payment solutions. 

The 2017 edition covered Australia, China, Hong Kong (China), India, Indonesia, Japan, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam. 

VN Economic Times