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Vietnam ‘promised land’ for digital banking

Vietnam is among the regional countries that are seeing new digital bank models, experts have said.

A recent report by Boston Consulting Group on digital banking in the Asia-Pacific listed various factors that make Southeast Asia and India "promised land" for digital banks.

Vietnam, promised land, digital banking,  new digital bank model, huge potential, banking industry revenues

Vietnam is considered a ‘promised land’ for digital banking.

The segment has huge potential in the region since digital adoption has grown rapidly in recent years, with the region now home to a digitally connected population of over 400 million.

This figure is likely to grow substantially in the coming years as mobile penetration and 4G coverage expands in a region with a population expected to reach 542 million by 2030.

Malaysia, the Philippines, Vietnam, and Thailand are first off the blocks in welcoming the new model.

Vietnam’s banking industry revenues could rise to US$27 billion by 2024, equivalent to annual growth of 13% since 2019 and the highest in Southeast Asia.

According to Finance magazine, in Vietnam, with its young population, technology and internet accessibility are high, and the percentage of the population using smartphones is increasing rapidly.

Creative marketing agency Adsota, in its Vietnam digital advertising market report for July 2020, had said 43.7 million people use smartphones, or 44.9% of the population and among the 15 largest markets.

Nirukt Sapru, global advisor of Timo Digital Bank, shared: “There is a significant opportunity for Vietnam to attract FDI in the digital banking space. Both banks and private equity firms continue to be attracted to the Vietnamese market by the digital-savvy consumer in Vietnam. The opportunity includes using digital banking to tap the unbanked as well as provide customised solutions to the rising middle class.

“I think that the digital banking and finance sector in Vietnam will still have many opportunities for development in the near future if we can reach the customer base who do not have a bank account or upgrade service experience towards personalisation to create novelty and breakthrough.”

Experts said digital banks need to overcome many barriers to being recognised as traditional landers in the next 10 years.

Speeding up regulatory approvals for digital banks is important.

Experts said it is necessary to speed up enactment of laws to enable them to keep pace with the development of the finance and technology sectors.

The banks themselves need to have long-term plans and the vision to invest in technology, regular improvement, maintenance, and system to enhance their competitiveness.

They also need to have good training programmes since digital banking is a relatively new field in the country, and their human resources are mainly recruited from traditional banks with banking and finance expertise or from technology companies.

Digital banks also have to compete with fintech companies who pay top dollar to attract quality personnel.

They are always prime targets for cybercriminals, and so, to build trust in customers, need to ensure the safety and confidentiality of information.

Vietnam is the country with the lowest population rate served by banks in the region -- of just over 40%.

So the habit of using cash remains widespread.

Changing people's consumption habits is also a challenge for Vietnamese banks’ digital transformation, experts said.

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Source: NDO/VNA

Vietnam, promised land, digital banking, new digital bank model, huge potential, banking industry revenues
 
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