Việt Nam to develop digital financial ecosystem

June, 20/2022 - 08:19

Việt Nam will need to speed up the digital transformation in its financial services sector in order to develop a digital financial ecosystem, experts said at a forum last Friday (June 17).

 

Vũ Viết Ngoạn, former chairman of the National Financial Supervisory Commission, speaks at the Financial Services and Open Banking Forum 2022 last Friday in HCM City. Photo courtesy of the organiser 

HCM CITY — Việt Nam will need to speed up the digital transformation in its financial services sector in order to develop a digital financial ecosystem, experts said at a forum last Friday (June 17).

Speaking at the Financial Services and Open Banking Forum 2022, Vũ Viết Ngoạn, former chairman of the National Financial Supervisory Commission, said the fourth industrial revolution was an inevitable development trend for businesses, consumers and society. 

It is important to speed up digital transformation in the financial sector to develop the digital economy and society.

The financial services sector is expected to play a major role in establishing a fully digitised, human-centred system, following the State Bank of Việt Nam’s guideline for digital transformation by 2025, he added.

The country’s digital transformation is likely to intensify in 2022, unlocking previously untapped potential, especially within the financial services sector. 

2022 is also a critical year for the digitalisation of financial products and services, as the habit of using digital products has become widespread since the COVID-19 pandemic.

Nguyễn Quốc Hưng, secretary-general of the Việt Nam Bank Association, said while the COVID-19 pandemic has caused serious impacts on the country’s economy, it has catalysed digital transformation across all sectors, particularly in financial services.

With a tech-savvy young population and relatively high smartphone penetration rate, the country has seen a surge in digital payment volumes, from online marketplaces, bill payment services, retail outlets, to small convenience stores, and even vegetable and fruit vendors.

Nguyễn Trọng Dương, deputy general director general of Department of Enterprise Management under the Ministry of Information and Communications, said technology is rapidly reshaping the financial services workforce. 

Technologies such as online payments, mobile banking, and e-commerce can now be accessed easily since banks and financial services from start-ups to institutions are adopting advanced technologies and services across the board.

To deploy technology successfully, organisations in the financial service sector will need to start paying more attention to how humans and digital labour can work alongside each other. 

Technologies that are being adopted include blockchain, artificial intelligence (AI), cloud computing, machine learning, and customer data collection, management and analysis, they added.

Other experts at the forum said digital transformation would allow Vietnamese banks to capture a larger amount of data from an increasingly high number of sources. Utilising this data serves both decision-making and the customers. 

It also enables the banks to reduce costs while growing operational efficiency and revenue. This will be generated through innovation in products, services, and distribution channels, thus enhancing the customer experience. 

Open banking is one of eight fintech trends that will reshape the banking industry, which has become one of the most important global trends in the banking ecosystem in Việt Nam, they said.

The government is improving financial inclusion in the country, with a strategy introduced in 2020 which aims to have 80 per cent of the adult population formally ‘banked’ by 2025. 

Digital banking technology is seen as a key driver of financial inclusion in the region, enabling banks and financial institutions to reach customers in areas where physical access to a bank branch is not possible. 

Speaking at a recent meeting, Phạm Tiến Dũng, deputy governor of the State Bank of Vietnam, said around 95 per cent of banks in Việt Nam have embraced a digital transformation strategy.

To date, nearly 80 banks offer internet banking solutions and mobile banking services are available at 44 banks. Việt Nam has 45 intermediary payment services providers, over 90,000 QR code payment terminals and close to 298,000 point-of-sale (POS) terminals in place, he noted.

Experts however said as digital financial services are still a new field, the legal framework is still incomplete and has not kept up with reality. 

Trần Thị Thúy Ngọc, general director of Deloitte Việt Nam Auditing Company, pointed out the lack of human resources with relevant and up-to-date skills as a major challenge to digital transformation in the financial services sector.

Recommendations

Experts recommended financial institutions constantly update the way they operate. 

As consumers demand faster, seamless, and more secure transactions when banking and shopping online, financial institutions must continue to adopt new operations to improve their service and keep customers safe. 

In addition, digitalisation within the securities industry has been focused mainly on enhancing customers’ experience, online account opening, fast and proactive processing of payments and trading online. 

Succeeding in digitalisation requires securities firms to rethink every aspect of how they operate to adapt to the market’s needs while maintaining their inherent position, creating a driving force toward financial inclusion.

According to the Việt Nam Securities Depository, as of the end of April, the number of domestic trading accounts exceeded 3.1 million, of which 3.09 million are from individual investors.

An exhibition organised along with the forum introduced the latest information technology advancements for the financial industry’s digital transformation, including artificial intelligence, cloud computing, and big data.

The event was  jointly organised by the Vietnam Association of Securities Business, the Vietnam Digital Communications Association and the International Data Group (IDC Group) in Việt Nam. — VNS