In Race for Industry 4.0 Banking Products

10:44:41 AM | 2/2/2019

Most commercial banks in Vietnam have deployed extremely useful technology applications for customers. The application of technology also helps banks simplify procedures and reduce paperwork.

Diverse service and utility
Launched in the middle of December 2018, ABBank’s Visa contactless card has become popular with many advantages by integrating international credit card (Visa credit) with non-contactless technology. Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and American Express also launched Vietcombank Cashplus Platinum American Express offering unlimited cashback with the highest rate of return on the market and outstanding privileges of classy lifestyle. Vietnam Prosperity Joint Stock Commercial Bank (VPBank), the winner of “Outstanding Digital Banking Award 2018”, has provided credit card products with the entire process done online; overdraft products based on the value of available online savings of customers; and a series of new service bill payment features in the most diverse and practical service ecosystem to meet the increasingly expanding payment needs of customers on its e-banking channels. It is known that up to now, VPBank's ratio of transactions made on self-service transaction channels, including Internet Banking, Mobile Banking, ATM/CDM, POS has increased from 26% in 2013 to 92% at the present time. Online trading has also grown spectacularly over 100 times.

To face the trend of the industrial revolution 4.0, Vietnam Bank for Agriculture and Rural Development (Agribank) has also promoted the development of many electronic banking products to meet the users’ demands such as Agribank Emobile Banking (allowing customers to perform many banking and financial services such as money transfer in Agribank system, prepaid phone recharge, game card and phone cards purchases, bill payment, Vnmart e-wallet payment, and non-financial banking services such as information exchanges, air ticket information, investment management, information search, etc.).

At Tien Phong Commercial Joint Stock Bank (TPBank), the digitization process takes place with all banking products, services, from payment, money transfer, lending, savings to financial management.

In addition, there are many products and services of commercial banks using modern technology highly appreciated by consumers such as Vietcombank with digital banking space - Digital Lab, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) with new generation core-banking software and modern enterprise data warehouse (EDW), Military Joint Stock Commercial Bank (MB) with a virtual assistant application ChatBot serving round the clock on social networks.

The application of technology also helps banks simplify processes, procedures and papers. The previous traditional paper-based process may take several weeks, nevertheless, the application of digital technology leads to better and instant discussion, improved rotation work, reduced paperwork. Meanwhile, transparency also results in efficiency.

The results of the "Banking services, user behavior and trends in Vietnam" survey by International Data Group (IDG Vietnam) in 2017 show that electronic banking solutions (e-banking) are getting more and more popular and highly appreciated for convenience and time saving, with 81% of users using e-banking solutions compared to 21% in 2015.

According to Dr. Nguyen Viet Loi, Director of the Institute of Financial Strategy and Policy under Ministry of Finance, in the period from 2016-2020, the development of artificial intelligence (AI), blockchain, data science, digital identification and biometrics has created an important infrastructure base in asset conversion, from using traditional bank staff to increasing use of artificial intelligence, make digital identification become the basis of identification and secured through biometric elements such as voice or fingerprints.

According to experts, by 2020, the four most impacted areas of financial technology (FinTech) are consumer banking, transfer and payment, property management and insurance.

Policy gaps
Besides the great promising opportunities, the industrial revolution 4.0 also poses many challenges for Vietnam's financial and banking sector in the integration period.

According to economic experts, it is a policy gap that requires the development of new legal regulations to meet the needs of technology reform in the banking sector, managing monetary policy, resolving difficulties in controlling cash flow when electronic money increasingly used and widely accepted.

Dr. Nguyen Viet Loi said that financial institutions and traditional financial services are subject to many legal constraints. The safety and legal regulations for FinTech in Vietnam are not enough to ensure the safety of the system. The increased use of technology in the provision of financial services requires increased monitoring, supervising and enforcement of financial regulations in order to ensure system safety.

The State Bank has approached Fintech proactively by establishing a Steering Committee on Fintech with the important task of building a legal framework for this field. However, according to Dr. Nguyen Viet Loi, the development of Fintech in Vietnam shows that there is still a lack of policies to attract investment in this area.

Meanwhile, other challenges that each bank has to face include changing the governance model, business model, structure of products and services adapted to the customer trend of digital generation, the digital economy, as well as preventing network security risks and protecting the privacy of customer information in a digital era.

In addition, according to Mr. Pham Xuan Hoe, Deputy Director of Banking Strategy Institute, the banking system also faces difficulties in securing information and security of the national financial network, high-tech crimes as well as challenges in qualification, capacity, quantity and quality of IT staff.

Facing the opportunities and challenges of the industrial revolution 4.0, the banking industry has determined to focus resources on researching and improving the legal framework to create a good ecological environment for credit institutions and Fintech enterprises to develop financial products and services based on digital technology in order to increase access to financial services of people and businesses; to establish a monitoring and management mechanism in accordance with the Vietnamese context, common standards and good practices of the world.

At the same time, the banking sector needs to focus on investing and completing the infrastructure of information technology to be able to modernize and automate most banking processes, to develop banking services through digital technology applications, to build a modern branch model based on the technology platform of automation, multi-dimensional connection and intelligence of the industrial revolution 4.0.

Quynh Chi