Finance & Banking
Last updated: Thursday, March 23, 2017
Opportunities from Digital BankingPosted: Tuesday, December 20, 2016
The boom of information technology is currently forming digital banking - a new retail banking trend, which brings new opportunities for commercial banks but also poses challenges needed to be addressed to bankers.
This is also the main content of the Vietnam Retail Banking Forum 2016 themed “Building your bank and driving profitable customer engagement in digital world” held in Ho Chi Minh City by the Vietnam Banking Association (VNBA) and International Data Group (IDG).
Digital technology will change electronic payments and retail banking in Vietnam in the near future while creating distribution channels, products and services and competitive environments different from those of the traditional commercial bank system.
Speaking at the forum, Dr Can Van Luc, a financial and banking specialist, said, the development of information technology gives rise to the development trend of digital banks and Vietnam is not an exception in that trend. He said, compared with some countries in the region such as Indonesia, the Philippines and Malaysia, the potential of digital banking growth is still very huge in Vietnam because the country has a young population and an internet access growth.
According to the International Business Monitor (BMI), Vietnam has a relatively high internet growth (9 per cent/year) and its internet coverage ranked 15th in the world. Besides, 52 per cent of Vietnam's population have access to the internet and 44 per cent of customers of Vietnamese commercial banks use digital banking services.
Besides, digital bank development is also a true demand from banks seeking to expand distribution channels, changing competitive edges and cutting costs.
Specifically, according to experts, digital technology-powered business will contribute 44 per cent of banks’ revenues in 2018, compared with 32 per cent in 2013. Big data and business analytics help create a difference and improve efficiency. However, changes in technology investment and digital bank development will positively help reduce operating costs and profits while pose increased risks.
Accordingly, associated risks such as information leakage, customer data, transaction fraudulence and hacking also appear. Mr Tran Viet Thang, Director of Information Technology at Military Bank (MB), said the deployment of digital products and services is a challenge for banks because they must meet customer requirements while balancing emerging risks and building secure technology system. Risk management must be properly addressed to minimise risks to both customers and banks. Policies for general banking risk management and digital risk management are essential. For that reason, digital banking development is a long-term business and the investment cost is a real challenge to many Vietnamese companies.
According to experts, to create a platform for digital bank development, Vietnamese banks need to have suitable personnel and governance for digital banking strategies. They must have steps for appropriate human resources (skills, knowledge, business culture), media management and social networking information, information platform upgrading, security risk management plan and customer classification.
Besides, banking systems need to expand cooperation with retailers to expand their service capacity for digital service demands from customers while ensuring network quality, convenience and security.
For its part, the State Bank of Vietnam (SBV) needs to accelerate the deployment of noncash payment scheme, build a legal framework for acceptance of digital and electronic transactions and electronic signature, and coordinate with banks to manage virtual property and virtual money.
Mr Tran Nhat Minh - Deputy General Director and Digital Banking Technology Director, Vietnam International Bank (VIB)
In Vietnam, to get digitalised, banks should carry out digitalisation processes at customer contact points, enhance digital technologies in products and services, meet customer demands, enhance long-term value for customers, and utilise digital technology to develop new businesses.
In particular, major challenges to digital bank development are changing business culture, balancing between information technology with business and investment budget, and information technology platform of businesses and the nation.
Mr Sujeeth Samrat - Senior Consultant at Infosys
The trend that customers search and apply digital contents in various fields to benefit from new products and services is developing strongly across the world, including Vietnam.
Commercial banks need to seek solutions to attract customers with new products and services to better serve them. It is important that banks must self-position and choose appropriate digitalisation development strategies based on current structures, technologies, data and business models. For example, they can promote cooperation with retailers to expand their service capacity for digital service demands from customers while ensuring network quality, convenience and security.
Mr Matthew B Martin - Chief Technology Officer of Asia Commercial Bank (ACB)
New approaches for the banking sector in the digital age include electronic signatures, online shopping and social media centre.
Therefore, to be successful in developing digital banks, it is vital to define the unique character of its customers as well as what they expect and care.
To survive and develop, each bank must become a technology company and a digital technology company.