Danang Hi-Tech Park
Dinh Vu

Economic Sector

Last updated: Wednesday, May 23, 2018


Money Sharpens Competitive Edge

Posted: Wednesday, January 04, 2017

Technological investment of Vietnamese banks is growing but they are still taking much time for this.

Banks in the Asia Pacific region invest about US$70.2 billion in technology each year. Malaysia takes the lead with US$12 billion / year.

In Vietnam, there are no official figures for the whole system but statistics from 13 banks and two universities, technological investment costs VND2 trillion a year, totalling VND11 trillion in the latest five years.

Security technology
Last year, the public was shocked at the disappearance of money from bank accounts. Hackers and customer information security and confidentiality are placed at the highest priority by banks. Banks will become targets of attacks by transnational criminals if they do not make strong investment for new technologies and better security systems.

Although the investment value is not high, all advanced technologies in the world have been widely used in Vietnam's banking system. A prime example is the replacement of traditional magnetic cards with EMV chip. In magnetic cards, accountholder information is stored in the layer under the magnetic tape, which is fixed and unencrypted. As it is stored in text, stealing card information is quite easy. For EMV cards, information is encoded into a chip on the card surface, thus helping enhance the security with cryptographic keys. A dynamic authentication process is applied in both the card and the card reader.

Moreover, all transactions must go through a closed verification process with three parties: payment bank, card organisation and issuing bank. Therefore, security is considered quite solid and secure.

Currently, EMV chip card security technology is considered modern in the world. In Vietnam, some banks such as Viet Capital Bank, VIB and ACB have applied this technology to protect the safety of customers although production costs are much higher than magnetic cards. In addition, many banks have strongly invested in 3D card printing technology, thus helping customers easily verify card authenticity with only the naked eye, and prevent the act of copying and tampering.

Security-enhanced technology also helps financial institutions understand more about their customers, simplify products and significantly improve customer experience platforms.

More money for technology
Mr Andrew Cranshaw, Executive Director of COPC Inc. in Southeast Asian region, said, recent studies showed that Vietnamese spend more time accessing the internet via computers and mobile devices than Americans. 27 per cent of Vietnamese consumers search for products only and 25 per cent of them make online purchases. A large part of new-generation consumers access interactive websites and social networks from mobile applications before they interact directly or call customer care centres. Poor interaction may disappoint customers. This has forced banks to seek a comprehensive solution to exactly address customer issues to enhance their competitiveness.

Technological restrictions inhibit local banks from upgrading customer services. For example, when using personal financial services such as cash withdrawal or money transfer via internet banking and ATM in Vietnam, customers usually must call banks for assistance in case of incident. Only after they explain the incident, banks will begin to take action. Meanwhile, in regional countries such as Thailand and Singapore, customers will be notified with cause and guide immediately via SMS when they confront transaction incidents.

According to experts, the upcoming competition in service sectors, especially banking, lies in technology-powered governance. This is also the reason for Vietnamese banks to rush for recent technology investments.

Some domestic banks like ACB have invested a lot in technology. Every year, the lender bank spends US$7-10 million on technology investment from 2012 to 2018.
With the target of taking the lead in digital banking in Vietnam, OCB has invested in state-of-the-art technology, OCB executive said.

Banking specialist Can Van Luc recommended banks to make more investment in technology because information technology is booming and the financial market is more and more complicated, sophisticated and interconnected.

He added that technology investment will bring net profit of 15-17 per cent.

Bao Chau


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