The global economic crisis challenged banks in Vietnam to adapt to new contexts to survive, including enhancement of governance, administration, IT application to expand banking services, and market expansion. IT investment is now a top investment priority for most banks.
Remarkable achievements
Mr. Nguyen Toan Thang, Vice Governor of the State Bank of Vietnam (SBV), said the banking innovation project and interbank e-payment system as well as sub-projects conducted by SBV have achieved considerable results. The project aims to transform the traditional payment practices of financial institutions and individuals nationwide. This will enhance competitiveness within the whole economy as well as the banking system and meet the nation’s development goals.
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Banking Vietnam 2009 Opens in
Hanoi
The Information Technology Department of the Bank and the International Data Group co-organize the three-day-event “Banking Vietnam 2009 Hanoi Conference and Expo” on 27-29 May 2009 at Melia Hotel, 44 Ly Thuong Kiet, Hanoi Vietnam.
Featuring the theme “Risk Management & Banking Development in the Global Economic Downturn”, Banking Vietnam 2009
Hanoi focuses on two hottest issues (i) Risk Management in the Economic Downturn and (ii) IT investment to develop advanced and efficient banking service. These issues are a major concern of entire banking system to enhance of risk management and sustain transparent and healthy financial status.
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With the completion of phase I of the project, the SBV’s core banking system has been comprehensively overhauled, and has resulted in a higher throughput and value of transactions. Phase II (from 2003 to 2010), will connect all of the 63 provinces in a single network and will become the backbone of the nation’s banking system.
In May 2008, the Vietnamese banking industry saw a leap forward in payment systems. The two biggest ATM alliances BankNet and SmartLink united to deliver a wider range of card payment services for customers.
Arguably, Vietnamese banking activities have never attracted more care than now. Banks are providing a wide range of products and services for their customers while the entire industry is developed in scale and quality.
Credit institutions also pushed their products and services to their customers. The number of bank service users increased thanks to higher quality and more utilities. They are expanding transaction offices, ATM, points of sales (POS), mobile banking and internet banking. ATM and POS systems have been quickly enlarged to facilitate card payment demands. For instance, Dong A Bank (DAB) reported annual card growth rate of 130 per cent in the 2003-2008 period, raising the total number of cards issued to 2.5 million in 2008. The lender is operating nearly 1,000 ATMs nationwide.
At present, most banks are investing to widen networks and upgrading technologies to adopt and introduce more modern products and services, reaching world-class standards.
Potentialities
So far, cash is still the main means of exchange in Vietnam, accounting for more than 17 per cent of total payment instruments. In 1997, the ratio was 32.2 per cent in Vietnam. It took more than 10 years to lower this rate to around 20 per cent. According to an official statistic from the State Bank of Vietnam, banks in the country are serving 15 million bank cardholders. This figure is small in relative to the country’s population of over 85 million people. Less than 10 per cent of the population have access to banking products and services.
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According to the financial insights of the IDG, despite tightening budgets, banks are increasing investments in technology to be more efficient and less costly in operation. The 10 trends of development strategies in the Asia-Pacific region are: IT optimisation, risk management and compliance, a customer-centred approach, payments, supporting the growth of deposits, core banking changes, outsourcing and alternative delivery models, cash and liquidity management, security and information system integration, and mobile financial services.
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The Vietnamese Government as well as the State Bank of Vietnam has enacted many decrees and regulations to popularise the use of banking services. For instance, Decree 20 provides compulsory salary payment via bank accounts. The above figures reflect the strong development strategy of banking and financial services in general and retail banking services in particular.
According to economic and financial specialists, the Vietnamese retail banking market may grow over 25 per cent per annum in the next five years. However, Dr. Dinh Quang Nuong, Head of Retail Banking at Dong A Bank, said it was not easy to obtain such an achievement. It required a combination of policy, education and cooperation from central to local authorities as well as continuing efforts from credit and financial institutions. The harmony will bring banks to customers and vice versa.
According to statistics, global banks introduced thousands of retail banking products and services while Vietnamese concerns can serve 200 products and services. Thus, foreign lenders like ANZ, HSBC and Standard Chartered are focusing on expanding retailing banking services in Vietnam. Vietnamese commercial joint stocks banks like ACB, DAB and Techcombank are developing technologies to introduce new services.
Mr. Le Manh Hung, Director of IT Department of the SBV, said although banks increased investments for IT applications, there were still many shortcomings. At the Banking Vietnam 2009, Mr. Hung said the banking industry is stepping up investment for IT renovation but not all banks can support and follow this work.
Nguyen Thoa
Vietnamese
