E-Banking: A Breakthrough for Vietnamese Banks

E-Banking: A Breakthrough for Vietnamese Banks

Time taken for monetary transfers between places in Ho Chi Minh City has been cut from 2-3 days (longer between the city and other localities) to just 10 seconds since local banks have adopted electronic banking systems. The technology not only helps clients save time but also increases the effectiveness of banks' capital usage.

Using the system, payment orders will be transferred from a bank's branch or a transaction office to a server at the central bank for balancing before going to receiver's account at the destination bank.

The electronic transfer systems operate 24/7, with all activities now automated.

According to the calculations of the State Bank of Vietnam (SBV) Ho Chi Minh City Branch, by using manual measures, it can only conduct 800 payments per day, compared to the 11,740 offered by the electronic systems. In the near future, the rate will be much higher.

Last year, some 2.12 million transactions transferred a total of VND575.55 trillion (US$36.66 billion) via electronic payment systems operated by Ho Chi Minh City banks. The daily value of money transferred through the systems has increased from VND2,293 billion in 2003 to VND3,710 billion daily so far this year.

The payment mode is now welcomed by most local enterprises. Therefore, despite heavy capital requirements, domestic banks were still ready to invest in their own e-banking systems. Investment will return soon thanks to high liquidity of banks' capital.

According to banking staff, transactions via the e-banking system are easy because the systems have been automated and standardised. Furthermore, payment procedures were cut to facilitate clients' adoption of the system.

With e-banking systems being installed at some local banks, customers will be able to deposit their money in one place and withdraw money at other places.

The systems have helped banks improve the quality of their service offerings and helped them use funds in the most effective way, said general director of the Asia Commercial Joint Stock Bank, Phan Van Thiet.

However, local commercial banks are now facing the problem of low-speed transmission lines. They are mostly using telephone lines for their electronic payment systems so breakdowns may occur when a great amount of payment orders coincide.

• Hoa Binh