The Vietnamese banking system had significant changes in entities and structures of credit institutions in general and commercial banks in particular in the 2006 - 2010 period, while it witnessed a strong boom in banking products, services and sales channels in the 2011 - 2015 period. And, the latter phase also posed certain challenges.
Boom in service forms
Banks have made handsome investments in ATMs, POS, Internet Banking and Mobile Banking channels. According to statistics, ATMs increased 1.5 times in number from 2011 to 2014, POSs increased 2.5 times, and the bancassurance channel also expanded. More banks deployed and expanded electronic banking channels.
Besides, banking products and services are being diversified. They have reached international modern levels, thus bringing more benefits to businesses and citizens. As of December 2014, up to 80.39 million bank cards had been issued in Vietnam. The quality of banking products and services has been constantly improved in technologies, utilities and transaction procedures and the service time is shortened and available around the clock with autobank services.
Mr Pham Xuan Hoe, Deputy Director of the Banking Strategy Institute under the State Bank of Vietnam (SBV), cited a survey as saying that 90 percent of corporate respondents said banking services are convenient, 100 percent said they are secure, and 70 percent said service fees are reasonable. Nearly 100 percent of ATMs operate every hour in the day. Banking service charges have fallen sharply while service quality and people’s incomes have increased significantly. Besides, most credit institutions have applied information technology to managing and transacting banking services and products with customers. Vietnam’s ease of credit index in 2015 ranked 36th out of 189 economies - a relatively good position for a economy such as Vietnam.
Furthermore, bancassurance channels are also developed across commercial banks. In 2011 and 2012, banks raced to launch bancassurance services. Although bancassurance revenue only accounts for about 3 percent of total insurance revenue, its growth is very strong.
Challenging
He added that the current issue of the banking sector is unbalanced access to banking services in the population and among economic entities. An estimated 22 percent of rural population had bank accounts as of the end of 2013. Only 20 percent of rural people with savings use banking savings services.
The credit access index of the economy has been improved significantly but, according to the World Bank's scoring criteria, limitations primarily lie in the perspective of lender protection. Modern banking services, especially electronic payment methods, have made breakthroughs, but the limited popularity of service use is incommensurate with its potential. Operational risk management of some credit institutions in the course of product and service provisions has not been focused when they are implemented,
This imbalance results from three sides: banks, individuals - businesses and the business environment, Hoe said. On bank side, the current coverage of banking services is uneven; well-designed banking products and services are not enough; the popularity of products and services remains limited; and the development level of capital markets is low. On individual and business side, rural people lack capabilities of creating production and business plans/projects; the official agricultural insurance market is undeveloped; information of small and medium-sized enterprises (SMEs), persons and families is incomplete; the SME sector has low effective business performance, low profitability, small financial capacity and weak governance capacity. On business environment, the enforcement of regulatory policies and laws is inconsistent.
Hoe proposed four major orientations to address these problems: Developing Vietnamese market-driven, customer-centred banking services on modern technological platform to (1) serve, form and integrate many channels, (2) distribute products on traditional channels, associated channels and modern channels (via electronic media), (3) enhance the diverse and convenient design of banking products and services from simple products and services that fit most users, particularly rural people, to advanced products and services for high-grade customers like financial consultancy and asset management, and (4) operate in a stable macroeconomic environment, a dynamic business environment and a consistent institutional environment that respects market principles of equitably protecting interests of customers and suppliers of banking products and services.
Thu Ha
Vietnamese
