Building National Brand for Banking and Financial Technology

Financial technology (Fintech) will enable businesses to access new markets and provide equal opportunities for competitors, forcing them to continuously innovate products and service skills to compete successfully.

Much room for development

Digital transformation is an indispensable trend of businesses and fintech is the focus that needs to be included in their branding strategy. The advent of fintech has resulted in numerous changes and dramatically changed behaviors of financial consumers. Customers enjoy more benefits from financial services, including consulting, and becoming less loyal to financial service providers because of more available choices. In addition, fintech offers business cooperation opportunities with commercial banks and fosters multichannel development and financial products and services for customers.

According to data from Fulbright University, Vietnam currently has 166 fintech companies. According to experts, Fintech companies in Vietnam are currently operating in electronic payment, digital banking, peer-to-peer (P2P) lending, blockchain, crowdfunding and credit rating.

Particularly, the payment sector accounts for the largest share, 47% of fintech companies, and 98% of the fund invested in fintech in Vietnam in 2019 and P2P lending is the second largest with 20 companies, typically Tima and Vaymuon.vn, according to UOB.

A recent survey by United Overseas Bank Limited (UOB) also showed that the fintech sector in Vietnam achieved impressive growth, from 74 companies in 2017 to nearly 140 companies by the end of 2019.

Dr. Can Van Luc, an economic specialist, said Vietnam has many advantages for fintech development, such as a large domestic market, relatively young population, high rate of smartphone users, and e-commerce growth of 25-30% annually in the next five years. Investors have begun to pay more attention to Vietnam. In 2019, the country ranked second in fintech investment in ASEAN, only after Singapore.

Although there is much potential for development, fintech still faces numerous risks and challenges, first of all legal, policy and cultural issues, he said. Mechanisms and policies are changeable and inconsistent. Moreover, regulations on Fintech (sandbox form) have not been enacted, and lack common standards. Data have not been shared and paper-preference culture and cash usage are still heavy.

Furthermore, the national identity database and business data are insufficient, fragmented, outdated, inconsistent and unsynchronized, while challenges of safety, security and cybersecurity also threaten fintech development in Vietnam.

Quick completion of legal framework

Information Technology 4.0 opens a new era for the banking and finance industry. To develop in the future, it is vital to integrate Fintech into the branding strategy of any company, but one of the first things to do is to urgently complete the legal corridor for this domain.

To develop Fintech and accelerate a robust development of the banking and financial technology industry, catch up with world development, according to experts, it is first of all necessary to quickly complete the legal framework for fintech management in the following approach: Open but risk-controlled (sandbox style), institutional improvement, and fintech management bodies.

Besides, it is necessary to create confidence, build an ecosystem and an environment for innovation, introduce common standards and regulations on the ecosystem of banks, fintech, chain stores and e-commerce sites. Fintech must meet capital, technology, performance standards and risk management requirements.

Regarding national fintech branding, Dr. Nguyen Tri Hieu, a banking and finance expert, said that the banking industry must first of all take advantage of Information Technology 4.0 to transact and connect with customers and build high-tech products and services, both convenient and with lower costs for customers, while keeping information confidential.

Sharing this point of view, Dr. Pham Xuan Hoe affirmed that commercial banks will have to re-study their vision strategy and governance in the digital age. They have to make a huge technology investment to change core banking to integrate multi-channel supply to customers. They must make investments and change their operating processes and internal processes. To digitize processes, banks must rewrite their processes.

Giving advice to Vietnamese businesses, Dr. Vo Tri Thanh, Director of the Institute of Brand and Competition Strategy, affirmed that businesses need to seriously invest in technology if they want to have development advantages in the future. Fintech is a focus that should be included in the branding strategy of the business.

“Doing that will help businesses develop their brands faster, stronger and more sustainably," he emphasized.

By Ha Thu, Vietnam Business Forum