Banks Leading Digital Transformation Wave

The digitalization rate of the banking industry, a pillar of the economy, is exceptionally high and experiencing strong growth.

Many commercial banks report 97-98% of transactions are conducted through digital channels

Remarkable progress

Mr. Pham Tien Dung, Deputy Governor of the State Bank of Vietnam (SBV), said, the banking industry has made remarkable strides in digital transformation, supported by an open legal framework for new technologies. The SBV has led the way by accepting eKYC for account openings since 2021 and recently implemented authentication with chip-embedded citizen ID cards, enhancing convenience and security for services like guarantees and online lending.

“The legal corridor has paved the way for the banking industry to apply technology and meet online transaction demands by people and businesses in the digital age,” he emphasized.

Many commercial banks have witnessed 97-98% of transactions executed on digital channels. Digital banking transactions have annually grown at a double-digit pace in both the number and value of transactions.

Mr. Nguyen Quoc Hung, Vice Chairman and General Secretary of the Vietnam Banks Association (VNBA), said the Vietnamese and global banking industry is undergoing an important turning point in digital transformation. Technologies such as big data, artificial intelligence (AI), augmented reality (AR) and open banking platforms have contributed to improving service quality and enabling around-the-clock transactions of customers.

AI applications have become a prominent trend in global business, particularly in the banking sector. Currently, 85% of banks have implemented AI strategies for developing new products and services, with over 59% of employees incorporating AI into their daily operations. Investment in Generative AI (GenAI) is projected to soar from US$6 billion in 2024 to US$85 billion by 2030, representing a staggering growth of over 1,400%. This trend underscores a significant transition from traditional and digital banking to AI-driven banking solutions.

The quality and value of electronic transactions have grown significantly. Many banks have witnessed over 90% of transactions performed via digital channels. Over 80% of adults have payment accounts. Over 200 million customer profiles, both individual and institutional, have been registered with credit institutions and payment intermediaries. Among these, 46.7 million profiles include biometric information from chip-embedded citizen ID cards. The financial switching and electronic clearing system processes more than 20 million transactions daily, while the interbank electronic payment system has achieved an average annual transaction value growth of over 23.5%, handling daily transactions exceeding VND830 trillion.

To provide high-tech and highly personalized banking products and services to enhance customer experience, data collection, exploitation and processing are always considered important, Hung added. The entire banking industry has focused on cleaning up all 51 million customer data at the Vietnam National Credit Information Center and credit institutions to make sure that 100% of customer data is authenticated with the national population database.

Security and safety above all

As a sector that plays a pivotal role in the economy, the asset value of the banking industry’s cyberspace is huge, so it is increasingly becoming the target of massive cyberattack campaigns. Therefore, challenges in respect of information security and safety are increasingly grave, especially when targeted cyberattacks on the banking system and customer fraud are increasing.

To cope with this reality and adopt a safe and sustainable operating strategy, the banking industry needs to constantly improve cybersecurity measures while raising security awareness for customers in online transactions, building a cooperative environment where banks can share and learn from each other's experiences, he said. Ensuring information security is a core factor for the banking industry’s sustainable development in the digital age.

Mr. Le Van Tuan, Director of the Authority of Information Security (AIS) under the Ministry of Information and Communications, said, to effectively ensure information security in the banking industry, it is essential to rigorously apply information security laws and implement comprehensive system-level regulations. Each unit should develop a plan that encompasses monitoring, protection, rapid response and recovery measures. Investing in modern technologies and enhancing staff capabilities is important. Regular drills should be conducted to identify vulnerabilities, and a collaborative coalition for incident response must be established. Ongoing training is important to raise awareness among all information security personnel.

Mr. Pham Anh Tuan, Director of the Payment Department, SBV said that the SBV together with commercial banks and payment service providers will collaborate to review and advance the goals outlined in Decision 810/QD-NHNN on the Banking Digital Transformation Plan. They will refine institutional frameworks and work closely with the Ministry of Public Security to implement Project 06 applications. Additionally, the SBV will enhance infrastructure capacity and security while increasing user awareness and knowledge about cyber fraud.

By Phuong Anh, Vietnam Business Forum