Risk management: identify and assess climate change risks, therefore banks can takesteps to mitigate these risks and ensure the long-term sustainability of their lending andinvestment ac
BANKING ACADEMY ADVANCED PROGRAM GROUP ASSIGNMENT: COMMERCIAL BANKING MODULE CODE : FIN09H TOPIC: ‘THE ROLE OF COMMERCIAL BANKS IN PROMOTING SUSTAINABLE DEVELOPMENT OF ECONOMY’ Group - Class K24CLCTCB Instructor : Ts Nguyen Thi Diem Huong Group members: Vu Thu Thao ( leader) 23A4010609 Pham Thuy Nhung 24A4012965 Tran Thi Hong Nhung 24A4013122 Nguyen Nhat Minh 24A4010767 Huynh Ngoc Mai 24A4013111 Ha Noi, 2023 TABLE OF CONTEN Liturature review 1.1 Definition and frameworks to calculate sustainable development of economy 1.2 Role of commercial banks in promoting sustainable development (NCKH) .2 Liturature Sustainable developed activites of Vietnam commercial banks 2.1 Green banks development 2.1.1 Environmental policy in credit appraisal 2.1.2 Green credit 2.1.3 Green bond 10 2.1.4 Community social activities 11 2.2 Digital banks development 12 2.2.1 Payment .13 2.2.2 Lending 14 2.2.3 Saving 16 2.2.4 Blockchain 18 Assessment of the activity of Commercial Bank .19 3.1 Assessment of the activity of Green Bank 19 3.1.1 Achievements .19 3.1.2 Limitations 19 3.1.3 Solution 20 3.2 Assessment of the activity of Digital Bank 22 3.2.1 Achievements .22 3.2.2 Limitations 22 3.2.3 Solution .23 References 26 Liturature review 1.1 Definition and frameworks to calculate sustainable development of economy There are different definitions of sustainable development of the economy, depending on the perspective and context of research (1) Economic sustainability is a broad set of decision-making principles and business practices aimed at achieving economic growth without engaging in the harmful environmental trade-offs that historically accompany growth Ideally, sustainable development creates operational systems that consume natural capital (also known as natural resources) slowly enough that future generations can also use those resources) (MasterClass, 2022) (2) Sustainable development of the economy is a concept that aims to balance the economic, social and environmental aspects of human activity, while ensuring that the needs of the present generation are met without compromising the ability of future generations to meet their own needs (Barbie, E., 1987) It is based on the recognition that natural resources are finite and that human activities have impacts on the environment that need to be managed and minimized (Kieren Mayers, Tom Davis, Luk N Van Wassenhove, 2021) There are various frameworks and indicators that can be used to assess and compare the environmental, social, and governance performance of different entities Some of the most widely used frameworks and indicators are the ESG Metrics, the Global Reporting Initiative (GRI), and The Sustainable Development Goals (SDGs) The E in ESG, environmental criteria, includes the energy your company takes in and the waste it discharges, the resources it needs, and the consequences for living beings as a result Not least, E encompasses carbon emissions and climate change Every company uses energy and resources; every company affects, and is affected by, the environment S, social criteria, addresses the relationships your company has and the reputation it fosters with people and institutions in the communities where you business S includes labor relations and diversity and inclusion Every company operates within a broader, diverse society G, governance, is the internal system of practices, controls, and procedures your company adopts in order to govern itself, make effective decisions, comply with the law, and meet the needs of external stakeholders Every company, which is itself a legal creation, requires governance (Witold Henisz, Tim Koller, and Robin Nuttal, 2019) GRI Standards are based on a Triple Bottom Line, disclosing information about the achievement of specific economic, social and environmental results.Sustainable development indicators are combined into three thematic standards: economic standard – indices, environmental standard – indices and social standard – 19 ones (Vera Samarina, Tatiana Skufina, and Aleksandr Samarin, 2020) To sum up, this research would consider that sustainable economic development involves balancing economic growth with social and environmental considerations, while ensuring intergenerational equity 1.2 Role of commercial banks in promoting sustainable development (NCKH) Lala, Stone (2023) states that commercial banks can help promoting sustainable development in four methods: Financing renewable energy projects: invest in renewable energy projects, such as wind and solar power, as a result reduce reliance on fossil fuels and support the growth of the renewable energy sector Green loans: make loans to businesses and individuals who have investment in sustainable technologies, such as energy-efficient buildings and electric vehicles Risk management: identify and assess climate change risks, therefore banks can take steps to mitigate these risks and ensure the long-term sustainability of their lending and investment activities Innovation: develop new financial products and services such as green bonds and other financial instruments to finance sustainable projects Nguyễn Khánh Duyên (2018) indicates banks may create sustainable business development through their credit policies, such as providing capital and encouraging environmentally friendly projects, making an impact through service activities like investment consulting Moreover, commercial banks can offer "green" or "sustainable" loans not only for large infrastructure projects but also in various sectors of the economy, such as projects aimed at energy efficiency Adhering to industry sustainability standards can help banks better assess and manage environmental and social risks in projects and avoid negative impacts on the environment Additionally, banks contribute to sustainable development by promoting comprehensive finance Comprehensive finance involves providing suitable and convenient financial services to all individuals and organizations, especially those with low incomes and vulnerabilities, to enhance access to financial resources, contribute to livelihood opportunities, circulate investment capital, and savings in society, thereby driving economic growth Therefore, banks play a specific role in achieving the Sustainable Development Goals (SDGs) as outlined in the tasks assigned to the banking sector in the National Action Plan for Implementing the 2030 Agenda for Sustainable Development Ryszawska (2018) emphasizes the importance of digital banks in promoting a sustainable economy Thanks to technology development such as climate finance, green finance, carbon finance, banks support sustainability transitions It may be observed that traditional banks are changing to adjust digital innovation, decentralized and sustainable production and consumption Moreover, banks play an important role in financing production of energy from renewable sources, waste recycling, reduction of greenhouse gas emission, modern products and technologies with improved energy efficiency, sustainable transportation, sustainable supply chains, and sustainable consumption It was revealed by Khaliun’s research (2015) that when commercial banks invest in environmentally oriented projects, they may effectively manage their resources as well as fulfill social responsibility and thereby build confidence in present and future customers For the effective development of the investment credit organizations need to balance the supply and demand of the real sector Commercial banks fulfill their social responsibility as well as solve the problem of cash flow balance when sending their financial resources to environmentally oriented investment projects Standard Bank Limited has categorized green banking products into several items to emphasize diversification and promote sustainable development Renewable energy a Solar energy: solar home system, solar micro/mini grid, solar iIrrigation pumping system, surface water purification plant using solar pump, solar photovoltaic (PV) assembly plant, … b Bio-gas: organic manure from slurry, mid range bio-gas plant, biomass based large scale bio-gas plant, poultry & dairy based large scale bio-gas Plant c Hydro-power: hydropower (Pico, Micro & Mini) d Wind-power: wind energy driven power plant Energy efficiency: substitution of conventional lighting system, electronic material, boiler with energy efficient alternatives on the basis of Energy Audit; auto sensor power switch assembly plant, energy efficient Improved Cook Stove (ICS)/ICS Renewable/Hybrid Cook Stove Assembly Plant Document continues below Discover more from: hàng Ngân thương mại FIN17A Học viện Ngân hàng 55 documents Go to course đề kiểm tra NHTM 2023 Ngân hàng thương… 100% (2) [222 FIN17A 21-Nhóm 25 8] Bài tập lớn Ngân… Ngân hàng thương… 100% (2) ĐÚNG SAI GIẢI Thích NHTM Ngân hàng thương… 100% (1) Ngân hàng thương 126 21 mại - Tài liệu tổng… Ngân hàng thương… 100% (1) Bài tập lớn NHTM Nhóm - Bài tập lớn Ngân hàng thương… Recycling & Recyclable Initiatives: 100% (1) PET Bottle Recycling Plant, Plastic Waste BTL NHTM Tài Recycling Plant (PVC/PP/LDPE/HDPE,PS), Wastage Paper Recycling Plant for toàn diện Production of recycled paper, plate, mug, glass, Recyclable Baggage Manufacturing 31 Ngân hàng thương… Plant 100% (1) In addition, there are some outstanding digital banking products to pursue the goal of sustainable development:(Sayan Das, 2022): (1)Savings accounts: easy access to banking services and preserve money's purchasing power with interest; (2)Current accounts: make multiple transactions daily; (3)Cash withdrawals and deposits: withdraw from or deposit cash into these accounts (4)Fund Transfers: users can transfer money between bank accounts, e-commerce services, or other business transactions (5)Bank statements: generate bank statements online using the bank's mobile application or website; (6)Loans: give loans to their users through digital means only In conclusion, many researchers conclude that commercial banks have a positive influence on sustainable development Banks promote economy’s sustainable development by enhancing comprehensive finance, offering green loans and mobilizing fund for economic development Liturature Sustainable developed activites of Vietnam commercial banks Recently, the Vietnamese government has actively participated in implementing international commitments to reduce greenhouse gas emissions, minimize the impact of climate change, towards sustainable development goals as committed to implementing the 2030 Agenda for the sustainable development at the United Nations Summit In particular, the banking industry is always identified with its roles in "greening" investment capital flows for sustainable development goals Within the framework of the green banking and green growth development plan proposed by the Government, commercial banks have also made changes to suit the new market 2.1 Green banks development Within the framework of promoting and developing green banking, commercial banks have been researching and proposing new policies to promote sustainable development, including: Environmental policy in credit appraisal, green credit, green bond and community social activities 2.1.1 Environmental policy in credit appraisal According to an assessment by PanNature, before 2015, Vietnam had not issued any environmental safety policies for credit granting activities, and a number of banks had developed environmental and social risk management policies The association is still relatively small However, recognizing the importance of environmental risk management in credit granting, the State Bank of Vietnam has taken many different steps to promote sustainable finance, and at the same time, provide directions guidelines to promote green credit growth and manage environmental and social risks in credit granting activities Currently, some commercial banks have basically built and completed their internal Environmental and Social Management System (ESMS) to serve the assessment of environmental and social impacts during the appraisal process determining and granting credit, usually includes the following steps: Source: author's compilation In 2012, Sacombank was the first bank to deploy the ESMS system with a combination of the following elements: Strategy, governance model, environmental and social policy (E&S) integrated into the credit granting process application, an Excel toolkit including a questionnaire to assess E&S impacts on customers, establishing an ESMS team at the Head Office.to conduct training for personnel to directly perform the assessment and participate in the appraisal process, environmental and social impacts on customers By 2016, the Credit Department (State Bank) said that two more banks had built internal environmental risk management systems: Vietnam Technological and Commercial Bank (TechcomBank) and Vietnam Bank for Industry and Trade (VietinBank) Up to now, many commercial banks have paid more attention and partly integrated environmental and social risks in the appraisal of loan projects For example, BIDV does not approve credit for unplanned projects, professionalizing environmental and social risk management in the credit granting process; promulgate a sustainable loan framework to provide green loans and sustainable linked loans for businesses Vietcombank only approves credit for projects that have been approved for environmental impact assessment and requires project owners to provide information related to technology and environment in the loan application At VPBank, since 2016, the bank has issued policies on environmental and social risk management, by 2018 it has completed the environmental and social risk management system (ESMS) and in 2022, the ESMS system credit granting became part of the bank-wide ESG policy Additionally, in February 2023, BIDV was the first bank to successfully develop a sustainable loan framework based on advice from the Carbon Trust, designed to provide the most popular sustainable loan products on the market The global market today includes thematic loans and sustainability-linked loans This sustainable loan framework includes Green Loan Principles, Social Loan Principles, and Sustainability-Linked Loan Principles The promulgation of the Sustainable Loan Framework helps position BIDV as a reputable bank, with an active role in implementing the Sustainable Development Strategy of the Government of Vietnam However, the actual implementation of the environmental and social risk assessment system in credit granting activities of most banks only stops at integrating requirements on projects that have been approved for assessment In addition, the sustainable development reports of commercial banks show that there are no significant actual or potential negative environmental impacts on the banks' product supply chains, nor are there any complaints Complaints about environmental impacts, no loan case has been closed due to environmental issues of the project This practice shows that many banks have not fully assessed environmental and social risks in granting credit and monitoring E&S risks after capital transactions with customers 2.1.2 Green credit In Vietnam, there are many different definitions of green credit, but in general, green credit can be understood as credits supported by the banking industry for production and business projects that not cause environmental risks environment, or for the purpose of protecting the environment, contributing to protecting the general ecology.For example, Techcombank has signed a credit cooperation contract with IFC to sponsor energy saving and clean production projects of small and medium-sized enterprises in Vietnam Accordingly, Techcombank and IFC will finance businesses to change equipment, upgrade technology and systems to improve energy saving efficiency, expand production, cut costs, and reduce gas emissions waste In addition, Techcombank, along with ACB and VIB, also plays a role in supporting financial appraisal and providing credit at the Green Credit Trust Fund established by the Swiss lenders without going through financial intermediaries Thanks to the application of digital technology platforms, loan and disbursement procedures and processes are also simplified, saving time In Vietnam, a company operating like the P2P Lending model began to appear in 2016 with the website huydong.com Since then, many other P2P Lending companies have gradually come into operation, such as Tima, SHA, Mobivi, Vaymuon.vn, etc Among more than 100 licensed Fintech companies, there are up to 40 companies with P2P Lending services Some are operating quite effectively, especially lending companies targeting the small and medium-sized enterprise segment, gradually helping this market become a potential capital mobilization channel for businesses which are the target group Capital needs for production and business activities change greatly during operations and often have to mobilize capital from unofficial sources P2P Lending development models in Vietnam are also quite diverse In addition to direct models from companies directly providing peer-to-peer lending services, indirect models have also been deployed According to this model, P2P Lending companies will transfer the loan request of the person in need to an affiliated commercial bank If the loan proposal is approved, the bank will issue a debt receipt to the P2P Lending company so that customers can receive disbursement at commercial banks using this debt receipt Then, when a lender is found, the P2P Lending company will pay this debt to the bank with the lender's money and issue a loan certificate to the lender With the indirect lending model, P2P Lending companies cooperate with banks and credit institutions to lend to customers Accordingly, some banks combine with technology companies to lend to small business and individual customers such as Dragon Bank, The Bank, Gobear are three joint stock companies that cooperate and connect with banks in finding customers Cooperative banks are very diverse Dragon Bank Joint Stock Company cooperates with banks: OCB, Shinhan Bank, HDBank, ACB, UOB, 14 VPBank, TPBank, MSB Gobear Joint Stock Company connects with BaovietBank, Citibank, DongA Bank, Eximbank, HD Bank The Bank has financial partners: FE Credit, Techcombank, Manulife, VPBank, UOB, Shinhan Bank, BIDV, ABBank, Sacombank, In general, P2P Lending companies connected to banks will cooperate with many financial institutions In addition, a technological development that has been successfully applied in lending activities is the application of blockchain in the documentary credit (L/C) method Blockchain technology acts as a ledger for all transactions, with the ability to share data information transparently in real time, save storage space and be highly secure To limit the risks of late payment or refusal of payment, letters of credit can be modeled as smart contracts capable of self-processing on the blockchain This type of contract automatically checks and determines the compatibility of delivery information with contract terms This approach increases the possibility of quick payment for sellers by preventing disputes arising due to ambiguity in payment contracts HSBC is the first bank to successfully have a letter of credit transaction on the blockchain platform in 2019 between Duy Tan Plastic Manufacturing Joint Stock Company of Vietnam and INEOS Styrolution Korea Company of Korea Transactions are conducted from start to finish on a single shared application, Voltron, the goal of this platform is to provide a single, simplified channel to support the digitalization of trade finance, from L/C issuance until presentation/exchange of documents 2.2.3 Saving According to the General Statistics Office, Vietnam has a large population, reaching 98.51 million people in 2021, with a relatively high young population (50.5 15 million people aged 15 and over) However, about half of the population currently does not have access to financial services through banks With these potentials, developing personal financial services is becoming one of the strategic directions of commercial banks The strong development of the consumer loan market is considered a good signal in the financial market, especially microfinance and personal finance To develop personal financial services, commercial banks often promote consumer lending to improve quality and diversify types of personal credit products Personal financial management (PFM): is a tool that helps build personal financial plans through managing financial data on software and phone applications PFM allows customers to manage their deposits in different banks or loans from different lenders in the same application For example: Personal Finance Management (PFM) feature is integrated on the MBBank App: Supports users to compile personal financial situation statistics, provide financial advice and investment instructions Effective investment to help customers achieve their goals in life, with a modern, user-friendly interface Fintech offers customization tools and savings performance tracking Users can set savings goals, receive notifications, and track progress automatically Fintechs can provide smart suggestions based on customers' data and savings behavior, helping them optimize their savings and investment strategies Integration with other services: Fintechs often have integration capabilities with other services such as electronic payments, loans, or investments, creating a comprehensive financial ecosystem Reduce costs and Increase competition: Using fintech can reduce operating costs for banks, which in turn can provide higher benefits to users through higher interest rates or other incentives 2.2.4 Blockchain Blockchain technology can be considered a breakthrough technology in the banking industry, expected to bring positive changes and promises to bring a digital era to 16 financial and banking activities thanks to its ability to breakthrough in technology, capable of simplifying complex business processes, reducing the cost of expensive technical infrastructure currently in the banking and finance industry, helping to speed up transaction processing speed, increasing Enhance transaction security, information transparency and ensure the processing infrastructure is resistant to hackers' attacks, maintaining the ability to operate persistently and continuously Therefore, many Fintech companies today focus on researching and supplying products based on this technology to the market Because Blockchain's applications are spread across many different areas of the financial and banking industry, including payments, insurance, money transfers, trade finance, foreign exchange transactions Therefore, Blockchain technology can be considered a separate field of activity of fintech businesses Blockchain technology is also being tested and gradually applied, such as: HSBC successfully implementing letter of credit (L/C) transactions, Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank) applying technology Blockchain participates in connecting and processing trade finance transactions Another technology that is always mentioned as an essential technology for banks to digitally transform is electronic customer identification technology (eKYC), most commercial banks have deployed and applied this technology, typically : TPBank, VPBank, HDBank, LienVietPostBank Blockchain has gradually become a pillar of technology in Vietnam with many attractive applications such as a diploma storage platform in the field of training; letters of credit, contract guarantees, payments in the banking sector 17 Therefore, blockchain is gradually being understood as a technology, not bitcoin or cryptocurrency as previously thought Data from the Payment Department (State Bank of Vietnam) also shows that the number of Fintech businesses participating in providing services in the Vietnamese market today has increased nearly times, from 40 businesses at the time At the end of 2016, by the end of 2021, it had increased to more than 150 businesses, spread across many different fields BIDV Bank pioneered the application of blockchain in trade finance, MB, VPBank, Vietcombank also announced the application of blockchain in financial transactions Some other businesses have also successfully applied blockchain in business, such as Masan Group, Bao Viet, AIA Assessment of the activity of Commercial Bank 3.1 Assessment of the activity of Green Bank 3.1.1 Achievements According to statistics from the State Bank, as of December 2021, there are about 25 commercial banks implementing green credit packages such as Sacombank, BIDV, Vietinbank, Vietcombank, Agribank, SHB, ACB, Viet A Bank, Nam A Bank, OCB, Kien Long Bank, PVCombank, HSBC, HDBank ; About 24% of green projects are built and implemented by banks for credit appraisal, 50% of them build and deploy environmental and social risk management processes in credit granting, construction and issuance activities written environmental and social risk management process, 68% have plans to expand green credit activities in the short and medium term By June 30, 2022, Vietnam's outstanding credit debt for green projects reached more than 474 trillion VND, an increase of 7.08% compared to 2021, mainly focusing on the fields of renewable energy and clean energy (47%) 18 3.1.2 Limitations Although green banking is strongly promoted and developed, it still has some weaknesses that need to be improved First, it is related to carbon emissions into the outside environment: Most banks not have clear policies and procedures for all employees to synchronously limit the printing of statements and internal reports Furthermore, banks need to invest methodically in document storage systems, submissions and reports, which can be electronic approval systems such as email and digital signatures Second, issues related to the development of green banking products and services: Although many banks have now deployed many online products and services, it is still not synchronized and diverse For services with complex procedures such as foreign exchange transactions, opening letters of credit, issuing guarantees , there are still quite a few banks implementing them Many banks still not pay too much attention to investing in the online banking system, so network congestion, poor connection, transaction errors, and affecting customer transaction activities often occur In addition, there are also objective factors at play because the gap in technological infrastructure in urban and rural areas is so large that it also makes it difficult for banks to provide green products and services to rural customers village Another point that banks should pay attention to is that investing in technology infrastructure also costs a lot of money, so banks need to consider and develop an investment strategy suitable to the business scale of the enterprise Third is related to green credit: Banks are currently quite cautious and have not provided specific policies on interest rate incentives or documents for investment projects in green fields and clean, or have financial incentive programs 19 for environmentally friendly products and projects such as green building projects, fuelefficient vehicle production projects, and loan projects for home equipment installing solar energy systems or refusing to grant credit to projects of businesses that bring negative harm to the environment From the State Bank and other agencies and department Three issues from the State Bank and other agencies are: There are currently no unified regulations on lists of industries, or lack of specific regulations on the legal framework, tools to measure risk impacts on the environment, society and other assessment criteria regulations on farming products and services and green credit development Legal barriers make it more difficult for commercial banks to build and deploy green credit products and services The legal corridor for management, supervision, and creation of favorable conditions for new types, means, electronic payment systems, and intermediary payment services is also not complete and synchronous Sanctions on pollution treatment specified in the Law on Environmental Protection and the Penal Code are only applicable to organizations and individuals directly causing pollution, there are no regulations/sanctions for those who directly cause pollution Units that sponsor or lend money to projects that cause environmental pollution Because they have not been held responsible, the bank's appraisal staff did not pay attention to environmental impact assessment during the loan appraisal process 3.1.3 Solution Firstly, enhanced the mandatory and responsible of the banking system in implementing the NHX project on green growth and sustainable development Establishing funds related to green growth (through mobilizing low-interest loans and capital from the budget), in which the fund's capital can be managed by one or several credit institutions and make loans to projects that meet the fund's requirements Second, synchronously develop green financial markets, especially the green bond market and organized investors, creating a basis for banks to mobilize green capital in the market Commercial banks also need to focus on diversifying capital sources mobilized for the NHX strategy Medium and long-term capital sources for TDX come from International financial institutions, such as the World Bank (WB), International Finance Corporation (IFC), Asian Development Bank (ADB) also contribute to supporting banks in focusing Centralize credit resources for environmentally friendly projects 20 Third, continue to research and apply measures to create real motivation for commercial banks to participate in NHX development A number of solutions have been and are being applied by central banks around the world to encourage green credit and develop green banks, such as reducing mandatory reserves corresponding to the level of green lending, increasing total outstanding loans for banks with green loans There is a lot of outstanding credit debt, applying reduced funding interest rates to banks that conduct good environmental risk assessments when granting credit, increasing requirements on required reserve ratios and liquidity for banks that lend Projects that cause great loss or damage to the environment These are good lessons that Vietnam can refer to Fourth, to increase demand for TDX, policies to support access to TDX for businesses 116 State Management Journal - No 328 (May 2023) Research - Business exchange such as preferential interest rates, taxes, fees, and fees Loan procedures and collateral Scales are carried out in parallel To create an environment for businesses to invest in green projects, it is necessary to continue to reform administrative procedures and create a transparent and favorable investment environment to reduce the risks of green projects Fifth, improve the capacity of banks and credit institutions in evaluating and appraising green investment projects, including improving the capacity of credit officers and investigating the establishment of a specialized department in green investment bank, building specialized financial products and tools to support green investment 3.2 Assessment of the activity of Digital Bank 3.2.1 Achievements According to statistics from the Vietnam Banking Association, by the end of April 2021, there were 79 financial institutions providing payment services via the internet, 49 organizations supporting mobile payments, a network of 271,000 POS and 19,000 ATMs covering the whole country, the number of internet transactions increased by 65.9% in quantity and about 31.2% in value compared to 2020, transactions via mobile phones and QR codes also experienced growth impression In addition, by the end of April 2022, transactions through the interbank system had grown strongly (more than 32.37%) compared to the same period in 2021 Specifically, non-cash transactions increased by 27.5 % value, 69.7% in quantity, transactions via mobile phones increased by 86.68% in value, 97.6% in quantity 21 (compared to 2021) The total number of activated e-wallets increased by 10.37%, especially during the pandemic period, the mobile banking growth rate reached 200%, the daily transaction value on mobile reached 300 billion VND/day This is an outstanding growth rate that is worthy of recognition in the process of developing digital banking in Vietnam 3.2.2 Limitations Besides the above opportunities and advantages, the transformation and development of digital banking in Vietnam still faces many difficulties and challenges, specifically as follows: Firstly, technology investment costs are high Technology applied in digital banking often develops rapidly and is easily replaced by new technologies Large technology investment costs come from banks having to regularly improve, maintain and upgrade systems to meet the increasing needs of customers while enhancing competitiveness This is considered a big challenge for banks in the process of digital transformation, especially small and medium-sized banks when technology investment requires a lot of resources but that technology is quickly outdated and outdated must update Second, the legal framework is still slow compared to the speed of technological development The legal framework that creates the basis for digital banking operations and development is still lacking All banks operate within the legal framework, and all business strategies need to ensure compliance with the legal framework The problem is that the pace of technology development is too fast and changes every day, but legal regulations have not kept up The State Bank has no official regulations on products applicable to digital banking such as money electronic sending, internet banking, mobile banking services; The legal corridor to protect consumers regarding electronic transactions is still weak; Regulations on identifying customers at the counter increase barriers to applying digital banking, there are no regulations on electronic customer identification (eKYC), making commercial banks reluctant to apply technology and services new service outside the allowed framework Third, information security in Vietnam is still poor 22 It can be said that the banking industry is always the top target of technology criminals Fraud cases related to digital payment activities have recently become increasingly complicated Using sophisticated tricks, hackers can trick users into making transactions, providing security information such as passwords, OTP codes or accessing fake banking pages, to take over asset In addition, there is currently a legal gap related to protecting consumer rights in financial services as well as protecting the privacy of consumer data The possible exposure of personal information is also the reason why many people hesitate to use digital banking services Upgrading the system and convincing customers to trust digital services is always a big challenge for every bank Fourth, the habit of using cash is still popular Vietnamese people still have the habit of using cash in payment The current habit of noncash payment is only popular in central provinces and cities - where there are good technological infrastructure conditions, while in remote and remote areas people still tend to tend to prefer using cash because they think it is more convenient and safer At the same time, the banking system here is also quite sparse, and internet infrastructure has not been widely available, so people's access to digital banking services is still very difficult Fifth, limitations in information technology human resources Vietnamese banks are currently facing the problem of shortage of human resources in building and developing digital banks During the digital transformation process, the need for personnel who are both knowledgeable about banking and finance and technology is one of the big challenges The current situation of Vietnamese bank personnel: if the personnel are knowledgeable about banking and finance, they are not knowledgeable about technology and vice versa This is a problem for training institutions and banks in Vietnam that have not really kept up with the pace of technological development In particular, high-quality personnel in the field of digital banking are still scarce, banks have to compete quite fiercely in terms of compensation to attract talented people 3.2.3 Solution Solutions to promote digital banking development in Vietnam In the coming time, in order to promote the development of digital banking in Vietnam, it is necessary to focus on the following solutions: 23 Firstly, continue to improve the legal framework system Continue to review and improve the legal framework system for digital technology development, in order to create favorable conditions for banks to have a full legal basis to promote the development of digital products In particular, completing legal corridors to ensure security and safety of information and customer data is extremely important in data management in the banking and financial sector; creating a foundation for the application of key technologies of the 4.0 Industrial Revolution, towards the strong and modern development of the bank in the future Soon build and complete the national database to facilitate open connection for banks to access according to approved authority and have a full legal corridor on data sharing with third parties Second, promote the application of science and technology in banking operations Focus on investing in developing technological, scientific and technical infrastructure, creating a modern technical and technological environment; Enhance learning and technology transfer from advanced countries to create a solid foundation for the banking industry to develop new technology applications Increase investment in the application of new technologies, especially prioritizing investment in technology with a long life cycle, helping customers feel secure in using the service; Strengthen risk management for digital banking services, information and asset security for banks Research cooperation with fintech companies to build breakthrough business models through the application of digital technology to increase convenience and save costs Third, foster knowledge and training of staff and change consumers' cash usage habits It is necessary to have policies to recruit, remunerate, and use to attract talented people to serve the long-term development of the bank At the same time, strengthen training and retraining of staff, ensuring that staff are qualified to operate and master technology To this, banks can coordinate with universities, organizations or professional training centers to improve employees' professional skills even while they are working as well as during the process recruitment program At the same time, guiding and supporting users is equally important in digital banking development for banks To help customers easily access digital banking services, banks need to increase promotion and marketing so that customers better understand the benefits and importance of digital banking In particular, it is necessary to expand the network system in rural areas, helping people have the opportunity to access digital 24 banking services, change cash usage habits, and shorten the digital banking development process of rural areas Vietnamese bank Fourth, enhance information security Comply with regulations and instructions of the State Bank on ensuring the safety and security of online banking transactions; develop scenarios, processes, and detailed response instructions for online fraud incidents Banks need to strengthen regulations as well as measures to secure customer information; Banks need to have staff knowledgeable about information technology or must cooperate with information technology companies to build a data security system Strengthen communication, propaganda, financial education, raise people's awareness and understanding of digital applications and notes to prevent and avoid risks when conducting transactions in the electronic environment death 25 References A.Tài liệu nước Barbier, E (1987) The Concept of Sustainable Economic Development Environmental Conservation, 14(2), 101-110 doi:10.1017/S0376892900011449 Lala, O.& Stone, D (2023) The Role of Central and Commercial Banks in Promoting Sustainable Finance in Africa Making Finance Work for Africa, last accessed 09 November 2023, Ryszawska, B (2018) Role of banks in sustainable and digital transition.Nauki O Finansach, Vol 23, No 1, pp 66-74 doi: 10.15611/fins.2018.1.05 Khaliun, G (2015) The Role of Commercial Banks in a Society and the possibility of participation in financing environmentally-oriented investment projects on the example of Mongolia International Journal of Trade, Economics and Finance, Vol 6, No 2, pp 140-144 doi: 10.7763/IJTEF.2015.V6.458 Standard Bank Limited Products of green banking Standard Bank Ltd, last accessed 19 November 2023, Sayan Das (2022) Digital Banking: Definition, Products, and Types, Fi., last accessed 19 November 2023, B.Tài liệu tiếng việt ThS Nguyễn Khánh Duyên (2018) Vai trò ngân hàng việc thực mục tiêu phát triển bền vững Viện Chiến lược ngân hàng, Ngân hàng Nhà nước Việt Nam, last accessed 09 November 2023, Quang,P.D.,Huu, T.K.,va nnk.(2022) Fintech Development and Cooperation Strategies of Vietnamese Commercial Banks International Journal of Advanced Engineering and Management Research ,Vol 7, No 01, doi: 10.51505/IJAEMR.2022.7104 26 More from: Ngân hàng thương mại FIN17A Học viện Ngân hàng 55 documents Go to course đề kiểm 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