The development of digital banking in vietcombank in industry 4 0 = phát triển ngân hàng số tại ngân hàng tmcp ngoại thương việt nam trong thời kỳ cách mạng công nghiệp 4 0

The development of digital banking in Vietcombank in industry 4.0 = phát triển ngân hàng số tại ngân hàng tmcp Ngoại thương Việt Nam trong thời kỳ cách mạng công nghiệp 4.0

Research rationale

The banking industry, as an important field in the economy, is always at the forefront of trends and the success of the industry is always associated with the application of technological advances Currently, under the impact of the industrial revolution 4.0, technology trends affecting the bank's distribution channels include wireless technology and mobile devices, technology of self-service counters, bio-technology, etc biometrics, media and multimedia, social networks, speech recognition/use technology, cloud computing, block chain, big data, AI …In which, social networks have been a basic channel for advertising and sales, thanks to the advantage of developing services associated with building customer relationships

On the contrary, the role of the traditional distribution channel of the bank is decreasing due to the rapidly changing customer behavior and huge operating fees

In addition, the development process of the banking industry is currently under the pull of companies outside the industry with new technology platforms (FinTech) which are attacking the banking and finance sector and have the ability to basically change the traditional operating methods of the industry

Therefore, many banks in the world tend to shrink, restructure or upgrade their traditional channels in parallel with the development of digital channels Digital banking, which is implemented in many countries around the world, has become the first choice of many Vietnamese banks With a modern technology platform, plus the convenience of helping traders save time, digital banking will be popular in the near future in Vietnam

Joint Stock Commercial Bank for Foreign Trade of Vietnam - Vietcombank, through more than 58 years of construction and growth, has grown strongly in the model of a multi-purpose financial group, with a vision of becoming one of 300 largest banking and financial group in the world by 2030 On November 26, 2020, Vietcombank was honored as "Vietnam's typical digital transformation bank in 2020" with the official launch of the brand new VCB Digibank digital banking service However, besides the achievements, the development of digital banking services at Vietcombank still faces some limitations such as:

- Only focus on providing front-end user experiences for existing products and services such as payment, money transfer, balance statement view, based on installed application (APP based);

- Vietcombank's channels are still relatively independent, there is no connection with the customer ecosystem to guide customer behavior and needs, both before and after using the bank's services;

- Services and transactions provided are limited by current technology, there is no automation of end-to-end digital banking services (end-to-end digital automation)

Being aware of these issues, the author chose the topic: "The development of digital banking in Vietcombank in industry 4.0" as the research topic for his graduation thesis.

Literature review

During the changing in the global landscape, large financial institutions already have brands with economies of scale and their networks have failed to create additional effects The emergence of fintech (financial technology) companies has created a new wave of digital products Already-branded banks are hampered by IT systems and processes that are no longer relevant while fintech innovators are the ones who can move quickly

According to Prof Dr Oliver Kruse - University of Applied Sciences, the

EU as an economic and political union, since 2015 has opened up digital services to all citizens and Fintech companies In 2020, the EU continues being expanded by the EU Commission's Digital Finance strategy, the Fintech vision is to become a digital marketplace for financial services including: core banking services, lending and depositing, market services such as sales and trading, wealth management, payment services, electronic money services Passport issuance allows financial firms which are authorized in any EU or EEA country to freely trade in other countries within the bloc with minimal additional licensing

The Central Bank of China has been recognized as one of the first central banks in the world to actively study digital currency of central bank (CBDC) From

2014, members of the PBOC and PBOC-related organizations have publicly announced work related to digital currencies They have also engaged with international organizations such as the BIS and the IMF on this topic for the past 5 years However, it was not until early 2017 that the PBOC officially established the Digital Currency Research Institute

With the experience of a prestigious speaker in the world about the future of business, White House advisor to President Obama, Brett King with the book Bank 4.0 has "predicted" the future of digital banks will rise up; and this forces existing banks to adjust to follow, before they become out of date Digital banking is an inevitable change, responding to changing customer expectations, supported by breakthroughs in technology Digital Banking also represents the transition from providing products and services in a traditional way to the digital and online space

In Vietnam, there have been a lot of researches on the development of banking services in general, but only a few of them are on the development of Digital Banking services, including works such as:

Master thesis by author Pham Minh Tri with the topic "Digital banking product development prize at Tien Phong Commercial Joint Stock Bank" (2018 – University of Economics Ho Chi Minh City) Master thesis by author Dam Trung Kien with the topic "Development of digital banking services at Bank for Investment and Development of Vietnam (BIDV)" (2018 - Foreign Trade University) Although there have been studies on digital banking services, they only approach the issue during the period of 2015 - 2017 when the digital transaction space was not yet born Meanwhile, the current digital technology platform has made great developments that can be applied in the banking industry, allowing to unify and replace all previous services such as I-Banking, Mobile Banking, A completely new and uniform experience for customers in terms of interface, login information, limits, service fees, features, and utilities Accordingly, almost all banking transactions are made to be simpler and more convenient to perform anytime, anywhere via the internet such as depositing, withdrawing money, shopping, paying without having to go to the bank counter They are also not required to perform transactions during office hours, which helps to reduce a lot of paperwork

And so far, there have been no comprehensive studies on the development of digital banking services at Joint Stock Commercial Bank for Foreign Trade of Vietnam in the context of the 4.0 industrial revolution Without conducting any specific studies which combines the general theoretical principles of banking service development and the features of the digital banking channel, it is impossible to have an overview and reality of the banking industry To develop this digital banking service, it is even more impossible to propose a possible solution for the development of digital banking services at Vietcombank in the context of the 4.0 industrial revolution Therefore, the author chooses the topic: "The development of digital banking in Vietcombank in industry 4.0" as the research topic for the author's graduation thesis with the desire to propose scientific and feasible solutions to develop Digital Banking services at Vietcombank to meet business development requirements and actual conditions Although this thesis has inherited some basic theoretical issues, it does not overlap with previous research work.

Research objectives

The purpose of the research is to study the basic theoretical issues of digital banking service development at commercial banks and the industrial revolution 4.0, and at the same time to study the current situation of digital banking service development at Vietcombank in the context of the current situation In the context of industrial revolution 4.0, the thesis proposes solutions to continue developing digital banking services at Vietcombank to meet business development requirements and actual conditions

To achieve the above research purpose, the thesis performs the following specific tasks:

- Systematize the theoretical basis for the development of digital banking services at commercial banks and the industrial revolution 4.0;

- Analysis of the current situation of digital banking service development at Joint Stock Commercial Bank for Foreign Trade of Vietnam in the context of industrial revolution 4.0 in the period of 2020 – 2022;

- Evaluation of success and limitations in Vietcombank's digital banking service development

- Researching the development orientation of Vietcombank, opportunities and challenges of the Bank in developing digital banking services in the context of industrial revolution 4.0

- Proposing solutions to continue developing digital banking services at Vietcombank to meet business development requirements and actual conditions

Research subjects

The object of research in this topic is theoretical and practical issues related to the development of digital banking services and the development of digital banking services of commercial banks in general and Vietcombank in particular.

Research scope

About space: at Joint Stock Commercial Bank for Foreign Trade of Vietnam

About time: Research data is collected in the period of 2020 - 2022, orientation and vision for 2030

Research methods

To accomplish the research objectives, the thesis uses research methods such as: statistics, analysis, comparison, synthesis combined with practical working experience in the field of banking information technology, financial management / performance of the author Specifically:

The data is collected from annual reports of Vietcombank and other commercial banks, financial statements, information disclosures, economic and banking journals and information processing on the status of service development digital banking at Vietcombank

The determination of criteria used to research the development of digital banking services at Vietcombank is based on references to documents, books, journals, articles, websites, and research works related to the topic, financial statements, annual reports of Vietcombank

During the research process, information about the bank's business situation was collected by the author in the form of general reports published by the bank, including the content of revenue, cost and profit of each type of service The data was selected, processed and included in this study by the author in the form of statistical tables and illustrative charts The analysis of these figures includes a comparative analysis of values between periods, here by year

THEORETICAL BASIS ON DEVELOPMENT OF DIGITAL

During the research process, information about the bank's business situation was collected by the author in the form of general reports published by the bank, including the content of revenue, cost and profit of each type of service The data was selected, processed and included in this study by the author in the form of statistical tables and illustrative charts The analysis of these figures includes a comparative analysis of values between periods, here by year

CHAPTER 1: THEORETICAL BASIS ON DEVELOPMENT OF DIGITAL BANKING SERVICES

CHAPTER 2: THE DEVELOPMENT PRACTICE OF DIGITAL BANKING SERVICES AT VIETNAM JOINT STOCK COMPANY FOR FOREIGN TRADE BANK

CHAPTER 3: SOLUTIONS FOR DEVELOPMENT OF DIGITAL BANKING SERVICES AT VIETNAM BANK FOR FOREIGN TRADE IN THE CONTEXT OF INDUSTRIAL REVOLUTION 4.0

CHAPTER 1: THEORETICAL BASIS ON DEVELOPMENT OF DIGITAL BANKING SERVICES AT COMMERCIAL BANK AND INDUSTRIAL

Concepts

The term "Digitization" refers to the conversion of analog information, data, or content into a digital format This process involves representing information using discrete symbols or digits, typically in binary code (0s and 1s), making it suitable for processing by digital devices such as computers and electronic systems

Digitization allows information to be easily stored, manipulated, and transmitted electronically, bringing numerous advantages such as faster data access, improved data accuracy, and the ability to apply various digital technologies and tools for analysis and automation It plays a vital role in the development of digital systems, digital media, and various digital services across different sectors, including education, entertainment, healthcare, finance, and more

According to the Law on Credit Institutions of Vietnam, banks are defined based on their main activities: “Banking activities are monetary business activities and banking services with the regular content of receiving deposits and use this money to provide credit and provide payment services”

Commercial banks are intermediaries leading capital in the economy, so there is a notion that “Commercial banks are financial intermediaries, transferring deposits and making loans Operating for profit”

There are several different types of banks including retail banking, commercial banking, corporate banking, and investment banking In most countries, banks operate under the supervision and regulation of the national government or the central bank

Banks are a very important part of the economy because they provide important services to both consumers and businesses As financial service providers, they provide a safe place to store customer cash

Through a variety of accounts such as checking accounts, savings accounts, and certificates of deposit (CDs), a person can perform common banking transactions such as depositing, withdrawing, writing checks and making payments bill A person can also save his money and earn interest on his investment

Banks also provide credit opportunities to people and corporations Bank deposits and short-term cash, used to lend to others long-term debt such as car loans, credit cards, mortgages, and other debt vehicles This process helps to create liquidity in the market where money is created and maintains the money supply

Just like any other business, the goal of a bank is to make a profit for its owners For most banks, the owners are their shareholders

Banks do this by charging more interest on loans and other debt they issue to borrowers than they pay to people using their savings vehicles A simple example is as follows: a bank that pays 1% interest on savings accounts and charges 6% interest on loans earns 5% interest to the owner

Banks are sized based on the location and audience they serve: from large institutions to small institutions, from residential communities to large commercial banks While traditional banks offer both in-person and online services, the trend of online-only banking emerged in the early 2010s

These banks often offer consumers higher interest rates and lower fees Convenience, interest rates, and fees are some of the factors that help consumers decide their preferred bank

Digital banking is a new concept, which has not been officially defined in the curricula at academies and universities, but is mainly defined by the regulator or mentioned based on actual results experience of banks that have successfully implemented or provided banking technology solutions

United Overseas Bank Singapore (UOB) defines Digital banking as a banking business in the digital age, that is, a banking business in which customers use more technology devices, more Internet connections, and high demand bridge connection via digital technology, different customer segments can choose different channels to connect with the bank

The Development Bank of Singapore (DBS) believes that Digital banking is about automating processes and services from reaching customers to providing final services, minimizing human work, reducing operating costs

VPBank again defines Digital banking as a form of banking that digitizes all traditional banking activities and services In other words, everything that customers can do at regular bank branches, has now been digitized and integrated into a single digital banking application

Temenos launched the Digital banking model as a Bank that can bring experience and customer orientation Temenos simulates the Digital banking using the following equation:

A = Anytime, anyplace, any channel: Customers expect to be served by the bank at any time, anywhere, on any channel

B = Better banking: Go beyond traditional banking Through data customers can become a virtual advisor, helping customers make better financial decisions

C = Contextual: Products, services, communication methods, incentives are personalized according to the needs of each customer based on collecting and analyzing big data

D – Digital banking: Combining the above components becomes a Digital banking The structure of the firm's Digital banking system is depicted in Figure

F IGURE 1.1.T HE MODEL ILLUSTRATES THE DIGITAL BANK STRUCTURE OF

(Source: Temenos digital banking solution brochure, page 9)

According to the State Bank of Vietnam, Digital Banking is a banking model that operates on the basis of technological processes to provide all services to customers through digital devices connected on the internet, telecommunications network, and the Internet mobile communication or self-service branch

Thus, Digital Banking is different from e-banking, e-banking (including internet banking, SMS Banking, mobile banking services) is only a service delivery channel for customers based on the current business process platform have from the bank Digital Banking is different from e-banking, e-banking (including internet banking, SMS Banking, mobile banking services) is only a service delivery channel for customers based on the current business process platform have from the bank Digital Banking is a bank based on the digitization of most banking activities: from digitizing traditional distribution channels and developing modern distribution channels to automating business processes, applying applying big data analysis for decision making and creating digital products, applying innovative products

1.1.3 Digital banking model and structure

In the market, each bank has a different orientation on the Digital Banking, depending on their customers, it is important that the bank creates a perfect customer ecosystem, serving the needs of customers to the fullest extent those customers Through the above definitions, it is possible to draw the differences of the Digital Banking model compared to traditional banks (for details see Table 1.1, Figures 1.2 and 1.3)

DIGITALBANKING Traditional banking model Digital banking model

Branch is the center Customer is the center

All customer interactions and experiences take place at the Bank's branch

The customer chooses to interact with the Bank

Identify and identify customers at the branch

Electronic customer identification and identification (eID, eKYC)

Digital distribution channel is one of the channels of the branch system

Digital distribution channel is the center of products and services

Uniform products and services for all customers

Products and services that can be personalized, designed and offered to suit customers' preferences

Inconsistent customer experience across channels

Provide a consistent customer experience, regardless of the channel the customer uses

F IGURE 1.2.I LLUSTRATION OF TRADITIONAL BANKING MODEL

Figure 1 3 Illustration of digital banking model

(Source: Strategic Banking Insights, 2018) 1.1.3.2 Digital structure

Channels to connect with customer s

Big Data supports decision making

With the above concepts and successful implementation results of banks, the Digital Banking structure includes 4 main components, including:

Figure 1 4 Main components of digital banking

Channels to connect with customers

The development of digital banking services of commercial banks

1.2.1 Applying digital technology in commercial banking

1.2.1.1 Benefits of applying digital technology in commercial banking

Enhanced customer experience: Digital technology allows banks to offer online services, utilities, and mobile applications, enabling customers to conduct transactions, check accounts, and make payments conveniently anytime, anywhere

Improved operational efficiency: Digitalization enables banks to automate various processes and tasks, reducing errors, optimizing resources, and improving overall work performance

Reduced operational costs: By replacing manual processes with digital ones, banks can reduce operational costs and manage infrastructure more efficiently, leading to significant cost savings

Enhanced security and safety: Digital technology provides advanced security measures, ensuring the privacy and safety of customer information, transactions, and accounts

Development of new products and services: Digitalization opens up opportunities for banks to develop new products and services, such as e-wallets, cashless payments, and other online financial services

1.2.1.2 Challenges of applying digital technology in commercial banking

Security and fraud: Embracing digital technology introduces new points of contact with customers but also increases the risk of cyberattacks, fraud, and information breaches

Training and transformation: The transition to a digital environment requires training employees and providing them with digital knowledge, as well as transforming the organizational culture to adapt to changes

Digital divide: Commercial banks may have different levels of digital development, resulting in disparities in competitiveness and attractiveness to customers

Compliance with regulations: Digitalization often demands strict compliance with information security regulations and data management, which may pose challenges for banks

IT skills: Sufficient IT skills within the organization are necessary to deploy and manage digital systems, ensuring smooth and effective operations

1.2.2 Analysis of digital banking services and comparison with traditional banking services

Traditional Banking Services: Rely on physical branches and transaction points, requiring customers to visit in person for transactions, service requests, or financial advice

Digital Banking Services: Operate through technology platforms, allowing customers to conduct transactions, access information, and receive financial advice online from anywhere with internet connectivity

Traditional Banking Services: May require customers to travel to branches, transaction offices, or use traditional communication channels such as phone and fax

Digital Banking Services: Provide flexible and convenient access, enabling customers to save time and energy by conducting transactions through mobile apps or websites

Traditional Banking Services: Often do not employ advanced technology, and manual procedures may lead to increased transaction processing time

Digital Banking Services: Utilize digital technology, including artificial intelligence, blockchain, and data analytics, to enhance transaction speed and efficiency

Traditional Banking Services: Typically rely on paper signatures and physical security measures for customer authentication

Digital Banking Services: Ensure safety and security through two-factor authentication, data encryption, and digital security solutions

Traditional Banking Services: Often entail operating costs related to maintaining physical branches and employing staff

Digital Banking Services: Generally offer lower costs due to reduced need for physical infrastructure and increased automation

Traditional Banking Services: Can provide personalized advisory services, but may require the physical presence of bank staff

Digital Banking Services: Easily deliver customized services based on customer data and behavior through automated technologies

1.2.3 Conditions for developing digital banking services

Legal corridors of countries will decide to what extent commercial banks can provide Digital banking services With countries like Singapore, India allows sharing and connecting citizen data from e-government databases to commercial banks; Korea allows commercial banks to authenticate customers with Videocall and sign on electronic touch devices instead of paper signatures traditional law

In Vietnam, over the past time, the Government and the State Bank of Vietnam have been actively establishing and completing the legal framework to manage and promote the development of non-cash payment services in general as well as the development of non-cash payment services as the initial step to establish the legal infrastructure for the implementation of the Digital banking in particular, specifically:

On the basis of Law on Electronic Transactions No 51/2005/QH11, the State Bank has submitted to the Government for promulgation Decree No 35/2007/ND-CP on electronic transactions in banking activities, creating a legal corridor fundamentals of electronic transactions

On the basis of the Law on State Bank in 2010, the State Bank submitted to the Government for promulgation Decree No 101/2012/ND-CP on non-cash payments (amended and supplemented in Decree No 80) /2019/ND-CP), including regulations on intermediary payment services and conditions for providing intermediary payment services; The State Bank also issued Circular No 39/2014/TT-NHNN guiding payment intermediary services (amended and supplemented in Circular No 20/2019/TT-NHNN and No 30/2019) /TT-NHNN), creating a legal basis for non-banking organizations to combine with banks to provide payment intermediary services including mobile payment services

In addition, the State Bank has also issued regulations on: bank card operations (Circular No 19/2019/TT-NHNN); principles of risk management in e-banking activities (Decision 35/2007/QD-NHNN); ensuring safety and security of information technology systems in banking activities (Circular No 31/2018/TT-NHNN); safety and security for the provision of banking services on the Internet (Circular No 35/2019/TT-NHNN)

The State Bank has also submitted to the Government for promulgation Decree No 96/2014/ND-CP stipulating penalties for administrative violations in the monetary and banking sectors in general, including regulations on sanctioning administrative violations for payment activities, payment intermediaries; coordinate with the Ministry of Public Security to study and submit to the Government for promulgation Decree No 25/2014/ND-CP stipulating the prevention and combat of crimes and other law violations using high technology in payment activities to improve the legal basis for the prevention and combat of high-tech crimes in the field of payment

In order to promote the development of non-cash payment, the Prime Minister signed Decision No 2545/QD-TTg approving the Project on development of non-cash payment in Vietnam for the period of 2019-2020 and Decision No 1726/QD-TTg approved the project to improve access to banking services for the economy The objectives set out in the Schemes include: (i) By the end of 2020, the proportion of cash in total means of payment will be less than 10%; (ii) Focus on rural, remote and isolated areas (such as payment via mobile phones, digital devices ), contributing to the promotion of Financial Inclusion; (iii) Strongly increasing the number of people accessing payment services, raising the percentage of people aged 15 and over with bank accounts to at least 70% by the end of 2020; (iv) On that basis, improve access to banking services, including basic non-cash payment facilities and services that are suitable to demand, of high quality, at a cost-effective level fees acceptable to the majority of the adult population and businesses, especially those in rural, remote and isolated areas, small and medium-sized enterprises based on the payment system of organizations providing payment services operating in a safe, healthy, responsible and sustainable manner

Security has become a vital issue of the banking industry in the digital age Security is also the top concern of customers when deciding to choose a non-cash payment method So without security measures, the development of Digital banking services cannot be done

Encryption of transmission: To keep the secret when transmitting information between two entities, they encrypt them Information encryption is the conversion of information into a new form other than the original form, this new form is collectively known as ciphertext There are two encryption algorithms: Conventional algorithms, also known as symmetric encryption algorithms Accordingly, the sender and receiver will share the same key It is a secret code used to encrypt and decrypt a message that only the sender and receiver know However, with this algorithm there are many problems, for example: the number of keys will increase a lot when the number of customers increases, leading to how the management will be organized…; Public key algorithms, also known as asymmetric encryption algorithms, solve the key exchange problem of conventional algorithms Accordingly, the asymmetric encryption algorithm uses two keys, one for encryption and the other for decryption Receiving a message is made safe and secure by announcing one key (public key) and keeping the other key secret (private owner of the private key can decrypt and read it This is a safe technology to secure information on applications and especially used in Digital banking transactions Public encryption algorithm used in transmission encryption technology and electronic signature Electronic signatures are used to keep information private The encryption of the transmission will cover the outside to ensure the information is safe

Digital signature: A digital certificate (CA) is a file that contains data about the owner These data are verified and authenticated by the digital certificate provider The user will use the digital certificate issued by the author to sign the electronic message Signing this digital signature means encrypting the message before sending it over the Internet At this time, the digital certificate issued to the customer is considered an electronic signature A digital signature is data that has been signed and encrypted by and only by the owner This is an asymmetric code-issuing technology that encrypts data on the transmission line and determines that: on the customer side, the transaction is confirmed, and on the bank side, the transaction is confirmed with the customer A digital certificate issued by a unit operating in the software field selected by the Bank as a supplier and issued to customers when using this service

+ SET (Secure Electronic Transaction): is a security protocol developed by Microsoft, SET is private, authenticated and very difficult to penetrate, creating high security, however, SET is rarely used due to its complexity and the need to There are user-specific card readers

+ SSL (Secure Socket Layer): is a security technology developed by Nescape, built into the customer's browser, which is an encryption mechanism and establishes a secure transmission from the Bank's machine to the customer (https), SSL is simple and widely used

+ One-time password (OTP) helps to authenticate online transaction orders issued from people with legitimate account access rights, but the security level varies depending on the OTP code receiving solution This is a common form of receiving OTP for individual customers, every time a customer makes a transaction, an OTP code will be sent in the form of SMS through the phone number that the user has registered Currently, depending on each bank, OTP codes received via SMS can still authenticate transactions with a limit of up to 300 million VND

Soft Token and Smart Token are applications that are installed on smart devices In order to install the application, the customer must register with the bank and each device can only install one OTP generator application Smart OTP will use an algorithm that synchronizes with the banking system at the same time and generates a random OTP code with a validity limit of 30 seconds - 1 minute; For Soft Token/Smart Token, it is also classified as having the function of user authentication Token or without this function, corresponding to a higher transaction limit; The convenient point of this method, helping customers to get OTP code without mobile signal, without Internet is very convenient for individual customers Many banks encourage customers to use the form of obtaining OTP codes via Soft Token by freeing the service However, because it is attached to personal devices, the use of Soft Token or Smart Token sometimes causes inconvenience in businesses, where there is a payment authorization activity for certain locations

Token Key or OTP Card is a very familiar device, especially for corporate customers Token Key has a common shape like a diamond, sometimes the size of a matchbox cut in half, works for 3-7 years without changing batteries Some banks offer Token Key in the form of a card to reduce the size of the Token Key, meet the needs of customers and take the name OTP Card

Industry 4.0 and and its impact on digital banking

According to Gartner, the industrial revolution 4.0 (or the fourth industrial revolution) comes from the concept of "Industrie 4.0" in a German government report in 2013 "Industrie 4.0" connects embedded systems and infrastructure intelligent manufacturing facility to create digital convergence between Industry, Business, functions and internal processes

According to Klaus Schwab, "the first industrial revolution used water and steam power to mechanize production The second revolution took place thanks to the application of electricity to mass production The third revolution used the use of electricity for mass production Using electronics and information technology to automate production Now, the fourth industrial revolution is emerging from the third, it brings technologies together, blurring the lines between physical, digital and biological"

Figure 1 7 History of 4 industrial revolutions in the world

According to Klaus Schwab, the breakthrough speed of the industrial revolution 4.0 currently has "no historical precedent" When compared to previous industrial revolutions, 4.0 is progressing at an exponential rather than a linear rate Moreover, it is disrupting almost every industry in every country And the breadth and depth of these changes heralds the transformation of entire production, management and governance systems

Industry 4.0 will take place, following the definition of Klaus Schwab, industrial revolution 4.0 will take place in 3 main areas including: Biotechnology, Digital and Physics And the core elements of digital in the industrial revolution 4.0 are: Artificial Intelligence (AI), Internet of Things (IoT) and Big Data

In the field of biotechnology, the industrial revolution 4.0 focuses on research to create leaps and bounds in agriculture, fisheries, medicine, food processing, environmental protection, renewable energy, etc chemistry and

Finally, the field of physics with next-generation robots, 3D printers, self-driving cars, new materials (graphene, skyrmions…) and nano technology

Currently, the industrial revolution 4.0 is taking place in developed countries such as the US, Europe, and part of Asia Besides new opportunities, the industrial revolution 4.0 also poses many challenges to humanity

The downside of industrial revolution 4.0 is that it can cause inequality Especially can disrupt the labor market When automation replaces manual labor in the economy, when robots replace humans in many fields, millions of workers around the world may fall into unemployment, especially those working in the insurance sector insurance, real estate brokerage, financial consulting, transportation

1.3.2 Impact of the Industry 4.0 on banking activities in Vietnam

1.3.2.1 Impact of the model of organization and governance at banks

As stated above, according to Klaus Schwab, the core elements of digital in the industrial revolution 4.0 are: Artificial Intelligence (AI), Internet of Things (IoT) and Big Data In particular, Artificial Intelligence (AI) is the focus of development of many large technology companies in the world, including Google

In the near future, AI will gradually become perfect; may even be more intelligent and accurate in some ways than humans Banks can apply AI in risk portfolio management, customer management, database management With the ability to self-learn and adapt, the potential of AI is not limited to applications, so the requirement for the banking industry in the future is to grasp trends, apply ways of working and AI control to ensure safe and efficient banking operations

The digital banking model that operates on a technology platform through digital devices connected to computer software through the Internet environment has in fact changed and will change the entire system structure of the bank bank Industry 4.0 will also create new strides in changing the way business is communicated and handled through interaction and electronic communication

With the growing telecommunications infrastructure, conversations are tending to video calls with increasing stability and quality Therefore, customer care work at banks may also require additional skills to work remotely via video-call In the distant future, virtual-reality technology and holography will be able to completely replace human communication The 3D calls like in the sci-fi movies may not be so far away

1.3.2.2 Impact of distribution channels and traditional banking products and services

Industry 4.0 may completely change the distribution channels and traditional banking products and services In the past 10 years, the emergence of smartphones (smart phones) has changed the way people communicate and interact, leading to changes in distribution channels, sales networks and design products and services of banks Banking services via Internet, Mobile, social networks, development of digital banking and paperless transactions will be a strong development trend Customer experience will be the dominant trend, in some developed countries, including developing countries, more and more "paperless banks" have appeared

Thanks to the application of digital transformation, the bank's products can be integrated with many ancillary products and services to satisfy customers The application of the principles of the industrial revolution 4.0, issues such as application programming interfaces (APIs), seamless delivery or intelligent analysis will be the popular application trends in business operations product development activities, especially products with high technology content of banks In addition, big data and customer behavior analysis are also becoming the future trend in the digital age, thanks to the fact that supporting technology can collect internal and external data Through the organization of customer behavior analysis to improve service quality, bring added value, contribute to cost reduction and support decision-making processes.

Factors Influencing the Development of Digital Banking Services for

Customer Behavior: The shift in customer behavior towards digital channels has a significant impact on digital banking services Customers now prefer convenience, speed, and accessibility, driving banks to invest in digital platforms to meet their expectations

Technological Advancements: Rapid advancements in technology play a crucial role in shaping digital banking services Banks need to adopt and integrate emerging technologies such as artificial intelligence, big data analytics, blockchain, and biometrics to enhance their digital offerings

Competition and Market Trends: Fierce competition in the financial sector and emerging market trends influence banks to stay innovative and competitive To attract and retain customers, banks must continually improve their digital services and keep pace with market trends

Regulatory Environment: Regulatory policies and compliance requirements affect the development of digital banking services Banks must adhere to strict security and data protection regulations to ensure customer trust and compliance with legal standards

Security Concerns: As digital banking expands, cybersecurity threats become more sophisticated Banks must invest in robust cybersecurity measures to protect customer data and prevent fraud, ensuring a secure digital banking environment

Digital Literacy and Access: The level of digital literacy among customers and the availability of digital infrastructure in different regions impact the adoption of digital banking services Banks need to consider accessibility and provide user-friendly interfaces for diverse customer segments

Internal Capabilities and Resources: The internal capabilities of a bank, including IT infrastructure, skilled workforce, and financial resources, are essential for successful digital transformation Banks need to invest in talent and technology to develop and manage digital banking services effectively

Partnerships and Collaborations: Collaborating with fintech companies and technology partners can accelerate the development of digital banking services Partnerships enable banks to leverage innovative solutions and expand their service offerings

Customer Insights and Analytics: Utilizing customer data and insights is critical for understanding customer preferences and needs Data-driven approaches help banks tailor their digital services and marketing strategies to enhance customer engagement

Customer Trust and Security: Building and maintaining customer trust is vital for the success of digital banking services Transparency, privacy protection, and reliable customer support are crucial in establishing and retaining customer trust

Change Management and Cultural Shift: Shifting from traditional banking to digital requires a cultural change within the organization Change management strategies and employee training are necessary to ensure a smooth transition to digital practices.

THE DEVELOPMENT PRACTICE OF DIGITAL BANKING

An overview of Joint Stock Commercial Bank for Foreign Trade of Vietnam 36 1 History of development and organizational structure

2.1.1 History of development and organizational structure

The former Vietnam Bank for Foreign Trade, now the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), was established and officially went into operation on April 1, 1963 with its predecessor the Foreign Exchange Department (under the Bank) Vietnamese State-owned goods)

As the first state-owned commercial bank selected by the Government to pilot equitization, Vietcombank officially operated as a joint-stock commercial bank on June 2, 2008 after successful implementation equitization plan through the initial public offering of shares On June 30, 2009, Vietcombank shares (stock code VCB) were officially listed on the Ho Chi Minh City Stock Exchange

Over the past 60 years of construction and growth, Vietcombank has made important contributions to the stability and development of the country's economy, promoting well the role of a key foreign bank, effectively serving economic development in the country, while creating important impacts on the regional and global financial community

From a specialized bank serving the foreign economy, Vietcombank today has become a versatile bank operating in many fields, providing customers with a full range of leading financial services in the field of commerce international; in traditional activities such as capital trading, capital mobilization, credit, project financing as well as modern banking services: foreign currency trading and derivatives, card services, banking electronic…

Possessing a modern banking technical infrastructure with the successful transformation of the core banking system (Core Banking) in early 2020, Vietcombank has many advantages in applying advanced technology to automatic processing of services banking, developing e-banking products and services based on high technology Digital transaction space and convenient digital banking services for individual and corporate customers such as: VCB Digibank, VCB Pay, VCB - iB@nking, VCB CashUp, VCB DigiBiz is and will continue to attract a large number of customers with its convenience, speed, safety and efficiency, creating a habit of non-cash payment for a large number of customers

After more than half a century of operation in the market, Vietcombank is now one of the largest commercial banks in Vietnam Vietcombank currently has more than 600 branches/transaction offices/representative offices/members at home and abroad including: Head office in Hanoi; 121 Branches; 484 transaction offices;

04 domestic subsidiaries (financial leasing company, securities company, remittance company, Vietcombank building company 198); 03 overseas subsidiaries (Hong Kong Vinafico Company, Vietcombank Money Transfer Company in the US, Subsidiary Bank in Laos); 01 Representative office in Ho Chi Minh City Ho Chi Minh City; 01 Representative Office in Singapore, 01 Representative Office in the US; 03 non-business units: School of human resource training and development; 01 Cash Processing Center in Hanoi and 01 Cash Processing Center in Ho Chi Minh City Ho Chi Minh; 03 Joint venture and associate companies Regarding human resources, Vietcombank currently has nearly 22,000 employees

In addition, Vietcombank also developed an Autobank system with more than 2,500 ATMs and over 60,000 card payment merchants nationwide Banking activities are also supported by a network of 1,173 correspondent banks in 95 countries and territories around the world…

On November 26, 2020, at the Retail Banking Forum 2020 jointly organized by IDG Group and Vietnam Banks Association (VNBA), Vietcombank was honored as "Vietnam's typical digital transformation bank 2020” with the official launch of the brand new VCB Digibank digital banking service

Currently, the current organizational model of Vietcombank is divided into many departments, the departments perform separate functions and there is support between one department and another

This management structure helps Vietcombank decentralize the management of each service segment in a specialized manner, saving management costs as well as using human resources more effectively, and at the same time helping to classify customer groups to have appropriate policies on products and services, thereby creating a reputation and retaining customers for a long time

(Source: Vietcombank) 2.1.2 Vietcombank's business performances in recent years

Vietcombank's operating results in the period of 2020 - 2022 have many

2022 is considered a successful year for Vietcombank, table 2.1 shows that all indicators increased, in which the growth rate of operating income and operating expenses were quite similar, increasing 121% and 105% respectively compared to that of Vietcombank 2021; However, profit after tax had a remarkable growth rate of 140% This achievement continues to affirm the correctness of Vietcombank's business transformation strategy focusing on 03 pillars: retail, services, investment (capital business), in accordance with the target ensure the quality of safe, effective growth and sustainable development, and at the same time show the efforts and dedication of more than 22,000 Vietcombank officers and employees throughout the system (by 2022)

In 2020, Vietcombank successfully put into operation a new core banking system - Core Banking Signature and implemented many projects applying modern technology to improve operational and governance capacity according to international practices The implementation of the new Core banking system allows diversification of products and services provided to customers, especially digital-based products and services Along with that, Vietcombank drastically reduced operating costs, applied modern technology platforms, took the lead in digital banking transformation, thereby achieving high business results at low costs

In the face of unusual developments in the socio-economic environment, Vietcombank has made great efforts to implement "multi-objectives" such as effective Covid-19 prevention, sharing difficulties with customers and developing business lasting Accordingly, Vietcombank is the pioneer bank to synchronously and strongly deploy solutions to support businesses and individuals affected by the Covid-19 epidemic and natural disasters through interest rate support packages, interest rate reductions for customers and investors loans for existing outstanding loan packages; simultaneously reducing lending interest rates for customers in the central region affected by storms and floods, reducing payment service fees, etc., according to Resolution 42 of the Government The results reflected in Vietcombank's Annual Report for the fiscal year 2020 show that the total outstanding loan with interest rate reduction support at Vietcombank is about VND 441,768 billion; The total amount of interest to support customers due to interest rate reduction in 2020 is more than 3,700 billion VND; Restructuring the repayment term and maintaining the debt group according to Circular 01 of the State Bank for loan customers affected by the Covid-19 epidemic as of December 31, 2020 is VND 5,156 billion

2.1.3 Digital banking service at Joint Stock Commercial Bank for Foreign Trade of Vietnam

According to Resolution 293/NQ-VCB-HĐQT dated June 25, 2019, as a goal for the digital banking transformation process, the Board of Directors of Vietcombank approved the selection of a digital bank model as follows:

- The digital banking approach focuses on improving the existing capabilities of the bank to create the basis for building a unified channel digitalization model The model is developed according to the omnichannel strategy, while allowing customers to have a uniform experience across all distribution channels This model also helps banks approach customers more closely at every interaction point, thereby capturing intents, recognizing customers' wishes, customizing and optimizing the effectiveness of interactive versions Through technological changes, the back office team's infrastructure and operations are digitized to best support the front office team's transformation roadmap In other words, choosing this digital banking model focuses on transforming existing banks to improve user experience and improve business efficiency

The practice of digital banking service development at Joint Stock Commercial

Commercial Bank for Foreign Trade of Vietnam in industrial revolution 4.0

Industry 4.0 is both an opportunity and a challenge for any country, on a smaller scale than for any business or bank Therefore, Vietcombank has chosen for the author the bank digitization model, which is an inevitable change to meet the change in customer expectations, with the support of breakthrough advances in technology, aiming to transform from the traditional provision of products and services to the digital and online space Digital banking will dominate the market thanks to its outstanding connection with customers and the ability to direct customers' behavior and usage needs

To analyze the application of digital technology in banking services at Vietcombank (Vietnam Commercial Joint Stock Bank), we can delve into the following aspects:

Mobile Apps and Internet Banking:

Vietcombank's mobile app provides a user-friendly interface and various convenient features for customers, such as checking account balances, domestic and international money transfers, bill payments, mobile top-ups, and more

Internet Banking allows customers to access their accounts through web browsers on personal computers or mobile devices, enabling them to manage their finances conveniently and flexibly

Electronic Payments and Digital Bank Cards:

Vietcombank integrates multiple electronic payment methods, including e-wallets, QR code payments, and online credit card payments These facilitate quick and easy transactions for customers

Digital bank cards (virtual cards) enable secure online transactions, reducing security risks associated with traditional card information

Vietcombank deploys numerous ATMs and self-service kiosks at convenient locations like supermarkets, shopping centers, and bus terminals This allows customers to perform cash withdrawals, money transfers, and account inquiries conveniently and quickly

Vietcombank utilizes advanced technologies like Artificial Intelligence (AI) and Machine Learning to enhance customer experiences The system analyzes data and provides personalized financial advice and recommendations tailored to each customer

Blockchain technology may be used to bolster security and authentication in processing banking transactions

Vietcombank invests significantly in high-tech security systems to ensure the safety and protection of customers' personal information This includes security measures such as two-factor authentication, data encryption, and continuous monitoring of transaction activities

In the fiercely competitive banking industry, Vietcombank must focus on digital transformation to maintain its competitive position and attract new customers

Facing competition from other banks and emerging financial technology (Fintech) companies, Vietcombank continuously updates and upgrades its technology systems to meet the ever-increasing demands and needs of customers

Vietcombank's digital banking model has chosen to focus on strategic transformational drivers: Expanding sales and distribution scale; Diversify banking products and services; Better service quality; Stricter risk management, resulting in high efficiency at low cost and enhanced customer experience As follows:

2.2.1 The practice of applying digital technology

2.2.2 The scale of digital banking service

Currently, Vietcombank is maintaining two distribution channels for products and services, which are Traditional Channel (Counter Channel - with the presence of physical transaction points: Branches/Transaction Offices) and Modern Channel (Banking Channel) electronic goods - applying advanced and modern technology platforms such as channels on mobile, web )

If you divide the business process into stages: Marketing -> Sales -> Providing products and services -> After-sales care, it can be seen that the counter channel is still the main channel of interaction with customers (see table below) 2.2) Other modern channels besides the counter take care of some stages in the process of interacting with customers such as: VCB Digibank channel on Mobile application or web browser to serve the transaction process and use basic products such as money transfer , inquiry, savings, payment services; Social network channel, Banking via landline 24/7 VCB-Phone B@nking serves the customer care process, supports the use of products, services, and marketing; VCB Digibank channel on web browser participates a small part in the marketing process by displaying advertising information

TABLE 2.2.VCBD IGIBANK SERVICE REGISTRATION / CHANGE CHANNEL

No Transaction Type Reception channel

9 Reactivate service on another device x x

Currently, Vietcombank's channels are still relatively independent, there is no link or integration with each other, affecting the customer's service experience The sales process mainly takes place at the counter, sales on modern channels are still limited, there is no optimal combination between modern and counter channels in sales processes And the main reason is that Vietcombank's integrated multi-channel management system is not working effectively

2.2.2.1 Expansion of digital banking services at the counter channel

As mentioned above, from July 16, 2020, Vietcombank officially launched VCB Digibank digital banking service with simultaneous transaction channels Customers can use their username/password using VCB-iB@nking, VCB-MobileB@nking, VCBPAY services to activate the conversion to use VCB Digibank digital banking services on mobile applications or web browser Customers can also request to change the use of VCB Digibank services at Vietcombank's channels

However, when registering for a new VCB Digibank service, customers need to go to the Transaction Counter to register a new one with complicated registration/change request forms for VCB Digibank service at the Transaction Counter, including:

- Registration form for using E-Banking Service (new form): Applicable to individual customers who already have an account at VCB and wish to register for VCB Digibank service

- Application form for opening individual customer information files, transaction accounts and registration for banking services (new form): Applicable to customers opening new accounts and registering for VCB Digibank services

- Request to change information of individual customers and services: Applicable to customers who request to change using VCB Digibank services

- Request to increase/cancel the transfer transaction limit of VCB Digibank Service: Apply to customers who want to increase the transfer limit beyond the standard

Table 2 3 Development of VIETCOMBANK's branch FOR 2020 - 2022

Table 2.3 shows that Vietcombank's counter channel system, although the scope of operation has not expanded geographically and remains the same in 53/63 provinces and cities across the country, has achieved a fairly even growth in size in the past year period of 2020 - 2022 Currently, the whole Vietcombank system has

126 branches, 515 transaction offices operating in 53/63 provinces and cities in the country, Vietcombank's counter channel serves about 3.17 million customers

The main program used at the counter is the Aperio operation program for

2019 and earlier and now is E-bank services, this program is used to operate the main operations related to the Core banking system, customers, loans, deposits, money transfers, accounting) In addition, there are many other systems at the counter such as card management system, IB system, bill payment, signature stamp sample management system, trade finance, document printing system for customers and many other systems Another system built by Vietcombank itself for its staff to use in providing products and services to customers

In general, Vietcombank's products and services provided at the counter have been computerized, but from the perspective of digital banking, computerization is only applied sporadically for each business without any support It does not support business process flows and does not yet support linkage between application systems The current digital banking system at the counter is only for business purposes, not for sales Meanwhile, some banks have digitized through the construction of self-service systems for customers to participate in a part of the process such as smart queuing systems, capable of conveying required information of the customer when taking the number into the counter channel for the teller to perform; manipulating, pre-entering transactions via the mobile system, In this way, the channels have been connected and integrated with each other to handle customer transactions starting from one channel and ending in another channel Currently, Vietcombank has supported to prepare and print documents for customers, however, this document printing system only helps customers not to write by hand, but does not support forwarding that printed information into the digital banking system to Transactions do not have to re-enter when performing operations

Modern banks are equipped with solutions for mobile branches, the main software system in branches can be operated on tablets and delivered to customers' residences after receiving customers' requests via Mobile channels, Website, or easily arranged at events, supermarkets, Currently, setting up a branch of Vietcombank needs very complicated requirements in terms of technology infrastructure as well as time deployment time, no mobility The current sales processes and information technology systems at VIETCOMBANK are only suitable for sales at transaction points, and there are no supporting solutions and regulations for off-counter sales

2.2.2.2 Expansion of digital banking services in e-banking channels

SOLUTIONS FOR DEVELOPMENT OF DIGITAL BANKING

Basis for proposed solution

3.1.1 The development of digital banking services in Vietnamese banks

Digital transformation is an inevitable trend of the economy in the era of the industrial revolution 4.0 taking place around the world Along with the development trend of the industrial revolution 4.0, Vietnamese commercial banks have implemented and achieved certain successes in digitization and application of modern technology in financial - banking activities such as: Digital banking/Digital Lab; Timo Bank, ATM + LiveBank Some commercial banks have successfully cooperated with Fintech companies to bring new and modern technology into payment activities on mobile devices such as applying biometrics, using QR code, Tokenization, mPOS technology, e-wallet Commercial banks have also taken the first steps in the process of researching and applying artificial intelligence (AI), robotic automation (RPA), chain block (Blockchain) Typical digital banking development trends include:

- Application of Artificial Intelligence (AI) in banking: The main function is to advise customers on information about interest rates, exchange rates, products, fee schedules , answer customers' questions about locations, transaction fees, card opening process Besides, there are some banks that have automated the registration and service change processes through the implementation of SMART FORM; use software to analyze customer information, evaluate and forecast their debt solvency to make accurate lending decisions

- Combining banking service provision with big technology companies: The financial and banking services provided by Big tech are largely not widely available The big technology corporations in Vietnam (FPT, Viettel, CMC, VNG, BKAV, VC Corp) still mainly focus on the main field of technology, a few have access to the banking service supply segment through develop electronic payment tools, such as WePay (VC Corp), Zalo Pay (VNG), Bao Kim (VNP)

- Converting core and cloud banks: This transformation is still slow due to lack of capital resources or has been implemented but is formal and has not brought about commensurate efficiency because commercial banks have to prioritize resources for processing problems of bad debt handling, liquidity assurance corebanking system is relatively outdated, not qualified to integrate digital applications based on big data, or converted but did not buy all features of modern corebanking Regarding data integration on the core, most banks have not yet deployed cloud computing due to sensitive data characteristics, complex and unsynchronized data systems

- Development of digital banking and e-wallet applications: Up to now, the trend of moving towards Digital Banking has been initially shaped in the banking system

3.1.2 Development orientation of Joint Stock Commercial Bank for Foreign

Trade of Vietnam to 2025 – Vision to 2030

In recent years, Vietcombank in general and retail activities at Vietcombank in particular have continued to develop and achieved many impressive results To achieve and maintain the No 1 position in retail in Vietnam market, Vietcombank has set very specific goals in its development plan to 2025 and vision to 2030

Accordingly, Vietcombank's goal is not only to be number one in terms of financial indicators, but also towards another important indicator of being the number one digital banking in terms of customer satisfaction, providing a consistent digital experience for customers on banking contact points, bringing convenience and peace of mind to customers

With clearly defined goals, in 2019, Vietcombank implemented the Project Transforming Retail Operation Model - RTOM and phase 1 - Design phase was completed, in order to transform all aspects retail activities with the cross-cutting orientation: "Customer-centric, towards digital experience and customer engagement" Stemming from strategic priorities in retail banking, based on thorough research on the needs and culture of Vietnamese customers, Vietcombank's culture, and comparison with regional and international standards , the RTOM project has been identified by the Board of Directors and Executive Board as one of the key projects of Vietcombank, one of the important steps to realize Vietcombank's goal of becoming the No in Viet Nam

3.1.3 Development orientation of digital banking services of Joint Stock

Commercial Bank for Foreign Trade of Vietnam

With breakthrough digitization innovations in 2020, Vietcombank has focused on researching and taking advantage of outstanding technology to build and deploy fast and convenient modern payment services, while focusing on highest level to ensure safety and security for customers in transactions

Defining the construction and development of digital channels as a continuous process to match the development of technology, consumption habits and customer needs in the 4.0 era, Vietcombank has developed and since mid-March 7/2020, officially launched VCB Digibank service - a completely new digital banking service This is an integrated multi-channel payment platform based on merging separate transaction platforms on Internet Banking and Mobile Banking, providing seamless and unified experiences for customers on electronic means such as mobile phones and tablets computers (PC/Laptop) and mobile devices (phone/tablet)

With the bank-wide digitization strategy, in the overall building of resources and apparatus to lead the implementation steps, Vietcombank established a Digital Transformation Steering Committee with members from the Board of Directors and the Executive Board in which the Chairman of the Board of Directors directly participates in the direction

Along with that, Vietcombank established a Digital Banking Center with the goal of strengthening the digitization capacity of the whole banking system and directly proposing and deploying digital platforms applying modern technology

With the formation of that comprehensive capability apparatus, Vietcombank has strong commitments in prioritizing resources to realize the customer-centric digitization strategy of banking operations, focusing on promoting, openly provide diverse products and services, form a wide ecosystem, promptly respond to customer needs, lead trends and enhance customer experience

3.1.4 Opportunities and challenges for Joint Stock Commercial Bank for Foreign

Trade of Vietnam in developing digital banking services in the context of industrial revolution 4.0

- Potential of digital customers in Vietnam market:

Vietnam is a country with a large population with more than 98 million people, is considered one of the 20 countries with the highest internet usage rate in the world with 68.17 million users (accounting for 70% of the population) About 94% of Vietnamese users use the internet regularly with an average usage time of more than 6 hours/day (reported by the Ministry of Information and Communications at the Vietnam Internet Day Conference organized by the Vietnam Internet Association) organization) Thus, Vietnam with a large population and a high percentage of internet users is a great potential market for digital banking

- The impact of the trend of industrial revolution 4.0 and the benefits of the digital banking:

+ Reduce transaction and management costs

+ The digital banking system can process hundreds of thousands of transactions at the same time, without geographical restrictions, 24/7 customer service time

+ Diversified products and services with higher quality

+Support executive management, strategic planning; increase labor productivity, increase competitiveness; increasing new business opportunities thanks to the strong development of e-commerce; increasing the ability to participate in global and regional value chains due to easier access to information, data and connectivity; participating in an e-economic ecosystem combining banking, commerce, healthcare, insurance, tourism, education

+ Opportunities for innovation, breakthrough, decision-making based on big data analysis

+ Easily manage customer interactions with the Bank

- Smart mobile devices are becoming more and more popular: Science and technology are constantly developing, the price of mobile devices is decreasing, consumer behavior following the digital trend of customers is increasing, creating favorable conditions conditions for digital banking channels to develop

Solutions for developing digital banking services at Joint Stock

Commercial Bank for Foreign Trade of Vietnam in the context of industrial revolution 4.0

The solutions for applying digital technology in banking services may include the following points:

Mobile Apps and Internet Banking: Providing mobile apps and Internet Banking services allows customers to conduct transactions and manage their accounts remotely through mobile phones or computers This brings convenience and flexibility, enabling customers to perform transactions anytime, anywhere

Electronic Payments: Integrating electronic payment methods such as e-wallets, QR code payments, and online credit card payments enables customers to make fast and secure payments for shopping and bill payments

Digital Bank Cards: Offering digital bank cards (virtual cards) for online transactions reduces security risks associated with traditional card information

Self-Service Banking: Implementing self-service solutions like ATMs and self-service kiosks allows customers to perform transactions conveniently and quickly without the need to visit a physical bank branch

Artificial Intelligence (AI) and Machine Learning: Utilizing AI and machine learning technology to analyze customer data and provide personalized services and product recommendations based on customer behavior and needs

Blockchain and Cryptocurrencies: Applying Blockchain technology enhances security and authentication in processing banking transactions Researching and implementing cryptocurrencies like Bitcoin or stablecoins can offer more convenient and secure payment options

Chatbots and Automation: Using chatbots and process automation to support customers in performing transactions and accessing information quickly and efficiently.

Solutions to scale up digital banking services

Thoroughly grasp and direct branches to shift the provision of products, services and customer service from counter channels to electronic banking channels and customer care channels such as Internet Banking, Mobile Banking, ATM, POS, etc Kiosk, Contact Center, Social Network; develop modern technology solutions to attract customers and increase competitiveness such as VCB-iB@nking, VCB-MobileB@nking, VCBPAY, contactless payment

Developing digital banking products and services at Vietcombank in the period of 2021 - 2025; Forming a culture at Vietcombank about converting from traditional transaction methods to digital transactions, through the implementation of the principle that each Vietcombank employee must be a pioneer and exemplary in registering and using services, at the same time shift the distribution channel such as stipulating the ratio of staff/products and services; thoroughly implement the transfer of simple and appropriate transactions such as money transfer, bill payment, savings deposit, inquiry of customers via digital banking channel Promote links with banks, information technology units, business organizations, online shopping channels to increase banking payment facilities (such as payment transferring money, paying bills ), linking with financial companies

In addition, the Bank needs to invest in upgrading and expanding transmission lines with broadband, large capacity, high speed, minimizing network congestion and network errors for customers to perform digital banking transactions quickly, no matter the time and place, especially on occasions when the demand for payments is high

The leaders of Vietcombank's branches need to properly appreciate the importance and benefits of digital banking development, and must consider digital banking services as a service that all modern banks focus on research and development Developing digital banking services is an important part of the strategic development plan and always pursuing the goal of developing digital banking services in the process of implementing the plan and strategy

The key point here is to change customers' cash consumption habits so that they realize that digital banking is very convenient, saving costs and time Therefore, Vietcombank's top policy is to guide and create trust for customers in this service It is necessary to build an online digital banking system or online websites to guide and introduce customers to digital banking services and its convenience.

Solutions to develop the quality of digital banking services

New technology will create a breakthrough in the application of new technologies to the bank's operations, which will help successfully transform digital banking In other words, the use of new technology will be a tool to help the bank achieve its goals when building a digital bank as follows:

Improve customer experience: Consumers today have more choices than ever before To compete, businesses need to offer differentiated products/services, while providing meaningful interactions and experiences that delight and foster customer loyalty with brand To achieve such a goal, it is clear that banks need to apply new technologies such as AI, Bigdata, or Cloud, which will bring high efficiency, improve customer experience and reduce operating costs

Process optimization: Enterprises provide a great experience for employees and customers based on the powerful backoffice capabilities Streamlining workflows, digital processes, and automated tasks is how businesses can optimize workflows, making work more efficient

Product digitization: is the use of technology to enhance the quality of products/services, such as smart connected devices or voice-activated capabilities New technologies not only help businesses stay at the forefront of technology, but also create a resilient infrastructure to continuously innovate and adapt to rapidly changing and user needs

3.2.2.1 Artificial Intelligence and Robotic Process Automation

Artificial intelligence (AI) and robotic process automation (RPA) both aim to assist businesses in automating manual tasks

Although the concept has appeared since the 1950s, but in recent years, Artificial Intelligence is becoming one of the typical technology phrases, representing the 4th Industrial Revolution and becoming the core of many technologies digital transformation strategy of organizations, businesses or governments Artificial intelligence has and continues to have a pervasive influence on human life, creeping into all areas of society that are sometimes so familiar that we do not realize such as: face unlock, etc hands on smartphone; Google Translate multi-language translation system; ad recommendation system…

Artificial intelligence (often used with the acronym AI - Artificial Intelligence) is known for many different interpretations, but can be summarized by four groups of views as follows: (1) Inference systems think intelligently like humans, (2) Systems think logically; (3) The systems act as intelligent as humans;

(4) Rational action systems More specifically for the human ability to think and act, today's artificial intelligence works focus on researching and giving machines the following capabilities:

- Ability to represent knowledge and infer

- The ability to hear and see

- The ability to show gestures

Robot or RPA (Robotic Process Automation) is one of the popular concepts associated with artificial intelligence Both of these technologies are aimed at using computers to replace humans in some tasks If AI focuses on the "intelligence" of machines, or the machine's ability to dynamically process and change behavior from the learning process, then RPA refers to software robots that use a rule engine (Rule engine) to replace people automatically performing office tasks on personal computers, mainly work with fixed logic

Since the 2000s, the ability to store and process data has grown explosively along with computing devices, storage, microprocessors, parallel computing programming models, etc., businesses can compute data Big Data at low cost and forming invaluable assets

For the banking and digital transformation industry, data and data analytics are also becoming increasingly important All customer interactions, transactions, and personal information constitute valuable data In addition, with the continuous development of IoT and internet, banks have a great need to collect more other information sources (telecommunications, social networks, e-commerce, ) to get more understanding Deeply know about customers who are using the service and also potential customers Big Data technology allows the bank to process that huge amount of data in real time to make strategic decisions quickly

There are many definitions and interpretations of cloud computing Simply put, cloud computing treats hardware and software as services and can be used and shared over the Internet

Deploying cloud computing for banks will bring huge benefits to banks immediately and in the long term, including:

- Cost benefits: Low cost is one of the important features of Cloud Users demand and pay when using The bank may also always be ready to cancel the service when needed

- Flexibility to change: Cloud allows to automatically expand or shrink the system depending on needs This capability is also the factor that brings about cost benefits through efficient and thorough provision and use of resources

- Reliability: Cloud is always designed to ensure the continuity of business operations and has mechanisms to recover data in case of failure This characteristic is essential and paramount in a banking institution

- Virtualization: Resources can be combined and made available to users by virtualization, shortening the time it takes for users to build an application and deploy it on top of IT infrastructures

- Wide-area access: With the cloud, users (customers or within the bank) can access the service at any location if needed, including abroad

- Device independence: Service users can use any kind of different terminal devices such as laptops, smartphones, tablets, etc with an internet connection

3.2.2.4 Microservice and Application Programming Interface (API)

Microservices were born as a variant of SOA (Service Oriented Architecture), inheriting many advantages of the old architecture and solving the problems that SOA is still facing Microservices architecture tries to divide the system into very small components, and more importantly, those components need to be able to develop, deploy independently, replicate when an instance fails, ensure fault isolation, does not cause a collapse of goods

Microservices and APIs are predicted to grow and become popular architectures in the future, which can bring banks the following benefits:

- Helping banks understand important components in software systems that are complex in their business Thereby making it easier to develop, test, and have more flexibility in business tuning without having to change the overall IT architecture

Possible solutions in application of RPA RPA/AI

RPA/AI has many applications for specific banking operations such as data processing, paperwork:

- Data transmission: Banking operations often exchange a large amount of data between statutory organizations and between systems within the bank Currently API (application program interface) is a partial automation solution A manual solution is the only way for systems that cannot yet implement APIs for some reason (cost, connectivity standards, product limitations, vendors, etc.) RPA/AI application data transfer will solve more complex problems A robot can do the work of an API, a scanner, or a human The daily data entry tasks between many different software applications are also one of the businesses that fall within the scope of this application

- Standardization of data: banking and financial activities are greatly influenced by data formats The conversion of data formats is a routine business (e.g currency conversion, time format conversion, ) These tasks will be repeated by the robot thousands of times without any errors

- Reconcile card transactions, support tracing: Reconciling card transactions requires taking data from many different sources and systems and performing manual comparison steps, which consumes a lot of resources due to the number of transactions large, can be error The RPA/AI solution will bring in robots to automate this process, and can also output aggregated report files according to the form

- Loan processes: The loan process requires processing a large amount of paperwork In the whole large process, there are also processing steps that are simple tasks such as receiving, storing, comparing data, etc., and can be fully automated by RPA/AI

- IT services: The IT department in the bank is often busy with the constant requests of internal units, as well as the tasks of providing consolidated reports to management levels Most IT staff when handling normal reporting requirements simply take data according to an existing rule and aggregate it Such jobs are very suitable for applying RPA In addition, there are many possibilities to apply RPA/AI to the bank's IT services such as: account key generation, periodic system monitoring, etc

Customer identification and verification (KYC) process is one of the process of filling out the form where RPA can be applied KYC is an important process in the financial industry and also exists in many other fields such as: telecommunications, social networks, e-commerce, During this process, the organization/business performs identity verification of current and potential customers to prevent fraud or illegal activities Therefore, KYC is time consuming and can lead to errors due to the requirements related to data reconciliation between multiple types of documents KYC can apply a variety of AI technologies such as facial recognition, handwriting, machine learning, and combine with RPA to automate the customer authentication process, making the process simpler, faster, increase the accuracy rate in data reconciliation and shorten the lead time, increase the customer experience

The combination of RPA and AI in business needs judgment capabilities such as: credit scoring, customer classification and product personalization, fraud detection and money laundering prevention, support for regulatory compliance monitoring determined

Credit scoring: Or credit rating to classify and arrange an object and customer groups on the basis of measuring credit risk Transactional data and customer payment history are used as input to credit rating models, and a popular method is quantitative This model only solves problems with a small number of inputs, while today's customers have many other types of valuable data such as: social network activity, transaction history with other customers telecom operators, e-commerce transactions AI with the foundation of big data can solve problems to further improve the accuracy of customer evaluation

Customer segmentation and product personalization: Customer segmentation is extremely important and also a time-consuming job, with too much information about customers that service providers can obtain such as: personal information, service usage history, consumer preferences, social network activities AI will help banks to segment customers in many different dimensions, helping banks to communicate with customers effectively, identify the key points they need and how the bank can respond: recommend products, execute real-time advertising

Fraud detection and money laundering prevention: Application to fraud detection and prevention of money laundering is one of the important and popular applications of AI in the banking sector Investigating suspicious transactions is a very time- and labor-intensive process, while monitoring systems often have false alarms (transactions are blocked but the nature of the transaction is not violated) AI algorithms can better filter transactions thereby reducing the number of false alarms In addition, AI can combine the review of transactions with other data sources such as: social networks, newspapers, etc to look for unusual signs to warn people more comprehensively AI technology in the field of fraud prevention such as: physical biometrics, transaction monitoring by rules and machine learning, behavioral biometrics Combining RPA and these AI technologies, banks can build tools to detect and prevent fraudulent transactions in real time, or automatically analyze suspicious transactions and alert merchants management to conduct further analysis

Regulatory compliance application: Banking is one of the sectors subject to the highest scrutiny of the economy The state should ensure that banking operations are appropriate with acceptable risks, and that customers do not use the bank to commit fraud or violate the law Therefore, there are many regulations from international, government to internal banks used in most important operations that banks must comply with Implementing compliance as well as monitoring this compliance requires a significant cost and resources and increasingly tight time/quality requirements Banks are looking for an intelligent AI solution to track all internal and customer related activities to record, monitor and quickly issue various compliance alerts Recently, the website of the Bank of England has published a summary information regarding an experiment conducted with a partner specializing in artificial intelligence and machine learning for detection to detect anomalies in the monitoring data A watchdog recently used natural language processing to analyze reports from pension funds to highlight reports containing sensitive information

Model measurement and testing: Banks around the world are considering using a combination of AI to understand big and complex data including both structured and semi-structured to control the outputs of their banks main model The bank has invested in using unsupervised machine learning in its model evaluations, some of which are computationally demanding and produce anomalous results due to loophole or input data errors enter The RPA engine combined with an unsupervised machine learning algorithm will help the model supervisor decide whether to continue the model run process and ignore the errors or to stop and fix the error The tool can record any deviations related to the selection of the model's parameters, thus increasing the accuracy and transparency of the model.

Developing resources for digital banking

According to the State Bank, 95% of credit institutions have been building a digital transformation strategy, 39% have built a digital transformation strategy or integrated it into an information technology business strategy Therefore, in the coming time, human resources in the banking sector are forecasted to have a digital revolution Personnel positions in the field of information technology, related to digital services such as software developer, information technology engineer to serve the construction and administration of CoreBanking core banking system are prioritized for recruitment by banks According to recruitment experts, banking personnel need to be equipped with digital awareness and communication skills, manage risks and apply data analysis to make decisions to solve problems

Pham Anh Tuan, Member of the Board of Directors of Vietcombank, said that the information technology staff at banks is not small, but the number of people with adequate thinking related to digital transformation is still limited Therefore, most of the digital transformation personnel in the banking sector move "around" - from one bank to another This led Vietcombank's representative to forecast that the mutual competition to attract digital transformation personnel between banks would push up the salaries of this group of personnel.

Cooperation in the digital banking ecosystem

The smartest banks will find that Fintech startups act as innovation hubs, which they can capitalize on by partnering or acquiring some of these companies Due to operational complexity, regulatory limitations, legacy systems and mindsets, and organizational size, traditional banks are slow to adapt to innovation

One of the main reasons why the banking industry is forced to adapt to the new world is that customers are increasingly comparing what banks offer with what Fintech startups or public companies are doing great technology brings them It can start with very simple things like: Why can't I open an account through the app but have to go to the branch

Benefits when banks and Fintech companies cooperate with each other

Strengths of Banks Strengths of Fintech Fintech Differences

New ideas/mindsets Customize experiences for specific consumer groups

Large product portfolio Agile deployment capabilities

Greater flexibility in service approaches

Low capital costs Advanced data New business models management and analysis techniques change economic mechanisms

Regulatory protection is available (deposit insurance )

Reaching customers online Universalizing banking services and serving underserved segments

Design optimized for online/mobile user experience

Moving from product to differentiated technology experience

Innovation in all activities, giving priority to the development of innovative and competitive products and services in the market on the basis of applying scientific and technological achievements such as artificial intelligence (AI-Artiílcial Intelligence), security, automation, internet of things connection (Internet of Things - IoT) in the form of self-research and development or cooperation with strong partners to deploy; building standard products for the majority of customers, priority products for each target customer group Research to improve to bring the most suitable products from traditional channels to digital channels to reach, serve customers, save costs

With existing products and services, it is necessary to accelerate the integration of Vietcombank's existing cards into VCB Digibank application to create market leadership advantages and take advantage of the POS network that has been invested in the past time, fully develop bill payment products for basic services of households and individuals (cable TV, internet…) to develop payment channels for customers

Research and deploy mPOS solutions to serve resorts, restaurants, hospitals, commercial centers ; developing ebanking solutions to serve customer groups is simpler and more effective than the homebanking system

VNPAY cooperation to promote QRCode payment method because the Vietnamese market is still in its infancy and the advantage of this method is the low cost of accessing and serving customers (no need to purchase POS devices).

Advance security for digital banking services

Regarding security in the banking sector in general and the Digital Banking in particular, especially after a series of incidents with customers of some of Vietnam's leading commercial banks in the past time, it has shown that security never fails stop time but it keeps happening In fact, it is difficult for any bank to be absolutely safe, but the problem is that banks must constantly update trends and have a system to support and promptly solve those security issues, so that new customers feel secure to use and are ready to receive the bank's services Customer reviews in an online survey conducted by Vietnam Report in 2020 indicate that there are 3 most important factors when choosing a bank's products and services, including: safe transactions, high information security, simple and quick procedures and attentive customer service, with many preferential policies

With the increasingly sophisticated development of digital technology and the gradual shift to cloud computing, security holes have also increased accordingly, leading to increasingly serious concerns about risk of hacker attacks This requires banks to be more socially responsible, pay more attention to the safety and security of customers' information Accordingly, in order to ensure safety and minimize losses in the event of an incident, Vietcombank should:

Develop and issue information safety and security policies covering Vietcombank's activities; effectively deploying and operating leading security tools, meeting the development needs of Vietcombank and in line with current trends in the world; Research and apply safety and security standards of State management agencies and international organizations

Identify and strengthen digital risk management: Develop regulations and processes to manage cybersecurity risks from both sides due to external attacks and intentional internal attacks Look for security solutions that include endpoint security tools, message security, and system recovery technology This multi-layer security solution will help reduce transaction risks In the near future, Vietcombank should apply user authentication along with transaction authentication on the basis of stronger authentication methods such as encryption method, OTP code authentication method, digital signature, biometrics (voice, fingerprint) to replace password

Detect, fight, prevent, stop and handle illegal acts in the field of mobile payment, card, ATM, POS

Pay more attention to building a backup database system and raise awareness of security and information safety in the whole system

Implement authentication measures to receive OTP code by application, by Token Key/Token Card or by digital signature authentication with NHS services to suit each customer

Soft Token/Smart Token helps customers get OTP code without mobile signal, no internet, very convenient for individual customers However, because it is attached to personal devices, the use of Soft Token or Smart Token sometimes causes inconvenience in businesses, where there is a payment authorization activity for certain locations

Token Key or OTP Card is suitable for corporate customers Token Key has a common shape like a diamond, sometimes the size of a matchbox cut in half, works for 3-7 years without changing batteries Some banks offer Token Key in the form of a card to reduce the size of the Token Key, meet the needs of customers and take the name OTP Card TPBank is the only bank in Vietnam that has reduced the OTP Card to the size of a payment card, weighing less than 5g and only 0.76mm thin OTP Card has the right size to easily store in any wallet, avoid loss, reduce entanglement and satisfy customers

Sending communication emails to customers, regularly giving recommendations and warnings to customers to help enhance customer support in safe and convenient personal financial management in the digital age In particular, guiding customers visually and vividly on transaction steps, experience in performing safe electronic transactions in cyberspace so that customers are more conscious and careful when using the product services of the Bank In addition, persuading customers to use the SMS service to notify account balance fluctuations, customers will be automatically texted each time their account includes a payment account, savings account, or credit card and many other account types subject to change Thereby, customers will easily control and cooperate with the Bank to promptly prevent losses.

Proposal

Researching and completing the legal framework for payment card activities with the issuance of standards for contactless payments, QR Codes, mobile payments, and completing the legal basis for Fintechs work at the same time, strengthen consumer protection, network security and safety as well as management and supervision capacity in order to create conditions for mobile payments in Vietnam to develop safely, effectively, and meet the needs of customers the increasing demand for payment of people and businesses and in line with the process of international integration

Research and develop a roadmap for sharing citizen databases for banks to meet security and confidentiality requirements similar to Singapore's e-Government model Singapore implemented e-Government many years ago, so banks all have applications that link to the Government portal to download information When registering for products and services of banks, customers do not have to re-enter their basic information (for example, DBS bank has a My information application)

Or the Government of India has created a digital ecosystem through digitizing and controlling its citizen identity on the basis of advanced science at low cost The country has leveraged the power of technological developments, issuing an electronic identity with a 12-digit identifier This identifier combines with fingerprint and iris biometric storage in transaction verification, the whole is stored electronically, can combine barcode and QR code systems User can also store card information on mobile phone This has great significance in promoting cashless payments Users can easily link bank accounts, customer identification for the bank is completely quick and safe

With the sharing of the citizen database, the eID/eKYC system is deployed on a large scale, administrative procedures will be greatly shortened, banks will be directly connected to the data centers about identity citizenship, verifying electronic signatures or comparing customers' biometric information, and linking with credit information centers to be able to identify customers and analyze customers' credit history online

In order to create favorable conditions for the use of electronic payment methods, the digital banking recommends that the Government and relevant ministries and agencies ensure network infrastructure, reasonable prices, and encourage consumers to use the electronic payment method online payment method, push back the habit of using cash, promote development with e-commerce

Accelerate forms of electronic customer identification (eID/eKYC) Although the Law on Electronic Transactions has been promulgated by the Government, however, it is only in terms of regulations for electronic transactions and e-commerce of banks, but regulations on digital signatures and electronic documents death, the legality when a dispute occurs has not been mentioned; complicated customer identification process, eKYC forms have not been approved to reduce customer travel time, reduce customer service access time

In order to implement the plan to promote financial inclusion in Vietnam in general, and for NHS services in particular, customers' transactions are required to take place anytime, anywhere, instead of having to go to bank branches Presenting identity cards, verifying live signatures on many forms of vouchers, customers' personal information must also be declared and repeated in many steps With a large population density and high smartphone usage rate, Vietnam's CCCD does not promote many uses in digital transactions; Instead of identifying customers by face-to-face meeting, through the complicated comparison of paper documents, e-KYC implements customer identification electronically without face-to-face meetings thanks to the support of technologies Advanced technologies such as checking and comparing personal information instantly with a centralized database of user identity, biometric authentication, customer identification thanks to artificial intelligence, help banks Save time, money and human resources for this work, and help customers have a better experience with banking services Besides, the application of eKYC in practice also opens up opportunities for customers in rural, remote and isolated areas to easily and conveniently open accounts without having to go to branches or delivery counters banking services, making it easier for people to access and use financial and banking services, helping to promote national financial universalization more quickly It can be seen that the benefits of the eID/eKYC system are enormous That is synchronization and accuracy in all activities of people's life; Increase the overall speed of customer verification related activities, customers receive service more quickly The examination of records and financial information of each individual takes place quickly Since 2020, there have been a number of pilot programs implementing electronic customer identification forms and reaping many benefits Therefore, the Authority needs to accelerate the synchronous implementation of the eID/eKYC system in the near future

Ensuring compliance with regulations and maintaining payment discipline, ensuring payment systems operate safely and efficiently; Strengthen management and supervision of important payment systems in the economy; cross-border payment activities, international payments, new payment facilities and services; timely prevent acts of taking advantage of payment utilities to carry out illegal activities

The State Bank needs to have circulars guiding commercial banks more clearly on standards and standards on service environment, responsibilities of stakeholders in online payment, and have policies to protect consumers used in online payments, protecting banks from taking advantage of profiteering

On the basis of synthetic application of scientific research methods, going from theory to practice, the topic "The development of digital banking in Vietcombank in industry 4.0" has focus on addressing a few important issues as follows:

Firstly, clarify the concept of digital banking, realize the advantages of this service and the need to develop digital banking services at commercial banks in the current trend of integration, industrial revolution 4.0

Second, analyze the current status of digital banking services at Vietcombank, thereby seeing the advantages and disadvantages as well as the successes and limitations to have appropriate orientations and solutions for the development and more and more perfect digital banking service at Vietcombank

Third, on the basis of the development orientation of the Bank as well as the development of digital banking services of Vietcombank until 2025, the thesis proposes a number of solutions and recommendations to contribute to promoting the development of the digital banking at Vietcombank

In order to successfully implement the development of digital banking services in accordance with the outlined directions, it is necessary to support the Government, the State Bank and relevant management levels along with the efforts of Vietcombank itself

Although the topic deals with many theoretical and practical issues and solutions in developing NHS services, the topic only focuses on Vietcombank's digital banking services Other problems need further scientific research to be able to solve