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Urgency of the researCh -‹sôô-c+.xxvvxtEEEEE HH HH H111 0.1011011101.01110111010110111111007111110nc1pg 8 1.2 Research aims & objectives
The Fourth Industrial Revolution, known as Industry 4.0, is transforming global production models and is considered a significant shift occurring every century since the early 20th century This revolution is particularly impactful in the banking sector, which plays a vital role in the economy and continually sets trends through the effective integration of new technologies, such as credit cards and ATM networks.
In the 1970s, the integration of computer systems into business operations began in the 1960s, paving the way for the early adoption of internet banking in the 1990s Today, the banking sector is actively driving significant transformations and initiatives focused on enhancing infrastructure systems to develop innovative technologies and customer-centric solutions in the twenty-first century.
Organizations beyond the banking sector are significantly impacting its evolution by introducing innovative technology platforms that challenge traditional financial operations Driven by Industry 4.0, the banking sector is undergoing rapid transformation, presenting both opportunities and challenges for existing banks.
The rapid evolution of consumer behavior is diminishing the relevance of traditional physical distribution channels in banking Factors such as the financial capacity of banks, regulatory constraints from state management agencies, and the effectiveness of new transaction platforms are limiting the growth of these physical networks Digital banking emerges as a viable solution, leveraging automation and system integration to lower distribution, administration, and operational costs Consequently, banks worldwide are restructuring and modernizing their traditional channels alongside the rise of digital platforms, driven by the need to reduce high operational expenses This trend of embracing digital banking is being adopted globally, including by numerous institutions in Vietnam.
Many banks in Vietnam have adopted Internet and Mobile Banking primarily to streamline client transactions; however, significant aspects of the business process, particularly sales and product development, remain undigitized Consequently, the establishment of digital banks presents both an opportunity and a challenge for these institutions Embracing this shift can lead to technological advancements, innovative offerings, enhanced market competition, and an improved customer experience with banking services.
Digital banking is set to gain widespread adoption in Vietnam soon, driven by advanced technology platforms, time-saving advantages for users, and its strong appeal to the preferences of younger generations.
BIDV, one of Vietnam's leading banks, must stay ahead of industry trends to compete effectively While the bank has embraced digitization across various functions, its channels remain largely disconnected, negatively affecting customer service quality The majority of sales occur through traditional counter channels, with digital sales remaining minimal, highlighting the need for a more integrated approach To enhance customer retention, BIDV must identify and resolve existing challenges while streamlining services A thorough analysis of its digital banking offerings is essential to pinpoint strengths, weaknesses, opportunities, and risks, guiding the development of solutions to expand market share and enhance the overall digital banking experience This context underpins the thesis topic: "Current Situation and Solutions of Digital Banking in Joint Stock Commercial Bank for Investment and Development of Vietnam."
- Learn the theoretical principles and transformation of digital banking trends for banks in local region and around the world
- Analyze the existing status, benefits, accomplishments, as well as challenges and restrictions associated with developing digital banking services at BIDV
- Achivements has been completed, and some restrictions on the Joint Stock Commercial
Bank for Investment and Development of Vietnam's digital banking services have been identified From there, solutions for expanding BIDV's digital banking services in the future have been suggested.
Scope and object of the research
Overview of the research and theoretical basis of digital banking services at the
Development situation of digital banking services at the Joint Stock Commercial
Targets h5
Leveraging IT is essential for the effective implementation of development strategies within the banking sector It plays a vital role in enhancing the internal governance and operational processes of credit institutions, aligning them with international standards.
All credit institutions have implemented core banking operations and IT platform activities, continuously enhancing and innovating IT applications to meet service delivery needs This aligns with the bank's business strategy, internal governance requirements for risk management and compliance, and the reporting standards set by the State Bank.
+ 40% of credit institutions adopted just partial risk management strategies, whereas 60% of credit institutions finished implementing full strategies.
Over 80% of financial service credit institutions have embraced innovative technology and diversified their offerings on cyber platforms, expanding the accessibility and usability of their services across various demographics and timeframes.
+100% of financial institutions that offer retail banking services use a multi-channel distribution system, linking and integrating channels to accommodate online transactions
Ninety-five percent of credit institutions leverage online banking tools, such as mobile and internet banking, to deliver essential services, facilitate payment processing, and provide crucial information, while also incorporating additional value-added services.
+ For customer, product, and profit analysis, + 70% of financial institutions use enterprise data warehouse systems and intelligent analytic tools (Enterprise Data Warehouse and
A Customer Relationship Management (CRM) system has been developed to provide a comprehensive 360-degree view of customers, utilizing insights from various sources This system not only automates sales processes but also enhances cross-selling opportunities and delivers advanced analytics on customers, markets, and products.
Thirty percent of credit institutions leverage database services to reduce costs and enhance customer convenience This strategy includes promoting banking services, providing customer support, and offering sales consultations on social media platforms Additionally, these institutions are transitioning counter operations and services to digital channels and self-service branches.
- Optimize the effectiveness of IT infrastructure investments by standardizing IT infrastructure in accordance with national and international technical standards.
Credit institutions fully utilize IT resources to effectively manage their operations A Management Information System (MIS) is implemented to encompass all banking activities, providing decision-makers with timely access to essential management reporting information This system is crucial for the heads of banks in making informed decisions.
+ 70% of financial institutions use service integration axes (ESB) to streamline and automate data transfer between systems.
+ 70% of financial institutions use service-oriented architecture (SOA) and business process automation (BPM) to increase flexibility, create goods and services more quickly, reduce costs, and alter future business processes.
- Ensuring the continuity, security, and performance of banking information systems. developing and deploying security solutions for card and online payments:
+ 100% Credit institutions offer identity verification methods such digital signatures, OTP tokens, and two-channel authentication for e-banking transactions, in addition to SMS OTP as a replacement for the traditional method;
+ When issuing overseas credit cards to consumers making online payments, 100% of financial institutions use the 3D Secure system;
+ Several credit institutions use systems to detect and prevent fraudulent activity, including those involving card payments, internet payment systems, and unusual transactions.
- Create an adequate pool of qualified IT workers, carry out technological transfers, and take the initiative to guarantee the efficient functioning of information systems.
Development orientation Of BIDV csssssssssssssssesssssssssessssessssssssssseesessesssssssssmsssessessessssssssssessessesssesssssssesseses 46 4.3 Opportunities and challenges for BIDV in developing digital banking services in the near
the principal aims for the years 2022-2023
To ensure compliance with international and state banking regulations, it is essential to enhance financial stability and asset quality by adhering to prudential ratios A strategic plan that promotes diversification of equity can effectively reduce the percentage of state ownership.
- Expanding SME customers, FDI businesses, improving retail operations, and diversifying the client base with products and services.
To enhance company efficiency cost-effectively and strategically engage in regional and global financial markets, it is essential to meet ASEAN banking standards, refine credit structures, manage risks effectively, and elevate credit quality in Qualified ASEAN Banks (QABs).
Implementing modern banking operations in line with international standards involves managing a bank legally while transitioning from theory to practical application This approach ensures productivity, openness, and transparency, all beginning with an innovative banking model.
- Enhancing the efficiency of established channels, creating modern channels for distribution, and expanding distribution channels to keep up with market developments.
To enhance both the bank's and clients' experiences, it is essential to improve the technological platform and application quality Establishing a comprehensive database across all operational areas will support this goal, while also driving the modernization of banking practices in line with global standards.
-Improve the effectiveness of investment activities, which mostly center on insurance activities, and reorganize the foreign investors’ operations in order to focus on inefficient
46 units and crucial investments A unit with promising development potential; finish selling off foreign investment capital after obtaining the state bank's request.
-Pay special attention to creating a qualified and capable workforce Establishing a competent workplace that benefits employees by giving them comfort and confidence.
Increase each officer's average pay is the target.
- Developing BIDV's corporate culture and raising the company's visibility in the area.
4.3 Opportunities and challenges for BIDV in developing Digital banking services in the near future.
According to data from the Payment Department of the State Bank of Vietnam, there has been a notable rise in customers utilizing internet banking and mobile banking payment channels compared to 2021 Specifically, the volume of transactions conducted via online banking surged by more than 48%.
In 2022, there was a remarkable increase in transaction amounts compared to 2021, soaring by over 1,328% from VND 811,717 billion to VND 10,868,458 billion Additionally, mobile banking experienced a significant surge, with both transaction volume and value rising by 100%.
- Vietnamese market's potential for digital clients:
By January 2023, there is 98.53 million people living in Vietnam, including 77.93 million
Internet users, or almost 80% of the country's total population It is hardly surprising that Vietnam has kept up with the worldwide trend of rapidly growing Internet usage In
January 2023, there is 5.3 million more Vietnamese online users than there were in January
In 2022, research by Kepios revealed that Vietnamese individuals spend an average of 6 hours and 23 minutes online each day, which amounts to over a quarter of their day Notably, 94.5% of Internet users in Vietnam access the web using mobile devices, highlighting the importance of mobile optimization for digital content.
This country represents a land of opportunity for the database industry, driven by its large population, widespread smartphone usage, and the increasing number of internet users.
- The advantages of DB and the waves of Industry 4.0
The goal of Industry 4.0 is to seamlessly integrate technologies that bridge the gaps between digital, physical, and biological platforms, facilitating a crucial method for connecting, exchanging, and leveraging big data.
The rapid and uncontrollable nature of change is creating a gap among various elements, leading to significant social and environmental challenges Additionally, the introduction of version 4.0 of banking, featuring the decentralized blockchain (DB), marks a transformative shift in the traditional financial system.
-Reduce the expenses of transactions and management
In Vietnam, the absence of comprehensive reports on transaction costs across different banking channels hinders optimal decision-making Financial transactions can be conducted in two primary ways: either in person at a bank branch or via phone, each offering distinct advantages and considerations for consumers.
To enhance competitiveness, banks should leverage innovative advancements to deliver high-quality products and services while promoting good governance The introduction of new opportunities by the database (DB) will significantly increase the sales team's productivity With features that support calculations, generate offers for new products and services, and provide intelligent solutions in an easily understandable format, the mobile platform stands out Additionally, collecting data on various aspects will further optimize performance.
48 branches are connected, sharing information, and working together to develop the company market and open up new opportunities.
- Expanding client presence in the digital world
The increasing preference for mobile devices and tablets among consumers for online information, consultations, and purchases is reshaping consumer behavior This digital shift is making it easier for banks to connect with consumers in an era of digital banking, enhancing accessibility and convenience.
- The cost of smartphones is falling, and digital trends are accelerating
Every second of every day, science and technology evolve, opening up new avenues for banking channels to develop, particularly those focused on digital banking and retail banking.
Comparing fees, product quality, and digital technology among banks allows for a comprehensive understanding of the banking landscape The enhanced accessibility of banking applications provides customers with a broader selection of banks, leading to improved cash flow and faster consumer transactions compared to the previous decade.
- Input factors’ (labor, capital, etc.) position has radically changed
The competitive edge of the capital has diminished, highlighting the necessity for successful Fintechs to establish a robust technological foundation, often requiring significant investment By adopting innovative and employee-centric practices, startups can effectively attract top tech talent Meanwhile, banks are facing challenges in recruiting qualified professionals in the artificial intelligence sector.
- Supplying across the entire world
Solutions for developing digital banking services at BIDV e sceeierirerriiiirrrriiirirrrrie 50 1 Modern IT infrastructure development and investmeni . -ôôccxcxeeerrreerrtriirrrrree 51 2 Increasing and expanding the range of digital banking serVÌC€S -cccererererrrer 53 3 Various distribution Methods .essssssessesssseessssssseesssesssseesssesssseessssssssesssssssseeesssessseeesssssseeessssnseeestes 56 4 The expansion of data gathering and processing to aid in decision-making
To successfully develop a database at affordable costs while leveraging global banking experiences and the existing IT infrastructure in Vietnam's business environment, I propose several solutions.
4.4.1 Modern IT infrastructure development and investment
To enhance development and integration, a flexible and reliable IT infrastructure has been established, utilizing open standards for API connectivity This architecture improves distribution channels and consumer authentication while prioritizing security in online business operations Additionally, decentralizing procedures and IT management can effectively minimize risks and reduce losses, making it a strategic approach for localized operations.
Configure resources for establishing the new Core banking system in order of importance.
Core banking serves as the essential backbone of a bank, characterized by its complexity and high costs To select an optimal solution that meets current requirements while offering flexibility for future digital products and services, banks must allocate resources to thoroughly explore and assess available market options Currently, several domestic institutions are in the process of implementing new core banking systems.
In early 2018, Vietinbank launched its new core banking system, Sunshine, which enhances dynamic development and supports a seamless transition to an omnichannel approach This advanced technology enables Vietinbank to provide significant benefits to customers, facilitating an effortless shift to omnichannel banking Additionally, the Touch Point branch transaction software offers a comprehensive customer relationship management interface, allowing for a 360-degree view of customers while effectively managing sales and promoting enticing cross-selling opportunities.
The TouchPoint transaction screen consolidates essential customer data, providing insights into customer relationships, including cautions, notes, and transaction histories, which enables tellers to better understand consumer choices and address issues effectively The system enhances clarity in consumer transaction records and synthesizes information to support sales efforts It offers a comprehensive suite of sales tools for managing opportunities, analyzing financial needs, and comparing products based on features and interest rates Additionally, TouchPoint optimizes transactions, boosts cross-selling potential, and mitigates risks across multiple transaction channels Its user-friendly account starting page organizes available products regionally, facilitating the simultaneous opening of multiple accounts Sales representatives are equipped with targeted product information and selling aids to enhance cross-selling and prevent fraud during account openings BIDV can draw inspiration from Vietinbank's implementation strategy to successfully complete its Core Banking project.
Multi-channel integration is essential for enhancing customer experience at BIDV, allowing clients to initiate transactions on one channel and complete them on another while feeling they are interacting with a single representative This seamless experience relies on advanced technology, particularly adaptable middleware that connects various distribution channels As BIDV prioritizes transforming its core banking system, the Omni Channel IT framework remains vital for improving distribution channels and delivering digital products and services efficiently Upon finalizing the new core banking system and its integration with existing applications, BIDV will assess and enhance this initiative.
BIDV should prioritize enhancing customer service in its project implementations, drawing on the successful experiences of international banks that have effectively executed independent initiatives.
The overall evaluation reveals that profit margins remain stagnant, as the presence of numerous independent agencies renders improved service and client engagement insufficient To enhance customer experiences, BIDV must prioritize strategic IT investments and consolidate project management rather than delegating tasks to separate units This approach will lead to increased customer satisfaction by ensuring that projects are accurately assessed and aligned with performance metrics before implementation.
4.4.2 Increasing and expanding the range of digital banking services
A new method is being developed to deliver goods and services through a chatbot, utilizing an extensive database and chatbot development software Initially, the Bank is focusing on providing standard client services via the chatbot to establish familiarity, with plans to gradually introduce additional products and services over time.
Developing a digital banking ecosystem allows banks to gain competitive advantages and minimize pricing wars For example, UOB has leveraged customer credit card usage data to create travel software and partnered with online booking platforms like Agoda to showcase popular travel destinations on their website To enhance engagement, UOB collaborated with top social media influencers, ensuring continuous content updates and customer interaction By offering discounts and incentives for UOB card usage during travel, the bank fosters customer loyalty Additionally, UOB can create programs that connect business owners with affluent individuals, promoting idea exchange within the entrepreneurial community.
Although these services have generated revenue, the Bank has not yet received any The
The bank can facilitate associate forums and assist with legal processes for foreign investors looking to invest in Vietnam, as well as for Vietnamese businesses aiming to expand into international markets, leveraging the expertise of its specialized Legal Department.
Research Center, Financial Institution, FDI, Modern businesses, particularly SMEs in
Vietnam's evolving free trade agreements and global market dynamics can confuse both local businesses and foreign investors, who often face challenges in navigating the complexities of the Vietnamese investment landscape To address these issues, specialized departments within banks provide high-quality information and insights, facilitating better understanding and engagement Consequently, this expertise not only enhances the client base over time but also encourages the utilization of the bank's diverse products and services.
Statistics indicate that no banks in Vietnam currently utilize this ecosystem Vietinbank is in the process of drafting a collaboration agreement with Opportunity Network (ON) 21, a foreign fintech, to implement customer connection services on a digital platform This initiative aims to analyze and develop a comparable model in the near future, leveraging a proprietary algorithm designed to enhance the effectiveness of identifying opportunities for international collaboration.
Connecting each member's strategic needs is straightforward and efficient, as they are nominated by reputable financial institutions based on specific criteria like revenue size and credit rating This approach fosters a network that links trustworthy and attractive business opportunities To ensure confidentiality, all job openings are posted anonymously, with clients receiving results only when they select a specific link.
"permission" from the partner will data about partners be made available.
Comparatively speaking, signing up for the service that connects users on a digital platform, choosing partners, and looking for opportunities is simple An invitation letter from
VietinBank is inviting eligible customers to join its customer connection service by accepting the invitation letter and completing the registration form This service is particularly beneficial for SMEs, as it addresses the lack of diversification among clients in this segment, helping businesses identify partners without incurring multiple fees or extensive personnel costs Through this digitized technology platform, customers can explore various business opportunities, including market expansion, product promotion, and finding strategic partners for capital participation, technology transfer, and mergers and acquisitions.