The potential for digital transformation in the Vietnamese banking industry is very huge and promising. In order to turn the potential into reality, commercial banks in Vietnam can consider the following solutions:
- First of all, cooperate with partners
Cooperate with partners, especially potential Fintech companies so that commercial banks can immerse themselves in the playing field of the digital operating ecosystem. Currently, banks tend to move from a competitive approach to cooperation with the role of partners of Fintech companies. The partnership is conducted in a win- win manner, in which application banks immediately update modern technologies, no need to spend too much money on initial technology infrastructure, and can meet the
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higher requirements of customers in terms of quality, price and reliability. Fintech companies exploit the bank's customer network, data and capital. Surveys of many international organizations show that the cooperation between the banking sector and Fintechs is very important, as if it is the only way for traditional companies to apply technology solutions in the banking sector, providing products and services that meet the market needs. As said, the relationship between Banks and Fintechs are very powerful. For instances, these are some of popular Fintech companies, mostly e-wallets, that many commercial banks in Vietnam are working with:
+ Shopeepay: This e-wallet belongs to SeaMoney, which is a leading digital payments and financial services provider in Southeast Asia. SeaMoney’s mission is to better the lives of individuals and businesses in our region with financial services through technology. SeaMoney’s offerings include mobile wallet services, payment processing, credit, and related digital financial services and products. These services and products are offered under ShopeePay, and other brands in the region. In Vietnam, Shopeepay is one of the most popular e-wallets.
+ Zalopay – National E-wallet: ZaloPay is a mobile payment platform, known as e-wallet, that allows users to make online money transactions on phones and tablets. This e-wallet is owned by VNG - Vietnam's technology company, integrated with the community of 70 million Zalo users. ZaloPay develops rapidly and has many advantages in participating in the online payment market.
+ VNPay: VNPAY e-wallet is a product developed by VNPAY - the leading prestigious Fintech company in Vietnam. Oriented to become the "Family Wallet", VNPAY E-Wallet is a multi-utility solution that makes your busy life become more simple, so you can spend more of your precious time with your family.
+ Momo: MoMo is an e-wallet on mobile devices that allows people to top up, transfer money or make extremely fast buying and selling transactions via mobile phones. MoMo is the main service of M-Service Online Mobile Service Joint Stock Company, also known as one of “Top Unicorns” of Vietnam. Established in 2007, M-Service is a Fintech company that mainly operates in the field of mobile payment.
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In accordance to the survey reported on Fintech activities of financial companies globally in 2017 by KPMG (USA), when interviewed about Fintech development strategy of the banking sector, it can easily be seen that the trend of this cooperation is becoming more and more important when 81% of the interviewed banks favor the cooperative model, while other forms of development tend to decrease.
Moreover, according to the Global Fintech 2017 report of Capgemini Information Technology Group (France), it has become a trend for banks to consider Fintech companies as cooperation partners instead of competitors. Specifically, the majority of bank managers (77% of the respondents) consider Fintech as a future cooperation partner.
- Secondly, make full advantage of Industry 4.0: Industry 4.0 brings such huge opportunities to businesses, including the banking system. To be able to take full advantage of opportunities from this revolution, commercial banks needs to:
+ Promote the digitization of services such as biometric security for payment or savings activities; integrating new technology into payment activities such as using NFC short-range communication technology on mobile phones to replace bank cards.
+ Use big data to store data about customers, analyze customer behavior to differentiate from competitors, analyze risks and maximize operations.
Currently, there are many banks that have applied big data in their analysis such as Barclays, HSBC, Deutsche Bank, Bank of America, OCBC, MayBank.
+ Using artificial intelligence (AI): According to Accenture's 2017 banking technology vision report, within the next 5 years (till 2022), AI will become the main way banks interact with customers. With the rapid development of AI recently, the future of banks with AI-based voice recognition software along with the creations of Fintech companies, will help change the face of the banking industry.
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+ Integrating the Internet of Things (IoT) into the payment method, allowing payment functionality to be implemented through a variety of smart devices that can be activated by any device with an Internet connection. However, in order to adopt this payment model, the bank must have sufficient current enabling technology to execute payment orders from any device, in any location. Furthermore, it should be apparent that IoT exploitation in banking and financial services is not just about using Internet-connected devices to provide products and services, but also about collecting vast amounts of data.
- Thirdly, strengthen the solutions to improve the quality of IT risk management and security: Banks should devote more resources to implementing solutions that improve IT risk management and increase the security of online services and card payments. In fact, as digital banking develops, the risk of network information security grows, as do the methods of online attacks, which are becoming increasingly diversified and sophisticated.
These issues jeopardize IT systems and client databases, bringing significant reputational and financial harm to banks as well as increased dangers to customers. As a result, banks must encourage the development of internal security policies, focusing on the creation of more advanced security utilities, functions, and authentication methods.
- Fourthly, comply with regulations and instructions of the State Bank on ensuring safety and security of online banking transactions; develop detailed scenarios, processes, and instructions for dealing with incidents of online fraud.
- Fifthly, in accordance with human resources: Banks need to have more specific training courses for employees, recruitment and good remuneration for human resources with expertise in banking technology. At the same time, it is necessary to actively develop and promote new electronic products, simplify service registration procedures, and support customer care when using digital banking.
- Next, balancing the budget for the implementation of digital technology applications. As known, investing in digital technology is a long process, including many different technologies and huge investment costs. So, banks
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need to seriously manage their budget for technology activities, in order to choose which technology application to deploy in, and which activities are suitable for them.