CHAPTER 2: DIGITAL BANKING IN ASIA COMMERCIAL JOINT STOCK
2.3. DISCUSSION ABOUT OPPORTUNITIES AND CHALLENGES IN DIGITAL
2.3.1. Opportunities
2.3.1.1. Huge opportunities for ACB in developing digital banking
- Efficiency: The achievement of digital transformation has reduced the time and cost in providing banking services and products. In addition, the pandemic COVID-19 has left so much damage to our world. Therefore, there is no doubt that the whole banking industry in particular needs to quickly digitize their system, in order to optimize the costs, and get ready to operate remotely so as to continue maintaining the business, as well as creating conditions for customers to easily access more financial services and products, helping them with the most suitable financial solutions and experience.
- Agility to advanced technology: Not only in the banking sector but also in every industry, it is really a huge opportunity for the whole system to get to know more and more about modern technology. Digital transformation facilitates data mining and information collecting. There is no doubt that smart systems and software will replace manual work, moreover, they could automate complex processes, support outsourcing service trends, and internally reuse some other services. The development of a worldwide connected system and things will open up opportunities for not only ACB, but all Vietnamese commercial banks, so as to access software conveniently to software with an affordable cost.
- Expanding network and customer database: With the application of advanced technology techniques, ACB could build extremely optimal banking models.
This digital banking model allows ACB to quickly expand its network and customer database, especially young customers, with the high potential to likely
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become high-end customers in the near future, while increasing productivity and managing costs effectively. In fact, applying AI will also help customers have service experiences provided by humans. Reality is showing that, in the near future, banks will apply AI-based voice recognition software, along with Fintech innovations that not only help them expand their customer database, but also help to change their whole brand-identity in the industry.
- Diversification in products and services: Launching digital banking has helped ACB to launch new innovative and breakthrough products, so as to expand more and more suitable business models to this technology age. As can be seen, new products and services offered by banks to the market are widely used by customers, demonstrating that the utility of those products are equal to customer satisfaction about the services and products provided by banks.
- Cooperation: The development of digital transformation is an opportunity to promote competition, as well as attract companies providing technology solutions, or businesses providing goods and services in cooperation with banks.
Transactions through payment, especially via e-wallets or bank cards, meet the increasing demand of customers, thereby, maximizing the bank's profits.
Currently, ACB has linked with the two most famous e-wallets, such as MoMo and Shopeepay, this partnership is a beneficial relationship for both sides, when the transaction volume per day is huge, and the amount of customers who use both banking applications and e-wallets is very large. This kind of cooperation not only increases the amount of customers to ACB, but also enhances their position in the customers’ mindset by the safety and security when using digital banking products and services. In fact, there have been many cases of linking with e-wallets and losing money in bank accounts. However, ACB is always proud of its safety methods, customers can fully use their ACB account conveniently and securely, and link to any e-wallet without any fear.
2.3.1.2. Advantages of ACB in developing digital banking
In fact, ACB’s digital banking has many strengths. Not to mention the very good reputation of ACB, a lot of customers, especially the “Gen Z” or young customers will likely choose ACB as one of their favorite banks, in order to use digital banking. In fact,
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ACB could take advantage of the strengths in their digital banking – ACB ONE, so as to attract more and more customers to experience their banking products and services.
The following conducted survey is an overview about "Quality of ACB’s digital banking - ACB ONE", the survey is based on Servqual Model, and the data was collected from customers using products and services of ACB - Thang Long Branch.
This survey will show us the level of customer satisfaction with ACB's digital bank – ACB ONE, and also the feedback of customers, in order to improve ACB’s digital banking.
2.3.2. Challenges
2.3.2.1. Challenges from the outside
Basically, ACB is also one of the joint stock commercial banks in Vietnam, so ACB will also face the common difficulties and challenges as the whole industry, especially in developing digital banking products and services. These mentioned below are some of apparent challenges for ACB in developing digital banking:
- First of all, the legal environment: Which forms the basis for digital banking operations and development, is still insufficient. For instance, the digital payment segment is currently developing very quickly, according to technological advances, but the legal regulations have not kept pace with it yet, which leads to the fact that commercial banks hesitate to apply new technologies and services outside the allowed environment, and so on.
- Secondly, the recent cases of fraud: Frauds related to digital payment activities are becoming increasingly sophisticated and complex. The ability to prevent fraud from digital banking transactions has always been a priority to not only commercial banks, but also ACB.
- Thirdly, the technology race in the banking industry: Digital banking projects also contribute to many security risks in general, and insecurity of user information in particular. The capacity to secure financial information in the digital environment is still limited in Vietnam.
- Fourthly, users' awareness: When customers are not aware of the risks in online banking transactions, disregarding the security of personal information,
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including students, employees, etc, leaking information, creating chances for criminals to create “ghost” accounts, causing difficulties if there is any investigation. Frankly, fraud tricks are increasingly sophisticated and difficult to detect.
- Finally, payment habits: Vietnamese people still have the habit of using cash payment. The habit of non-cash payment is now well-known mostly in central provinces and cities, where they have good technological infrastructure conditions. On the other hand, in remote areas, non-cash payment is not often used and known about, cash is 90% used daily.
2.3.2.2. Challenges from the inside
In fact, ACB also needs to overcome many of their own weaknesses, and also general difficulties, so as not to turn those factors into barriers to digital banking development. To ACB, there are some inside challenges:
- Human resources: Quantity, Quality, and Managing
+ The insufficiency in Internet technology of human resources in both quantity and quality of the bank, affecting the implementation in upgrading the digital system.
+ Especially, employees who do not fully understand the whole idea, or concept of ACB’s digital banking would likely be a real issue for the whole bank. In the worst situation, they can take advantage of their internal privilege, in order to gain their personal purposes.
+ The implementation of digitalization requires constantly changing operating procedures, which requires employees to be open and ready for changes in the way they work in the digital environment.
+ Not all customers of the bank have technical qualifications that can perform the exact operations that digital banking deploys.
- The financial issues: It will be very expensive if the bank can digitize all of its services and products. There are some expensive costs, such as costs for technology (AI), training costs, application costs, and so on. Digital transformation of the entire system will cost a lot of a bank’s fortune and time.
- Weaknesses turn into Challenges for ACB in developing digital banking
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+ Not completely synchronized products and services when launching "Digital Bank - ACB ONE": The most typical is the inadequacy. When the transaction limit at ACB ONE application is limited, it is mandatory to use ACB’s digital bank website version. This can make customers feel inconvenienced when using ACB, and they may switch to other banks to use instead, and gradually remove ACB from their bank list, which causes a huge problem to ACB when losing customer’s loyalty.
+ “Tracing error” problem: In fact, one of the biggest errors that ACB's digital bank often encounters is the "tracing error". There have been a lot of customers complaining, even calling the bank's 24/7 call center to reflect about it everyday, but the error continues to happen. Customers not only have their transactions interrupted, but also have a lot of psychological effects, being afraid that the bank could be hacked, wondering if their money will be lost or not, or not knowing what to do next when it is unknown whether the money has been transferred or not. It can be said that this error is a painful problem for ACB's digital bank.
Continuously, this error can cause the bank to lose a large amount of customers, including loyalty and new customers.
- The conservatism of the managers: In fact, the managers of ACB, especially the ones in charge of developing ACB's digital banking products, are considered to be relatively conservative. Since before launching ACB ONE digital bank, there have been many internal and customer feedbacks about ACB's e-banking services and products, until ACB ONE was launched, the conservatives were still maintained. For instance, the most typical is the inadequacy of using two applications just to make money transactions.
- Customer’s tendency: It is a fact that people in the North have a tendency to use products and services of state-owned banks, instead of using products and services of joint stock commercial banks. Typically, when there is a comparison between Vietcombank and ACB, most people in the North will choose to use Vietcombank's products and services, because they believe that all the best things belong to state-owned banks. Resulting in a fact that ACB and the rest of
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commercial banks will have to face the idea that their digital banking is not good enough, compared to “The Big Four”.
2.4. OPPORTUNITIES AND CHALLENGES: BASED ON CUSTOMERS’