CHAPTER 1: DEVELOPMENT OF DIGITAL BANKING IN VIETNAMESE
1.2. DIGITAL BANKING DEVELOPMENT IN VIETNAMESE COMMERCIAL
1.2.2. The current situation of digital banking development in Vietnam
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As previously said, in the context of worldwide economic integration, establishing digital banking is an unavoidable mission. Digital payment has not developed since the outbreak of the COVID-19 pandemic, although it has been a heavily advocated payment trend for a long time in many countries throughout the world. Since 2006, the State Bank of Vietnam has proposed a non-cash payment plan to the Prime Minister for approval. This system has been modified to reflect economic growth and the advancement of cashless payment technology. Non-cash payment operations in our country have previously been increased in both scale and quality, with many new, convenient, and modern payment goods and services based on information technology applications.
In recent years, Vietnam's technological infrastructure and technology for non-cash payments, particularly digital payments, has focused on improving quality and increasing efficiency. Banks employ cutting-edge payment technology, which is ideal for the development of new non-cash payment services and methods. The quality of the technical infrastructure for card payments has been increased, with a focus on development. ATMs are widely available, POS machines are now found in most institutions, distribution chains, shops, and large hotels, and are gradually expanding to medical facilities, hospitals, and schools, among other places, with an average yearly rise of about 17-18%. Commercial banks have expanded their payment capabilities to include bank cards, mobile wallets, and apps, among other things.
Many banks have begun to deploy digital banking services in Vietnam, which is still in the early stages of digital transformation. The majority of banks in Vietnam have a digitalization strategy and a focus on digital banking development. Because all banks regard digital transformation to be critical, up to 96 percent have devised development strategies based on 4.0 technologies and 92 percent have developed internet and mobile applications.
Most Vietnamese banks have begun to execute digital transformation strategies, establishing their own digital banking divisions to focus on digital transformation research and implementation. With the advent of the OPBA Robot
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and the VTM digital branch, Nam A Joint Stock Commercial Bank (Nam A Bank) has created a digital transaction space combining a modern device ecosystem and utilizing artificial intelligence (ONEBANK). Orient Joint Stock Commercial Bank (OCB) has created the OCB OMNI channel, for example. As a result, when clients travel across digital transaction channels, they will have a consistent and integrated experience, allowing them to access products and services without having to visit a transaction office.
Currently, many banks are starting to implement digital banking at the level of processes and communication channels, only a few banks are shifting to digitalization at the data platform. In addition, banks are implementing cooperation models with technology enterprises in the financial sector or large technology companies. This cooperation brings customers more enjoyable experiences, as well as access to diversified services with fewer transactions.
In Vietnam, most of the major banks have gone through the digitization phase and are in the digital transformation (process automation) stage integrating various communication channels and digital processes to provide customers with personalized experiences. The rest of the banks are at the first level of transformation - digitalization in the database. A number of small commercial banks have boldly redirected their investments to digital technology. The typical cases are OCB, TPBank. OCB's OMNI synchronously connects all communication channels with customers, in which all banking services are integrated on a single digital platform so that customers can use all services without going to the counter. Some banks tend to set up a new business or set up pure digital banking. Accordingly, digital banking is said to be a separate business segment targeting new customer segments, independent of traditional business activities, such as Cake of VPBank, LiveBank of TPBank, they are considered as fully automatic 24/7 digital banking model that can perform almost all transactions like a traditional branch without the need for customers to have direct contact with bank staff. Moreover, large-scale banks such as Vietcombank, VietinBank, BIDV, ACB, MB focusing on digital transformation of traditional business activities combined with creating new products and service
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channels for customers exploiting new business segments on the basis of combination with Fintech applications. The digital transformation process of large banks is often associated with the fundamental upgrade of the information technology infrastructure system, especially core technology (Core Banking).
Typically, VietinBank with Core Sunshine (2017), VPBank's CAKE for digital banking (separate from the current system). Commercial banks also have a connection with a common payment platform to fully exploit the advantages and power of digital technology in banking activities. The digital transformation of Vietnamese commercial banks also helps to expand the cooperation between the bank and Fintech enterprises or technology giants such as Google, Facebook, etc. to bring benefits to the bank as well as to customers. row. This is an important foundation for gradually moving to the state of connection of things (IoT). Some typical activities such as: VietinBank combined with Opportunity Network in providing digital platforms for businesses, Vietcombank - M_Service in payment, MBB - Startup Fintech in providing banking services, VPB - Fintech Weezi in payment transferring money via social networks, Techcombank - Fastcash transferring money via Facebook…
As previously reported, the State Bank of Vietnam (SBV) has suggested to the Government for promulgation a trial legal framework permitting Fintech firms in the banking sector to deploy a variety of new products and services. Furthermore, in order for commercial banks to be prepared to provide services based on banking modernization, infrastructure development as a foundation for providing electronic/digital services, and security and safety, it is necessary to consider not only the banking industry but also the integration of other industries.
Simultaneously, increase human resource quality and satisfy the needs of work in the new context, with a focus on network security management.
Over the past time, commercial banks in Vietnam have actively and proactively implemented digital transformation and achieved positive results.
Specifically, by the end of August 2020, the number of individual accounts reached 95.6 million, up 45.5% over the same period in 2016; Total circulation of cards
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reached 109 million cards. ATM and POS network covers all provinces and cities across the country with 19,541 ATMs and 274,539 POS. The number and value of payments via internet channels reached 282.4 million transactions with 17.4 million billion VND (up 262.5% and 353.1% over the same period in 2016). The number and value of payment via mobile phone channel reached 682.3 million transactions with nearly 7.2 million billion VND (up 980.9% and 793.6% over the same period in 2016). Payment via POS reached more than 218 million items with 382.86 trillion VND (up 176.45% and 139.52% respectively over the same period in 2016).
Payment via ATM reached 660 million items with 1,818.58 trillion VND (up 38.65% and 53.77% respectively over the same period in 2016).
Every day, nearly 30 million people in Vietnam use the internet banking payment system. In Vietnam, transaction volume on mobile banking has increased by more than 200 percent. The daily value of money transactions via mobile phones is currently at 300 trillion VND.