Banks should consider more about cooperation in doing digital banking

30-Sep-2020 Intellasia | Tri Thuc Tre | 6:02 AM Print This Post

In the report on the Asia Pacific Regional Bank to 2025, the International Data Group (IDC) said that Vietnamese banks were building the highest digital investment plans from ever. IDC forecasted that mobile banking transactions in Vietnam would increase by 400 percent by 2025. It was expected that the Top Eight Vietnamese banks would have a new account growth of 50%, thanks to the application of information technology intelligence in creating accounts for customers.

IDC believed that cooperating with fintech, both in the country and the region, could create more competitive advantages for Vietnamese banks. In the digital world, banks were no longer the only party that brought value to customers. Today, the competitive power came from connecting well with other players, increasing and sharing value. Banks had to use open APIs to connect, both internally and third parties, according to the IDC reports on digital banking trends in Vietnam.

In Vietnam, the cooperation between Fintech, Mobile Money and banks was also increasingly encouraged. During the recent meeting with Military Commercial Joint Stock Bank (MBBank), the minister of Information and Communications, Nguyen Manh Hung, said that banks that wanted to expand the digital space need to find friends had not gone alone. Instead of seeing each other as competitors, banks could work together to create a shared data set of digital identifiers. They could also see Mobile Money as a financial habit education channel for people who did not have a bank account.

Mobile money helped people get used to accessing banking services through network operators. At first, there were only a few hundred thousand dong paying demands, but when the demand reached millions, they had to go through the bank. Then the bank must cooperate to pick up because the network operators could only do a few simple things. Thus, there were fewer competitors, more partners and cooperation. This was entirely due to the perspective, minister Hung emphasized.

Richard D. McClellan, Senior Advisor on Business Strategy and Economic Development RMAC Advisory, said that great new forms of cooperation were emerging in the field of electronic payments.

The rapid growth of the digital economy was driving e-payments with fintech, e-wallets, and other non-banking solutions to fill the void left by traditional banks. This also farced traditional banks to keep up and develop their own platforms to cooperate with non-bank institutions.

In fact, fintech was both a potential partner and a formidable competitor to traditional banks. From a defensive perspective, fintech would rob the bank’s market share and customers. Nevertheless, from an attack perspective, when they work together to penetrate the market better, fintech was a great partner, said Richard D. McClellan.

Banks themselves were concerned about fintech’s rapid growth, and on the other hand, appreciate the tendency to cooperate with these fintech companies.

Le Ngoc Lam, deputy general director in charge of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)’s Executive Board, said that fintech was very flexible, responsive, had a well-defined business model, taking advantage of the strengths of technology to provide financial services similar to banks but bring better experience, convenient, fast and at a lower cost.

On the other hand, according to the bank’s leaders, BIDV was also promoting cooperation with Fintech companies when connected with 24 Fintech companies, 756 service providers to provide more than 1,500 payment services for customers.

For telecom groups deploying Mobile Money, Tran Cong Quynh Lan, deputy general director of Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), shared that perhaps everyone thought this would be a fierce competition because telco companies were substantial, with financial potential and vast network.

However, Mobile Money was only licensed to provide payment services. Once the customer had used the financial service, the demand would not be limited to the payment service, and that was when banks and Telco companies could shake hands. Telco provided small payment services, and when a specific limit was exceeded, banks would become Telco’s partner to perform other services such as lending, consumption. This was an opportunity for cooperation and mutual development, Lan said.


Category: Finance, Vietnam

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