Digital payment accelerated

27-Nov-2021 Intellasia | Dau tu Chung khoan | 5:02 AM Print This Post

Cash payment has decreased significantly over the time, but in order to further boost the digital payment, it is necessary to soon complete the relevant legal mechanism.

“Technological vaccines” change customer behaviour

Dang Tuyet Dung, Visa director in Vietnam and Laos shared a remarkable information that at least three out of five Vietnamese consumer carry less cash in their wallets, because they are used to card payments and contactless payment methods. The average number of cash transactions have also declined before the Covid-19 epidemic and is expected to continue to fall in the future.

“The amount of cash in wallet has also decreased for at least 65 percent of consumers, contributing to promoting the use of cards and contactless payments,” said Dung.

According to Dung, the main benefits of cashless payments include the lower risk of theft, less complication and prevention of the spread of germs. The services that tend to be chosen by consumers to switch to cashless payments in the market will be payments of bills, shopping in supermarkets and overseas travelling when the tourism industry recovers.

Consumers tend to prefer cashless payments, with 78 percent saying that they will continue to use digital payment methods even after the pandemic is over, 65 percent saying that they will switch to cashless payments thanks to the use of contactless cards and electronic wallets (e-wallets). Businesses in the field of e-commerce and e-payment can continue to operate when they are less affected by the epidemic.

Dung added that “the government agencies those that promote digital payments have seen the increase in performance.”

Sharing a survey on the speed of digital transformation of banks, Sunday Domigo, Managing director of Digital Product Management, Digital Channels & and Data Analytics, Corporate, Commercial & Institutional Banking of Standard Chartered Bank, said that “To serve customers in the supply chain, the digital transformation pace has been faster than it was three to four years ago, but this pace in Asia is even seven years faster, and most importantly, digital transformation, along with a strong workforce, also needs a change in mindset.”

Regarding the mind-set change for digital transformation, Sunday Domigo said that in the past, digital transformation was simply motivated by cutting costs, but banks now know that applying technology is a competitive advantage, technology improves customers as well as improves banks’ business processes, etc. It can be affirmed that the banking industry is going through an unprecedented digital transformation.

“Attracting talented human resources to deploy products and services is one of the important strategies of banks. Accordingly, banks have the opportunity to embrace innovation even in Business-to-business (B2B) and Business-to-customer (B2C) models, etc.,” said Sunday Domigo, adding that banks also need companionship of customers, technology companies and the regulators in the process of innovation.

Nguyen Hung, general director of Tien Phong Commercial Joint Stock Bank (TPBank) said that the bank’s goal is to restructure the current system so that it can reduce the load on the core banking, shorten the time it takes to develop products, and improve the ability to reuse banking services on across different channels and ultimately adopt a more sustainable foundation for the bank’s future. This brings a multi-channel experience to TPBank and the bank can introduce more advanced products with the “customer-centric” motto.

Mechanism barrier

A survey by Vietnam Prosperity Commercial Joint Stock Bank (VPBank) showed that the cost of a transaction on a digital platform is 96 percent lower than that of a branch channel. However, Tran Diem Chi, Backbase’s representative in Vietnam, said that in the next 12 months, Vietnamese banks are still the least likely in the region to increase spending on financial health initiatives (42%) and on financial management digital tools (20%). It is worrying that up to 74 percent of Vietnamese banks are uncertain about how to cooperate with financial technology (Fintech) companies.

Nguyen Chien Thang, director of Digital Banking of Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), said that although there is a draft on the sandbox and other related regulations for Open Banking, BIDV still follows its own needs and does not have specific standards because these regulations are not yet officially issued. In addition, BIDV is facing many problems with risks and regulations on information security and safety.

“It is suggested that the State Bank of Vietnam (SBV) should soon issue regulatory documents so that banks have a basis to carry out and promote banking activities because this trend will develop very strongly in the near future,” Thang proposed.

Tran Cong Quynh Lan, deputy general director of Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), said that the banking industry has eKYC solution for account opening, but it still requires customers to meet face-to-face in order to issue a digital signature.

Lan questioned why citizenship data are not used instead of digital signatures, why technology platform is not taken advantage to fully carry out the digitisation.

Sharing a similar view, Nguyen Quoc Hung, general Secretary of the Vietnam Banks Association emphasized that it is not possible to require a fast digital transformation when the legal framework has not been completed.”

Dr Nguyen Duc Hien, deputy Head of the Central Economic Commission, said that in order to promote digital transformation to achieve the goal set out in the Resolution 52-NQ/TW dated September 27th 2019 of the Politburo on a number of policies of proactively participating in the 4th Industrial Revolution, as well as in the Plan 810 dated May 11th 2021 on the digital transformation of the banking industry by 2025, with vision to 2030. In particular, not only focusing on the payment field as in the past time, there are many issues that need to be improved on policies for banks in the digital transformation process, and on creating a competitive and cooperative environment for development between commercial banks and fintech companies and big technology (BigTech) companies.

“In the coming time, it is necessary to continue to improve the mechanism, policies and laws for digital transformation in the banking industry. At the same time, the promotion of smart banking also needs to be implemented more strongly,” said Dr Hien.


Category: Finance, Vietnam

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