The comprehensive financial strategy: opportunity for the digital economy

26-Feb-2020 Intellasia | Tri Thuc Tre | 6:02 AM Print This Post

The prime minister had just approved the National Comprehensive Financial Strategy until 2025, with orientations to 2030 in Decision 149/QD-TTg. The strategy was considered to be of great significance to the socio-economic development, paving the way for the development of financial markets and financial services to keep pace with regional trends, so that individuals and businesses could have access, thereby promoting e-commerce and the digital economy.

Mission vision directed to core values

Under the new financial strategy, by 2025, at least 80 percent of adults would have accounts at banks and other authorised organisations; towards the goal of each adult having at least one trading account at a bank or other authorised organisation by 2030. The strategy also set the goal of the number of cashless payment transactions reaching a rate increasing by 20 percent to 25 percent annually.

The strategy of many important points was developing financial institutions; consolidating, restructuring banks, enhancing the application of technology with financial institutions, banks, Fintech companies, and telecommunication enterprises providing payment services.

According to the evaluation of Can Van Luc, a Member of the National Monetary and Financial Policy Advisory Council, the promulgation of the National Comprehensive Financial Strategy was necessary, in the context of 35 countries to 36 countries issuing strategies in the world. The main objective was inclusive development, increasing access to financial and banking services of individuals and businesses. It was apparent that access to financial and banking services in Vietnam was still relatively low, despite rapid growth in recent years.

Le Quang Tri, a Financial expert, said that the most outstanding point in this strategy was innovation and breakthrough spirit, demonstrating the government’s new vision in making policies and comprehensive payment development in Vietnam.

Two noteworthy points of the strategy were technology application, maximum service development according to world standards, thanks to technology for breakthroughs; and expansion of many sectors, especially those that were still exclusive to mobilise social resources.

According to this expert, the trend to switch to comprehensive payment and e-commerce was inevitable. Many countries were developing strongly, and Vietnam could not be different. The strategy would help businesses in particular, and the economy, in general, would have opportunities to grow faster.

Accordingly, the strategy would focus first on the financial sector, from which the sectors would develop fast to catch up the electronic payments of countries in the region and around the world to attract more businesses, encourage customers to participate in electronic payment more.

The application of technology, maximum service development according to world standards, technology would create conditions for businesses in many fields of development. Banks and businesses would reduce many types of costs, including personnel costs, time, intermediary costs.

Basically, the National Comprehensive Financial Strategy to 2025 and orientation to 2030 had mentioned many essential issues to serve the general economic development in the industrial 4.0 age. Businesses would reduce costs, have more opportunities for breakthrough development.

Open to business and sustainable development

The national financial strategy aimed to develop a comprehensive financial system for all people and businesses to access and use financial products and services in a convenient, appropriate, and cost-effective manner, responsibly and sustainably provided with a focus on low-income groups, small and medium-sized enterprises, and micro-enterprises.

One of the outstanding tasks of the Strategy was to promote cashless payments to people and businesses, such as collecting, paying taxes, fees, charges, collecting administrative fines, paying bills periodically (electricity, water, telecommunications, tuition fees) or payment of pensions, non-cash social insurance benefits, had been implemented but was still quite limited, requiring more applications to expand more strongly.

However, when financial services developed to the smallest areas of life, to remote areas through the network of correspondent banking, fintech, mobile money, electronic wallets, channels, more and more modern payment would require a strong switching and clearing platform. Therefore, allowing more businesses to participate in the market would expand the infrastructure to accelerate the process of cashless modernisation.

Therefore, the strategy also proposed to research and develop a mechanism for financial switching and electronic clearing in the direction of allowing more organisations and businesses providing services under the law to increase competitiveness, ensure security and safety, increase handling efficiency, reduce payment transaction fees, transfer money to people and businesses.

According to the financial expert Pham Nam Kim, so far, Vietnam’s electronic payment system had only partially met the needs of people in urban areas, and the system in rural areas was still very lacking. Coverage of service delivery points was still thin with high costs. Payment via cards still accounted for a large proportion, payments via QR Code, e-wallets were still low, while this was a new trend.

Wanting to bring the service to everyone, erasing the current service white areas requires a large, modern switching system, connecting new payment facilities, such as transmitting develop and bringing services to everyone.

Talking about this issue, experts from the Central Institute for Economic Management expressed that this was the right policy, opening up great opportunities for more resources to contribute to the creation of important national infrastructure.

This expert mentioned the successful lesson of the telecommunications industry nearly 20 years ago. It was a period of booming new telecommunications services but was ‘stuck’ when there was only one national backbone managed by state-owned companies. Infrastructure and management limitations had affected the speed of the development of telecommunications services. These problems would be solved only when more businesses participated in the construction of national trunk roads. That helped to expand the infrastructure, which was a sufficient foundation for Vietnam’s telecommunication and technology services to develop strongly.

It was a lesson of quarterly and never-ending development. The innovative view of this financial strategy was expected to create a new step for the national financial market as a whole and the online service bar in particular. This was also the direction appropriate to the reality when there were more and more private enterprises in building important national infrastructure in the past, which used to be assigned to the State, the expert emphasized.

In fact, in many countries around the world, many countries had many companies providing switching services, even some countries had more than 10 enterprises performing different levels of service in this field. In Vietnam, there were businesses capable of participating in the creation of financial switching infrastructure and clearing. They were technology corporations or strong financial institutions with enough experience and potential.

According to Le Quang Tri, financial switching and clearing were fields that were an important infrastructure of the nation. This was the ‘spine’ for all financial, monetary and service payment activities being operated and operated by the only unit. The new strategy had allowed more participating businesses to create a big change, expecting a positive impact on payment activities in Vietnam, promoting the development of e-commerce and non-cash payment methods.

 


Category: Finance, Vietnam

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