Customers use mobile banking on phones. Vietnam has many potentials to develop digital banks. (Source: VNS) A recent report by Boston Consulting Group on digital banking in theAsia-Pacific listed various factors that make Southeast Asia andIndia "promised land" for digital banks.
The segment has huge potential in the region since digital adoption has grownrapidly in recent years, with the region now home to a digitally connectedpopulation of over 400 million.
This figure is likely to grow substantially in the coming years as mobilepenetration and 4G coverage expands in a region with a population expected to reach542 million by 2030.
Malaysia, the Philippines, Vietnam, and Thailand are first off the blocks inwelcoming the new model.
Vietnam’s banking industry revenues could rise to 27 billion USD by 2024,equivalent to annual growth of 13 percent since 2019 and the highestin Southeast Asia.
According to Finance magazine,in Vietnam, with its young population, technology and internetaccessibility are high, and the percentage of the population using smartphonesis increasing rapidly.
Creative marketing agency Adsota, in its Vietnam digital advertisingmarket report for July 2020, had said 43.7 million people use smartphones,or 44.9 percent of the population and among the 15 largest markets.
Nirukt Sapru, global advisor of Timo Digital Bank, shared: “There isa significant opportunity for Vietnam to attract FDI in the digitalbanking space. Both banks and private equity firms continue to be attracted tothe Vietnamese market by the digital-savvy consumer in Vietnam. The opportunityincludes using digital banking to tap the unbanked as well as providecustomised solutions to the rising middle class.
“I think that the digital banking and finance sector in Vietnam will still havemany opportunities for development in the near future if we can reach the customerbase who do not have a bank account or upgrade service experience towardspersonalisation to create novelty and breakthrough.”
Experts said digital banks need to overcome many barriers to being recognisedas traditional landers in the next 10 years.
Speeding up regulatory approvals for digital banks is important.
Experts said it is necessary to speed up enactment of laws to enable them tokeep pace with the development of the finance and technology sectors.
The banks themselves need to have long-term plans and the vision to invest intechnology, regular improvement, maintenance, and system to enhance theircompetitiveness.
They also need to have good training programmes since digital banking is arelatively new field in the country, and their human resources are mainlyrecruited from traditional banks with banking and finance expertise or fromtechnology companies.
Digital banks also have to compete with fintech companies who pay top dollar toattract quality personnel.
They are always prime targets for cybercriminals, and so, to build trust incustomers, need to ensure the safety and confidentiality of information.
Vietnam is the country with the lowest population rate served by banks inthe region -- of just over 40 percent.
So the habit of using cash remains widespread.
Changing people's consumption habits is also a challenge for Vietnamese banks’digital transformation, experts said./.
VNA
