Banks race to implement digital transformation ecosystem hinh anh 1Clients make transaction at a HSBC Vietnam transaction office in HCM City. (Photo courtersy of HSBC)

Hanoi (VNS/VNA) – The local banking sector, currently undergoing
drastic restructuring, will have more opportunities to improve its financial
capacity as well as learn modern business models and management from UK
partners after the UK-Vietnam Free Trade Agreement (UKEVFTA) takes effect,
according to banking insiders.

UK banks may set up representative offices, branches, 100% foreign-owned banks
and joint ventures with capital contributions not exceeding 50% in Vietnam.

Until 1 August 2025, UK financial institutions may solicitate the approval of Vietnam’s
competent authority (State Bank of Vietnam) to buy shares in one joint-stock
commercial bank of Vietnam, up to 49% of that enterprise’s chartered capital,
except for four commercial banks of which the Government of Vietnam currently
holds the majority of equity.

UK investors are also permitted to transfer cross-border financial information
and financial data processing. In addition, UK investors can provide
cross-border advisory, intermediation, and other auxiliary financial services
(including credit reference and analysis, wealth management, acquisitions advice,
and corporate strategy).

The UKVFTA was signed on December 29, 2020, and temporarily came into effect on
December 31, 2020, before officially starting on May 1, 2022.

Digital transformation is an irreversible trend of businesses in the 4.0 era.
Banking and finance is not an exception to that trend, according to banking
experts.

According to the State Bank of Vietnam (SBV), at least 95 credit institutions
have developed plans for digital transformation.

In recent years, the use of banking transactions on digital channels is no
longer unknown to the majority of people.

According to experts, the bank’s digital transformation journey consists of
three steps. The first is digitisation – converting the traditional process to
a digital one; the next is digital transformation – digitising each part of
business, enhancing customer experience; the last is ultimately digital
reinvention – combining technology and digital platforms to generate revenue
and results through innovative strategies, products and services.

Most banks are at the third step, so there are already many plans to go further
in digital transformation. Therefore, many banks have moved to establish a
digital banking ecosystem, from opening accounts to registering, issuing, and
managing products. Services such as accounts, credit cards, loans can all be
done online.

The percentage of people accessing digital platforms is increasing as Vietnam
has a young population structure and a rapidly increasing smartphone usage
ratio.

According to Adsota’s Vietnam digital advertising market report in July 2020, Vietnam
has 43.7 million people using smartphones, or 44.9% of the total population. Vietnam
is among the 15 markets with the highest smartphone users globally.

UK-based HSBC opened a full-service branch in Ho Chi Minh City and has taken
the lead in implementing digital penetration and new technology solutions which
are key focus areas at the bank for both retail as well as corporate customers,
according to an HSBC report.

Likewise, on the retail space, HSBC Vietnam has been the first bank in the
market to roll out an end-to-end digital journey for onboarding new customers
and mobile banking.

HSBC Vietnam has introduced Omni Channel Collections Solution, a dynamic
service that supports businesses, especially those who wish to develop
e-Commerce, to provide multiple payment options on one single platform.

“We are very proud to be the first international bank and the fifth market in
the world for HSBC to launch this innovative solution in Vietnam. This
ambitious, holistic and digitalised solution has proved that banks and Fintech
companies can flourish in partnership and will help boost digital payments as
per the Government of Vietnam’s strategy to encourage cashless transactions,”
said Hanh Nguyen, Country Head of Global Liquidity and Cash Management, HSBC
Vietnam.

According to Tim Evans, General Director of HSBC Vietnam, two important issues
post-Covid-19 to ensure that the financial sector maximises its potential are
sustainable finance and digitalisation. The State Bank of Vietnam (SBV) has
recently introduced initiatives to support green finance development and
digital transformation. It has set a target of 60% of banks having access to
green capital and lending to green projects by 2025.

Do Quang Vinh, Member of the Board of Directors, Deputy General Director and
Head of Digital Banking Division of SHB, said that digital transformation is
considered a long-term project, with items that are highly complex and require
coordination between many units.

The bank has transformed customer management to offer a variety of financial
solutions as well as applying technology in operations, which help to save time
and personnel costs as well as increase productivity.

Nam A Bank said that in 2022 it will continue to focus on increasing investment
and applying technology, creating new steps in digital transformation, and
continue to perfect the digital banking ecosystem: Robot OPBA, Open Banking and
ONEBANK, meeting the needs of transactions anytime, anywhere.

MSB has also cooperated with the world’s leading consulting group, Boston
Consulting Group (BCG), in implementing the Digital Factory project with an
investment of approximately 2 trillion VND (83 million USD).

However, to solve the above problems, banks have to invest up to tens of
trillions of dong per year for digital transformation. Vinh said SHB has
invested a lot of resources and budget to upgrade Core Banking (core bank),
upgrade cards, deploy investment banking, loan origination solutions (LOS),
deploy Omni Channel systems and related information technology systems and
apply the most modern solutions.

According to Le Anh Dung, Deputy Director in charge of the Payment Department
under the SBV, said in the first six months of 2022, non-cash payment
transactions increased by 77.2% in quantity and 29.8% in value compared to the
same period of last year.

Around 68% of Vietnamese adults have a bank account, and 5.5 million accounts
and about 8.9 million bank cards now use the eKYC (electronic Know Your
Customer) process.

Speaking at a seminar on digital transformation a few months ago, Governor of
the State Bank Nguyen Thi Hong said that the banking industry will strengthen
security and safety in electronic payments, effectively implement important
payment systems and operate payment intermediary service providers to ensure
proper, smooth and safe operation.

She said many domestic banks have 90% of their transactions conducted on
digital platforms, surpassing the target of 70% set for 2025.

Half of banking services are expected to be digitalised and 70% of transactions
will be carried out online by 2025, she noted./.

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