While Covid-19 is causing severe impacts on the economy as a whole, the pandemic has also served as a driving factor for banks and fintech companies in Vietnam to digitalize their services and take on online payment.

Banks are at the brink of losing their market shares in case they lag behind in the digitalization process.

Pham Tien Dung, director of the Payment Department under the State Bank of Vietnam (SBV), said recently, there has been a major shift of customers from one bank to another, leaving many on the brink of losing their market shares in case they lag behind in the digitalization process.

According to Mr. Dung, in order to promote digital economy, banks should find the quickest way to attract customers to use their online services. And secondly, they have to be satisfied with the service quality offered.

In Vietnam, the growth rate of mobile banking is estimated at 200% in recent months, while around 30 million people are using banks' payment system daily. However, customer behavior remains the largest restriction to promote greater usage of online banking services. In this regard, around 81% of credit institutions are working with fintech companies to develop new services.

Nguyen Chien Thang, director of BDIV Digital Bank, said before 2010, as customers look to move from cash-based to e-payment with the introduction of debit cards and ATMs, BIDV took advantage of this trend to become Vietnam’s top three banks with the largest number of transaction points. During the Covid-19 pandemic, BIDV recorded 15.5 million transactions per month with an amount of VND11 trillion (US$475.43 million).

Technological bottleneck

Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc said priorities for the economy in the post-Covid-19 period is digitalization, corporate operation, and the development of e-commerce.

Digital transformation is fast becoming an urgent task to help support the development of enterprises at the moment, Mr. Loc noted.

Among Southeast Asian economies, Vietnam holds a number of advantages in developing digital economy. Statistics revealed the country is home to 70 credit institutions, not to mention intermediary payment services providers.

In the first six months of 2020, the amount of transaction value via the internet is estimated at VND7,000 trillion (US$302.49 billion) and nearly VND300 trillion (US$12.96 billion) via mobile phones, which remain disproportionate to the potential of the economy, stated Mr. Loc.

To address the technological bottlenecks, Mr. Thang from BIDV said in the bank’s development strategy until 2025 with vision to 2030, it identifies technology and digital banking among the top three pillars for development.

Mr. Dung from the SBV expected the government to continue investing in the digital infrastructure, including technology for the banking sector. Moreover, there should be greater connectivity between banking infrastructure and those of other sectors to expand the digital ecosystem.

In addition to the development of digital banking, Mr. Dung said financial inclusion should be among priorities, and banks should continue to provide services in remote and rural areas as part of the national strategy for financial inclusion.