The Hanoitimes - In Vietnam, 72 percent of financial technology (fintech) companies choose to cooperate with banks in their business and service delivery, instead of entering direct competition, said Le Anh Dung, Director of the State Bank of Vietnam (SBV)’s Payment System Department.
Dung made the statement at a national workshop on “Industry 4.0 and new changes in the finance – banking sector” held in Hanoi on June 12.
Fintech has become an familiar term in the financial industry in recent years. Fintech stands for financial technology, spreads across many different areas, applies new technologies such as cloud computing, large data analysis, artificial intelligence, and biometric authentication.
Director of the SBV’s Payment System Department Le Anh Dung. Photo: Bnews
Dung stressed that fintech companies take advantage of providing innovative, flexible and effective technology-based services that help reduce fees and enhance customer experience.
However, fintech companies still lack experience in finance-banking activities, capital, customers and a system for internal compliance control and risk management. Meanwhile, banks now have all of these factors. Therefore, cooperation between banks and fintech firms is viewed as a foundation for improving financial services, Dung added.
“Fintech is a fast-growing sector and a dynamic intersection between technologies and financial services that reflects the impact of Industry 4.0 on the banking and finance industry,” the official stressed.
Operating costs of a bank will be cut by 80% if fintech is applied, said Prof. John Wong from the Paris Graduate School of Management, adding that thanks to fintech, banks can reduce the numbers of transaction offices and unnecessary ATMs; and with only a smartphone, Visa or Master cards will be no longer needed.
Nguyen Dinh Thang, Chairman of the Board of LienVietPostBank, pointed out three major challenges to Vietnamese commercial banks in developing the digital banking system: legal environment, capital, and human resources and risk management.
The slow change of related regulations that does not keep up with the pace of technological growth has hindered the development of high technologies and digital banking, posing great legal risks to banks and fintech firms, Thang explained.
At the same time, research and development of digital banking requires big investment while technological risks and threats of banking frauds remain.
Director of the SBV’s Payment System Department Le Anh Dung affirmed: “The SBV acknowledged these challenges and has been continuously investing in upgrading the local financial infrastructure to prevent cyber risks and introduce warnings and new policies on information security.”
The commercial banks to strengthen system security themselves to avoid card frauds that can negatively affect the industry’s reputation, Dung said.