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Banking revenue to be managed by digital models by 2025: survey

The rapid advancement of technologies in the banking sector should be accompanied with substantial changes in current legislation, said a banking expert.

About one-third of banking revenue from traditional sources will be managed by digital models by 2025, said Vice General Director of Ernst & Young Vietnam Nguyen Thuy Duong at a conference discussing the future of digital banking in Vietnam held in Hanoi on March 25.

 Customers experience digital services provided by LienVietPostBank. Photo: Cong Hung

The forecast is resulted in a survey conducted by Ernst & Young recently, in which 42% of Vietnamese banks are ready for the digital transformation process, while 28% have incorporated digitalization strategy into their respective business.

The survey showed that the majority of banks are providing services for customers based on digital platforms, including wire transfer, online saving, bill payment, and online shopping.

 “Around 41% of banks expect to providing online loans for customers,” she added.

 In addition to transforming customer services, 73% have digitalized their internal procedures and 42.8% adopt digital signature.

As for problems challenging banks during the digitalization process, Duong said the majority has not set a clear vision on digital banking and put the right attention to the relation between business and digitalization strategies.

“Digitalization is a journey and in a modern world of rapid technological advancement, any institution should think as a strategist, innovate as a startup, design as a tech firm, and invest as a venture capitalist,” she asserted.

Sharing the same view, Pham Xuan Hoe, former Deputy Director of the Banking Strategy Institute, said digital technologies, including internet of things (IoT), artificial intelligence (AI), or machine learning, are transforming the way banks provide finance-banking services to their customers.

“The emergence of fintech has also put banks under pressure to change their business models,” he added.

Hoe referred to a survey conducted by the State Bank of Vietnam (SBV) that digitalization would help banks save up to 70% of operational costs, on the other hand, customers could now enjoy better experience in dealing with banking services.

Hoe, however, said the rapid advancement of technologies in the banking sector should be accompanied with substantial changes in current legislation, while banks should be prepared to invest a substantial amount for digital transformation.

Vice Director of the Vietnam Institute of Digital Transformation and Innovation (VIDTI) Hoang Nguyen Van told Hanoitimes of his concern over the lack of detailed instruction from the legislation viewpoint in digital transformation, saying this may cause “confusion among firms that are looking to engage on this process.”

“The Covid-19 pandemic is making digitalization an urgent issue for firms to increase their survivability by transforming business operation and technologies to cope with a new situation. So the quicker the government provides legal guidance for digital transformation, the better,” he concluded.