Vietnam’s retail banking forecast to boom by 2026

The potential of the retail banking market in Vietnam by 2026 is forecast to be very large as the unbanked and underbanked percentage of people is very high, said local economist Nguyen Tri Hieu.

Vietnam’s retail banking forecast to boom by 2026. HNT Photo: Tran Anh

Speaking at the Vietnam Consumer Banking Services Conference 2021 on December 23, Hieu stressed that banks need to develop products and services that are suitable for the majority of Vietnamese consumers. 

“There is a need to have a consumer credit scoring system in Vietnam, which is built and approved by the State Bank of Vietnam in order to develop retail banking,” Hieu said.

In addition, the management agencies need to improve the legal framework, as well as promote the universalization of financial education for the entire population.

Digital transformation in banking is indispensable to providing products and services to the entire population, especially the vulnerable, he underlined. 

Sandeep Deobhakta, President and CEO of Manulife China Bank, said that digital technology will be a key factor enabling attractive offers to customers, and the use of data and analytics to create powerful customer interactions as well as allowing banks to better manage risks than their competitors. 

“Automation and digital personalization have significant benefits in the retail banking race,” said Sandeep Deobhakta.

According to Gopal Kiran, Global Head of Financial Services at Insider Singapore, building a successful digital bank requires a number of key supporting factors, including a focus on customers, ecosystem and data, technology infrastructure as well as business and operating models. 

“With the customer-focused element, banks need to have a deep understanding of customers' needs and preferences, thereby providing digital banking products and services with a simple and convenient customer experience through suitable distribution channels,” he added.

Delegates attend the virtual event. Screenshot from the event

Nguyen Quoc Hung, General Secretary of the Vietnam Banks Association, said that the 4th industrial revolution (Industry 4.0) is the driving force for the development of retail banking services in Vietnam as the leading strategy of banks, helping them to expand markets, improve competitiveness, and create resources for economic development.

The Covid-19 pandemic has lasted from the beginning of 2020 with extremely complicated developments, causing serious impacts on people and businesses.

With support from the proactive application of technology, credit institutions, financial companies, and intermediaries have launched many modern banking products and services such as mobile banking, internet banking, contactless payment, and QR code.

After being approved by the State Bank of Vietnam, local banks have applied new technology to identify customers (electronic Know Your Customer - eKYC), banking products and services that meet people's needs, ensuring safety, saving time, and supporting customers in remote areas who find it difficult to access banking services.

“Vietnam has become the country with the highest percentage of people shopping online in Southeast Asia with about 50 million people (nearly 50% of the population),” Hung said.

In which, online banking services, such as internet banking and mobile banking, have a remarkable growth rate, accounting for more than 40% of transactions, especially those with banks reaching more than 80% of the total. The growth rate of payment via QR code was up to 200% compared to 2020.

During the Covid-19 pandemic, banks have increased their advantages over pure fintech companies, according to Naushad Contractor, Founder and CEO of Fable Fintech (India). "Global consumer confidence in banks has increased since 2015. Especially, during the Covid-19 pandemic, many customers considered banks as a place to keep their money safe and stable," Kiran from Insider Singapore said.