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Need for financial and banking system to apply technology

Released at: 16:22, 09/11/2019

Need for financial and banking system to apply technology

Photo: Ngoc Lan

Fintech Vietnam Forum 2019 held on November 8 in Hanoi.

by Ngoc Lan

Vietnam has favorable conditions that can help its financial and banking system take a step forward to quickly catch up with the speed and development level of advanced financial and banking systems in the world, Mr. Nguyen Kim Anh, Deputy Governor of the State Bank of Vietnam (SBV), told the Fintech Vietnam Forum 2019 held on November 8 in Hanoi.

With the practical requirements of society and high economic growth, credit institutions in Vietnam have been actively researching and applying technologies to optimize products and services and have initially transformed the operating model towards digitalization with automated banking solutions and digital banking. “Digital transformation in banking activities is an inevitable trend and will certainly develop strongly in the coming years,” he added.

Mr. Anh also said that accompanying the traditional banking and finance system, financial technology (fintech) will bring innovation with many benefits while contributing to helping governments achieve socioeconomic development goals. He pointed out that in the last four years, the number of fintech companies in Vietnam has increased from 40 to about 150. “This shows the dynamism of businesses, especially startups in Vietnam,” he said. “The business environment is also improving, and many regulatory agencies, including the SBV, have tried to establish a legal framework appropriate to the level of technological development and also management capacity.”

Mr. Pham Tien Dung, Director General of the Payment Department at the SBV, agrees that digital transformation is inevitable, helping the banking industry overcome the challenges posed in the digital age. “Technology is now being applied in all fields, with many new players joining the market and with legal regulations to promote innovation and protect consumers,” he added.

He also said that in Vietnam, 94 per cent of banks have initially implemented or are preparing a digital transformation strategy, of which 59 per cent of banks have started to implement digital transformation in practice. “Vietnam is a market of potential for developing digital banking, with 96.5 million people and a young population structure,” he said. “Seventy-two per cent of the population has a smartphone, with mobile subscriptions standing at 130 million, while there are 64 million internet users, or 67 per cent of the population.”

Mr. Nghiem Thanh Son, Deputy Director General of the Payment Department at the SBV, said there are the two major challenges when developing fintech. “For banks, the problem is how to meet the high expectations of consumers, take advantage of new technologies, and prevent the risk of cyber-attacks,” he explained. “For regulatory agencies, the challenge is to protect consumer rights and personal data, deal with challenges from cyber security, and balance management goals with the promotion of innovation and competitiveness.”

According to Mr. Son, banks have gradually changed their thinking, focused on customers, applied 4.0 technology, and focused on building big data along with changing their business culture, management methods, and leadership. “They also need to invest in technology, integrating distribution channels in order to diversify and optimize products and services, reduce costs, increase control, and improve the experience and satisfaction of customers,” he added.

In addition to proposing solutions for the banking industry, Mr. Dung proposed that ministries and agencies work together to accelerate the completion of the National Database on Population, allow open connections with service sectors such as banking, telecommunications, and insurance, build regulations on the protection of user data and digital identifiers, and complete transaction security regulations and information security.

Economists, meanwhile, said the State needs to build and implement a comprehensive system of policies to promote fintech, such as tax exemptions and reductions, policies to support access to capital, create an environment for fintech investment, and cooperate with traditional financial and banking institutions.

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