Race for digital transformation

Speaking at the Forum "Open Banking & Financial Services" organized by the International Data Group in Vietnam (IDG Vietnam) in collaboration with the Vietnam Securities Business Association and the Vietnam Digital Media Association recently, Mr. Vu Viet Ngoan, former Chairman of the National Financial Supervisory Commission, said that businesses' perception of digital investment has changed, especially during the past two years of the COVID-19 pandemic.

Accordingly, about 73% of businesses in the ASEAN region said they increased investment last year and this year in technology and digital transformation, compared to only 60% in the same period in 2017. Similarly, up to 80% of businesses perceive data as a valuable asset (previously only 63%).

Regarding securities, Ms. Hoang Hai Anh, Vice President and General Secretary of the Vietnam Securities Business Association assessed that most securities companies now have a digital transformation research department. Thanks to technology products such as eKYC and Blockchain, trading accounts increased rapidly.

In addition, for the insurance industry, according to the Vietnam Association of Insurance in 2021, the total insurance premium revenue of the whole market was estimated at VNDD217,338 billion, up 16.71% over the same period in 2020, in which non-life insurance premium revenue was estimated at VND57,880 billion, up 3.98% over the same period in 2020; life insurance premium revenue was estimated at VND159,458 billion, up 22% over the same period in 2020. Businesses have also increased the application of technology in business activities, such as using 100% of electronic contracts, and applying technology to enhance customer experience through many contact stages such as consulting and claiming. Or the most common is exploiting modern sales channels through banks and online channels.

Regarding the trend of open banking, over the years, many commercial banks have been implementing Open Banking activities at many levels and in different forms. In 2019, some banks launched API platforms to be able to connect with partners in the same ecosystem.

Ms. Tran Thi Thuy Ngoc, General Director of Deloitte Vietnam, said that the financial services industry is being affected by technological development, specifically digital transformation. In recent years, regulators globally have begun to open up banking processes and data as a means of increasing competition and giving customers more control over personal data. Core competencies that support the open banking ecosystem, such as regulatory framework, are well-established. Liability and dispute management should be clearly established and agreed upon by the parties.

According to Financialbrand.com, with the trend of data sharing becoming stronger in 2022, the Open Banking model will increasingly develop, creating comprehensive changes in the financial and banking industry.

Toward a comprehensive digital finance

Sharing at the Forum, experts also said that although digital transformation in digital finance has been promoted in recent times, the challenges posed to the financial ecosystem in Vietnam are also quite large. Digital financial services are still a new field, so the legal framework is still incomplete, hindering the development, management and supervision of the activities of actors in the digital financial ecosystem.

Regarding the reason for the unsuccessful digital transformation of enterprises, Mr. Vu Viet Ngoan, former Chairman of the National Financial Supervisory Commission, said that it comes from incomplete awareness.

“Digital transformation does not mean technology application but it requires a change in mindsets, business models and governance. In addition, the strategy of conducting digital transformation without mobilizing talented human resources also greatly affects the building of a digital ecosystem," said Mr. Vu Viet Ngoan.

Agreeing with this view, Ms. Nguyen Minh Nguyen Thanh, Southeast Asia business director of akaBot (FPT Software), said that the main cause of failure in digital transformation is that the management strategy and the governance model of enterprises have not really kept up with the digital development.

"One important thing that businesses need to change is management strategy. Instead of waiting for changes to come, we must actively anticipate and prepare for all changes," emphasized Ms. Nguyen Minh Thanh.

Making recommendations to the management agencies, Ms. Tran Thi Thuy Ngoc, General Director of Deloitte Vietnam, said that the State Bank needs to study, build, test and gradually improve the legal framework to manage open banking activities, and also promulgate an open data standard toward an open banking system. it needs not only to improve the customer experience for banking products and services on digital platforms, but also create a level playing field in the banking system.