Vietnam, astutely acknowledging the importance of this trend, has initiated its National Digital Transformation Programme, slated for realisation by 2025, with an extended vision to 2030. Coupled with the blueprint for the development of applications centred on population data, identification, and electronic verification, the government strategically designated 2023 as National Data Year. This ambitious move aimed to cultivate and leverage digital data to foster new value creation.

Pham Tien Dung, Deputy Governor, State Bank of Vietnam

For the banking sector, the strategic development and efficient utilisation of digital data is enshrined in nine key objectives outlined in 2021 on approving the plan for digital transformation of the banking sector this decade.

Notably, data does not merely facilitate customer identification and verification for banks. Through modern technological applications, it allows institutions to analyse, understand and forecast consumer behaviour, aiding in decision-making processes pertinent to product and service offerings. This ensures alignment with market needs while optimising operational efficiency.

Recently, the State Bank of Vietnam (SBV) has been proactive in paving a legal pathway that encourages data connectivity and tech applications, all while prioritising security and confidentiality in transactions. Collaboration has been a theme, with the SBV partnering with the Ministry of Public Security on a plan that zeroes in on using citizen data to verify customers and enhance various banking services. The project is thorough, with 11 tasks and 35 specific objectives lined up.

The initial results are promising. Over 42 million customer profiles have been “cleaned” or verified in the Credit Information Centre. Moreover, most banks have coordinated with public security units to electronically validate customer credentials.

A notable move by the SBV encourages banks to use this verified citizen database when assessing consumer loans. This integration is designed to assess retail customers seeking loans for daily needs, simplifying and streamlining loan processes while ensuring regulatory compliance.

Furthermore, given a government directive in August this year on reinforcing measures against so-called shadow banking or black credit, the banking sector has undertaken various strategies to combat this menace. Harnessing citizen ID data to assess borrower credibility provides banks with a reliable data reservoir, further strengthening their lending decisions and consequently diminishing the threat of illicit lending.

Embracing the broader digital transformation vision for the banking sector, most banks have already established centralised data warehouses. They are also extensively researching and deploying cutting-edge technologies like big data, data analytics, AI, and machine learning. These innovations aim to optimise, simplify, and automate business processes, providing bespoke services and products that reduce processing times, and enhance customer experiences.

Looking ahead, the SBV remains committed to proactively collaborating with various ministries and agencies. The primary focus is on refining the legal framework that propels digital transformation, which includes policies on data connectivity and extraction.

In tandem, ensuring banking applications operate securely, efficiently, and can integrate seamlessly with other systems is paramount. This will widen the digital ecosystem, catering to online payments with seamless, convenient services.

Lastly, reinforcing security, information confidentiality, and continuing public awareness campaigns will be pivotal to equipping individuals with the knowledge and skills to safely access banking services.