Many banks and finance companies have proactively adopted technologies to provide digital financial services, Nguyen Hoang Minh, a senior central bank official said.

A discussion at the Saigon Times newspaper conference on financial transformation in
the digital age held in HCM City on December 5. — Photo Courtesy of the Saigon Times 

Speaking at a conference organised by Saigon Times newspaper in HCM City on December 5, deputy director of the State Bank of Vietnam (SBV)’s city branch, said, “The country has seen a growth in population and internet and smart phone users, and banks and finance companies should take advantage to further develop digital services such as mobile and internet payments.”

The SBV is strengthening the legal framework to create the best conditions for banks and finance companies to operate more efficiently, he added.

Legal amendments to take effect early next year would require finance companies to provide clear information about interest rates, how they are calculated, loan documents, and the debt collection “culture” to help improve the financial sector, especially the consumer finance segment, he said.

“The conduct of finance companies and the way they demand repayment of debts have caused a bad image for them among the public.”

There have been numerous instances of finance companies' debt collectors harassing and even threatening debtors and even their relatives.

According to the central bank’s payment department, almost all banks have plans for digital transformation.  

Bruce Delteil, partner at McKinsey & Company, said: “Consumers’ banking preferences are evolving with the rapid adoption of digital.”

“Banks that successfully execute digitisation will improve their return on equity, but it may not be sufficient.”

Leading global eco-system players, including banks, have already started to build capabilities outside their core business activities, he said.

Banks that successfully execute eco-system and platform plays could potentially return to double digit return on equity, he said.

Financial services companies have started to transform their “DNA” to prepare for the changes, he said.

Kalidas Ghose, vice chairman and CEO of FE CREDIT, said digital transformation has helped improve the quality of staff at finance companies.

Young customers

Dang Thuy Ha, director of consumer insight at Nielsen Vietnam, said her company’s many studies show that consumers aged 18 to 25 account for 20 per cent of those using financial services.

“Banks and companies providing electronic wallet services should focus on people of these ages because they are potential future customers. They should strengthen the links between financial services and these young people’s daily activities.”

They start using digital transactions via their banking accounts to pay university fees, she said.

Moreover, they use e-wallets because of the many attractive promotions, she said.

Nguyen Khac Quoc Bao, head of the University of Economics’ School of Finance, said studies show consumers’ lack of trust is a major barrier to the digital economy.

Consumers’ acceptance and the Government’s support are decisive factors in its success, he added.

Datareportal’s Digital 2019 report showed that 70 per cent of the country’s population use the Internet, and the average age of users is 30.

A statistic from the Vietnam E-commerce and Information Technology Agency showed that 50 per cent of internet users use financial services via mobile phones.

According to the State Bank of Vietnam, the country’s interbank clearing system handled 37 million transactions worth nearly VND21 quadrillion (US$898.4 billion) in the first quarter of this year, up 23 per cent and 17.8 per cent.