HCM City (VNS/VNA) - The COVID-19 pandemic not only createschallenges for banks, but also pushes them to foster digital transformation tosurvive, experts have said.

A recent survey by the State Bank of Vietnam found that 95 percent of creditinstitutions in Vietnam have either implemented digital transformationstrategies or are in the process of formulating them.

It is expected that in the next three to five years digital-only banks willhave revenue growth of at least 10 percent, while regular lenders will havemore than 60 percent of customers using digital transaction channels.

State-owned banks seek to digitise their entire system, while smaller bankshave identified certain areas to improve service quality and the customerexperience.

Commenting on digital banking development in Vietnam at an online talkshow IDGTekTalk on August 3, Phan Viet Hai, director of information technology and alsothe digital banking centre at Viet Capital Bank, said digital banks must createa superior customer experience by changing the way services are provided usingtechnology.

Nguyen Quang Minh, deputy CEO, partnerships, Timo Digital Bank, said, "Inaddition to offering perfect and up-to-date financial products and services, wealso have to really understand the market, customers' needs and expectationsand more importantly, identify the problems and difficulties they are facingevery day in each transaction.”

Pham Quang Minh, general director of Mambu Vietnam, said banking services havechanged greatly in the past few years. In Asia, including Vietnam, risingcustomer expectations for online and mobile banking services are the drivingforce behind the digital transformation of financial service providers.

Nguyen Van Tuan, deputy general director of VCCorp & founder of BizflyDigital Transformation, said currently banks are not only competing with eachother but also with rapidly growing fintech companies, which have created“amazing” services and experiences through digital technology andtransformation.

For succeeding at the digital transformation, the determination shown by abank’s bosses plays an important role, he said.

“Technology contributes only around 30 percent to the success with theremaining 70 percent being owed to other factors like the mindset ofbusinesses’ leaders and digital transformation,” he added.

According to experts, banks still face challenges in digital transformationrelated to regulations on electronic transactions, data sharing, networksecurity, and an inadequate legal framework among others.

They said completing a comprehensive legal framework would provide a fillip todigital transformation.

The standardisation of technical infrastructure is also very important tofacilitate interconnection and seamless integration between the bankingindustry and others to form a digital eco-system, they added.

Yeo Siang Tiong, cybersecurity company Kaspersky’s general manager forSoutheast Asia, said: “Digital transformation, in any sector, always presentsnew challenges, but especially for banks and for financial services. To put itsimply, revolutionising banks’ way of doing transactions means overhaulingtheir legacy systems including people, processes and technologies.”

Humans remain the weakest link, especially those who lack proper awareness ofthe simplest risks like phishing and spam, while employees require new trainingand third-party services should be assessed comprehensively, he said.

“When it comes to security, the endpoint should be the foundation and banksshould have known this by now. Financial services should be looking at anadaptive approach in security, which should be proactive rather than reactive –ready before an attack happens.”

Online transaction increases

Due to social distancing restrictions amid the pandemic, online payment hasbecome more convenient than cash, and, with just a smartphone and bankingapplication, users can save, borrow money, pay for electricity, water,television, and internet bills, buy movie and airplane tickets, make hotelreservations, or even buy vegetables or meat online.

Pham Tien Dung, head of the State Bank of Vietnam’s payment department, saidonline transactions in the first four months of the year jumped by 66 percentin terms of numbers and 31.2 percent in value year-on-year, including 86.3 percentand 123.1 percent on mobile phones and 95.7 percent and 181.5 percent using QRcodes.

Statistics from the National Payment Corporation of Vietnam, show that in thefirst five months its automatic clearing house processed over 800 milliontransactions worth over 8 quadrillion VND (347.7 billion USD), an increase of113 percent and 169 percent.

A recent survey by Visa also revealed strong increases in the use of e-wallets,contactless payment via cards and smartphones and QR Code. The year-on-yeargrowth rate of the total e-commerce transaction value in the first quarter of2021 rose by 5.5 times compared to the fourth quarter of 2020./.