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Digital Transformation in Vietnam’s Banking Sector

Through a series of newly issued regulations and access to the national population database, banks are preparing to enhance their online money-lending services. According to Deputy Governor Pham Tien Dung of the State Bank of Vietnam (SBV), the utilisation of the national population database will enable banks to conveniently verify and authenticate the information of new customers, streamlining the process.

Commercial banks will promote lending services on their electronic platforms based on this database. The proposed amendments to the Law on Credit Institutions contain numerous regulations that specifically address banking services conducted through electronic devices.

For quite some time, many banks have been providing online lending services, primarily for small loans. However, the legal status of this lending model has not been explicitly defined in the law. As a result, banks have been engaging in online lending with concerns that the lending contracts may be deemed invalid in the event of a legal dispute.

Furthermore, banks have been hesitant to promote online lending due to the presence of a significant volume of junk data and virtual accounts. With the establishment of the national population database, the State Bank of Vietnam (SBV) has collaborated with the Ministry of Public Security to authenticate 25 million customers in the credit information database. SBV aims to verify the remaining 26 million customers within the coming months.

Possessing such a vast pool of clean customer data presents banks with a valuable opportunity to promote digital services and products, particularly online lending. Granting banks access to the population database, coupled with the establishment of a comprehensive legal framework for digital banking, represents a significant opportunity for the banking industry to experience robust growth in the future. A well-defined legal framework and a reliable database serve as the fundamental pillars for enabling all banks to operate effectively within the digital landscape.

Previously, banks exercised caution in engaging in online lending due to the presence of unverified and unreliable information within the customer database. Another problem is the automatic credit appraisal and approval due to data limitations and unclear legal basis. Furthermore, the lack of comprehensive customer information posed difficulties in effectively collecting debts.

Accessing the national population database and implementing an automated appraisal and approval mechanism allow state-owned joint-stock commercial banks to address these issues. It enables individuals to conveniently obtain online banking loans at reasonable interest rates.

The traditional lending process involved multiple steps and consumed significant time and human resources. However, with the extensive customer data available to banks and the national population database, there is a hope to enhance the speed of loan processing procedures and strengthen risk management measures. This advancement allows for more efficient lending operations, reducing delays and streamlining the overall process.

Several banks have coordinated with the Police Department for Administrative Management of Social Order (C06) under the Ministry of Public Security to start testing a citizen credit scoring system based on population data. As an initial step, banks intend to offer unsecured loans for small amounts using the citizen credit scoring system. This approach will promote the retail lending of the banks.

To ensure a seamless integration between the banking system, VNeID (the electronic identification application), and the citizen credit scoring system, it is crucial for the Ministry of Public Security to promptly update the population data. State management agencies must also adjust relevant legal provisions to create favourable conditions for providing loans in the digital environment.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

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Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

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SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

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IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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