February 24, 2024

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Vietnam Witnesses Rise in Digital Banking Adoption Rate

The adoption of digital banking in Asia-Pacific (APAC) emerging markets, especially Vietnam, has caught up with developed markets, according to a recent report on the digital banking behaviours of 20,000 urban banking consumers across 15 APAC markets, including Vietnam.

The report, released by McKinsey, noted that the behaviour change has brought the financial services industry new prospects. The window for seizing opportunities will narrow quickly as consumers give serious consideration to innovative propositions from digital banks. It identified the gap between customers’ interest in digital banking and their actual actions, how banks can better capture opportunities from this gap, and the core technologies that can support banks in doing so.

The report revealed that the increase in active digital bank users is arguably higher in Vietnam compared with APAC’s emerging markets and some APAC-developed markets. Between 2017 and 2021, 88% of APAC consumers in emerging markets actively use digital banks, a 33 percentage points increase. In Vietnam, the numbers rose by 41 percentage points to 82% in 2021. At the same time, fintech and e-wallet penetration reached 56% in 2021 for Vietnam, a hike of 40 percentage points from 2017. This penetration level is higher than the average of APAC emerging markets (at 54%) and developed markets (43%).

OpenGov Asia reported on a recent study, which surveyed 500 senior banking executives globally. It showed about 67% of the banks believe they will lose market share within two years if they fail to digitally transform. It illustrated the urgent need for banks to modernise their offerings, with 58% of global respondents predicting they will completely cease to exist in the next five to ten years unless they change their business models. Vietnam is witnessing an increase in demand for online and mobile banking services from consumers, which is driving the digital transformation of banks. Online transactions in Vietnam for the first four months of this year jumped 66% compared with the same period last year, which has been accelerated enormously by the pandemic.

The large majority (73%) of Vietnamese consumers are multi-channel banking users. This means they use a combination of digital banks and physical branches. Despite the change in consumer behaviours, banks are not doing enough to capture digital sales, due to limited digital offerings and a lack of meaningful engagements with digital users. Accordingly, three strategic moves banks can consider in closing this gap include rethinking the role of branches. Banks need to strengthen branches’ omnichannel delivery – measuring both financial goals and customer satisfaction.

The McKinsey report suggested they should transform their business model to digital-first, or integrated omnichannel engagement centred on the deployment of artificial intelligence (AI) and machine learning (ML) capabilities. Banks need to deliver intelligent value propositions (automating key decisions and recommending actions), personalised (based on an understanding of customers behaviours), and omnichannel (embed digital banking capabilities within partner ecosystems).

Banks should play the role of a digital attacker (digital-only banks using a cloud-native, low-cost platform) or an omnichannel incumbent to stay competitive. In doing so, they must differentiate their digital value proposition from existing offerings, focus on gaining access to a large customer ecosystem to scale fast, and capture transactions and balances as primary banks. Banks in emerging markets are already leading digital innovation but the market is getting crowded and competitive. To stay relevant, banks should think about building (or acquire) AI/ML capabilities in sales and service, operations, and information technology (IT).

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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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