Digital banking grows to support new customers

Banks expand the digital services they offer to meet the demands of a growing tech-savy generation, Photo: Le Toan

‘Live’ banks, ‘live’ services

For Hanoi-based Tien Phong Bank, launching their new digital banking kiosk called LiveBank in 2016 had only one alternative: taking the lead in making use of disruptive technology and offering customers a channel of digital banking services.

Available around the clock, endowed with user-friendly functions, and located in residential areas and shopping malls, LiveBank gives its customers easy access to make transactions anytime they want.

Dinh Van Chien, deputy general director of Tien Phong Bank (TPBank), said that 80 per cent of customers rate LiveBank as easy to use, with 86 per cent of them willing to employ LiveBank as a channel equivalent to entering a bank branch.

“We aim to have at least 100 LiveBank kiosks deployed across the nation next year, on top of the current 40. Digital transactions already account for up to 80 per cent of our total transactions,” said Chien on the sidelines of last week’s Vietnam Retail Banking Forum 2017, hosted by the Vietnam Banks Association and IDG ASEAN.

TPBank’s move into the digital era may be bold, but the lender is not alone in the race, as many local rivals are doing the same thing. While none are going the LiveBank kiosk route, many are pairing up with fintech companies to come up with new applications. One of these lenders is Vietnam International Bank (VIB), which has deployed the MyVIB social keyboard, which allows users to pay anyone right on the keyboard of any social chat app on their phone.

“We know that Generation Y (those born between 1981 and 1995) and Generation Z (those born after 1995) are very tech-savvy. We’ve seen babies who know how to scroll on an iPad before they ever learn to speak,” said Tran Nhat Minh, VIB’s deputy CEO. “Disruptive tech has become a part of their lives, and banks who want to reach them need to offer products and services that meet their demands. What members of these generations buy aren’t products or services, but experiences.”

According to Minh, banks cannot afford to assume that what worked for previous generations will also work for Generation Z. This includes physical bank branches with white collar staff, ATMs to withdraw cash, and long queues of people waiting for tellers. “We now need sophisticated digital products, digital architectures and platforms to support a customer-centric approach, and digital initiatives that focus on the needs of customers. Simply put, traditional banks ought to transform themselves, to catch up with technology, or else they will not be able to survive this digitalisation,” Minh told VIR.

The numbers speak volumes

According to a survey on user behaviour and trends in Vietnam released by IDG Vietnam in 2017, 44 per cent of participants sometimes go to bank branches for transactions, while 61 per cent said they regularly make transactions through internet banking. E-banking solutions are growing in favour because of the easy access and time-saving nature, with 81 per cent of participants having used e-banking solutions for transactions, compared to only 21 per cent in 2015.

According to the survey, customer satisfaction with online banking services in the country stems from easy access, time and cost savings, transaction accuracy, and availability of mobile applications.

Customer dissatisfaction, on the other hand, remained stable over the last two years, with 68 per cent in 2017 compared to 70 per cent in 2015. Reasons for dissatisfaction include major issues like high transaction costs, transaction errors, slow transaction speeds, poor customer service, and concerns about information security.

E-banking users request improvements and further development in application access, e-banking service quality, and safety and security.

Nick Middleton, a consultant at IDG Vietnam, noted in his Vietnam Banking Report 2017 that 45 per cent of net profits in retail banking stem from digital technology and 40 per cent of bank transactions in the country will be processed via mobile devices and the internet by 2020.

He cited other sources as saying that 25 per cent of costs could be cut to increase revenue, should banks employ disruptive technologies in their retail banking business and enhance security features for their customers.

A budding cashless economy

With e-banking and e-commerce on the rise in Vietnam, cash transactions are expected to gradually fade away. Yet it is not an easy process, as some 90 per cent of transactions in the country are reportedly made in cash.

“It comes down to trust. Buyers often prefer to see the product they’re buying before handing over payments, so 90 per cent of [e-commerce] payments are cash on delivery,” noted VIB’s Minh.

So to promote a cashless ecosystem, it is the banks’ responsibility to partner up with e-commerce businesses and fintech companies, in a quest to steadily reduce cash transactions from 90 per cent down to about 20 per cent, he added.

Jeong Jae Lee, deputy general manager of the Global Business Division at Korea-based NICE Information Service Co., Ltd., who has been providing consulting services on retail banking to local banks such as VietinBank, said that Vietnam has got what it takes to transform itself into a cashless nation.

“I believe the technology is ready, and it’s not very difficult to apply in the Vietnamese market. You have all the necessary infrastructure for the data, you have the internet and e-banking. The most important thing is the individual’s access to the bank,” Lee told VIR. “All individuals need to have a [bank] account and credit card in order to create a cashless economy.”

Vietnam aims to boost the number of bank account holders to at least 70 per cent of adults by 2020. Data by the central bank shows that as of September 2017, the country had 66.6 million bank accounts, with 127 million bank cards and credit cards in use.