Financial wellness and digital money management apps to ignite digital banking

September 08, 2021 | 16:52
Financial wellness and digital money management apps are potential future sparks for igniting Vietnam’s race for digital dominance in the retail banking sector.
Financial wellness and digital money management apps to ignite digital banking
Financial wellness and digital money management apps to ignite Vietnam’s digital banking boom

Through advancements in AI and behavioural analytics from the spending habits of users, better user experience, and mobile-first technology, financial wellness and digital money management apps can provide customers with a huge range of financial literacy tools such as spending analysis, creating savings goals, transaction categorisation, personalised recommendations, and the scheduling of bill payments, to name a few.

New data published this week in a Backbase-commissioned study, conducted by Forrester Consulting, reveals that 50 per cent of Vietnamese are not achieving their financial goals, 62 per cent feel overwhelmed by debt, and 71 per cent do not know where to go for reliable financial advice. Through such apps, banks can address all of this and more.

In addition, banks in Vietnam are moving forward into digital, but for some it is a slow-paced journey. Of the Vietnamese retail-banking business decision-makers interviewed as part of the report, 58 per cent said their company was implementing or expanding their digital banking offering, while 28 per cent said their company had "no interest in" or was "removing" its digital banking offering.

According to Riddhi Dutta, regional director for Backbase ASEAN and South Asia, “There seems to be a wide disparity between some banks who are progressing and others who are yet to start; this could be a huge opportunity for those disruptors who want to put their ‘pedal to the metal’ and gain first-mover advantage.”

“From our research, 42 per cent of the interviewed Vietnamese retail banking business decision-makers said they are going to increase spending on financial wellness initiatives over the next 12 months. 74 per cent said they were ‘planning to’ or ‘actively expanding’ digital financial wellness initiatives, so there are some positive signs there too,” he added.

With banks well aware of the challenges their consumers face, and with the knowledge that digital financial wellness apps are an ideal solution for these challenges, all thoughts go to why some Vietnamese banks are slower in getting started.

The research revealed that in Vietnam, 72 per cent of the banking sector sees a "lack of understanding of customer needs and outcomes" as an obstacle in further developing digital tools for customers, and 74 per cent said they are "unsure of how to work with or partner with a fintech company" to implement the activity. 70 per cent said it was due to "outdated or legacy technology" and 68 per cent said it was due to "competing priorities"’

Talking about the points raised, Iman Ghodosi, Backbase regional vice president for the Asia-Pacific region said, “It seems there is a lack of understanding; we can empathise with these challenges because at one time every bank in the world faced them. Change is not easy. However, for those institutions who want to take the lead, the slowness of some of the sectors is definitely an opportunity.”

“There is no doubt that financial wellness apps aimed at consumers can play a large part in improving trust in digital banking and adding value to the lives of Vietnamese. 12 months from now, adoption will be much further advanced, and 24 months from now Vietnamese will have a whole different digital relationship with their banks. It all comes down to who wants to be first,” he added.

By Backbase

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