State salaries excite banks

Cash-in-the-hand state salaries will soon be a thing of the past

State offices in major cities and provinces must implement the change by January 1, 2008.
The move has jolted banks into action with promotional activities to attract potential customers.
Vietcombank, the local market’s card leader, recently launched Connect 24 Visa which has all the features of Vietcombank’s Connect 24, with the addition that the card can be used worldwide at more than 30 million Visa merchants.
Nguyen Thu Ha, Vietcombank’s deputy general director, said the bank was now in discussion with several state-owned corporations to offer a salary-based banking services alongside the new product.
“This move will mean that all payments are recorded in the banking system. With this direction, local banks can welcome millions of new customers, but they will also face pressure to improve facilities,” said Ha.
Vietcombank is planning to expand its point of sales (POS) network and install an additional 200 automated teller machines (ATMs), increasing its number of cash points to 1,100 by the end of 2007.
The Military Bank (MB), another player with a network of 55 POS and 100 ATMs, even carried out promotional activities before the directive was approved.
The bank cooperated with the State Bank’s department of payments to organise conferences with the participation of potential customers from offices and corporations under the ministries of National Defense and Police.
Cao Thi Thuy Nga, MB’s vice manager, said the bank was investing in technology and a card service infrastructure that would meet customers’ needs.
The Ministry of Home Affairs calculated that the number of state officials working for central and municipal agencies, excluding those of the Ministry of National Defense in Hanoi and Ho Chi Minh City, is around 150,000 and three million in total throughout the nation excluding the military.
“We estimate that there are 400,000-600,000 state officials including military staff in Hanoi, where almost all central organisations are located,” said an Incombank source.
“However, without the directive, it is tough for a bank to access this market due to the conservative and traditional payment systems. However, through large-scale state-owned enterprises, we also have advantages,” the source said.
The country had 6.5 million card holders as of June, this year with around 3,900 ATMs installed by three bank alliances.
Of which, the Vietnam National Financial Switching Joint Stock Company (Banknetvn), comprising BIDV and Incombank, will hook-up with Agribank later this month.
Next month, Banknetvn will serve more than half of the total country’s ATMs with more than four million card holders and more than 2,000 inter-bank transactions a day.
“The number of state staff using cards for expenditure is small, but it is the first door for commercial banks to market their services through administration organisation systems to create a greater non-cash payment community,” said Duong Hong Phuong, deputy director of the State Bank’s Payments Department.
The State Bank later this year will release a list of all 26 domestic commercial and foreign banks with information on their networks to assist state agencies to select their own service provider.