The thrust from the legal corridor for digital bank transformation

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Digital tools are now considered a competitive advantage for banks. Photo: TL

Increase competitiveness with digital tools

In addition to the digital banking model (Agribank Digital) being implemented, Agribank is currently testing and will deploy according to the roadmap of applying citizenship identification (CID) to attach chips to transaction activities. With this form, customers who come to Agribank to make transactions only need to choose the service and sign only 1 signature without manually writing or filling in any information. Opening an account, issuing a card, registering for Agribank E-Mobile banking service, even taking out a loan or depositing money into an account is all done very quickly, safely and with high accuracy due to customer information is “read” by the system via the chip and directly authenticated with the citizen database of the Ministry of Public Security.

Previously, with traditional transaction methods, the average execution time was about 20-25 minutes; now, it only takes customers 4-5 minutes to complete the transaction using a CID information reader, authentication device, and related support software. Moreover, customers who have registered biometric information, next time can make transactions at the counter or Agribank Digital/CDM... without using a physical card or any other documents.

HDBank is also providing digital banking services with more than 100 features and connecting more than 200 service providers to meet the maximum needs of customers on a single application, in the spirit of “All in App HDBank”. Recently, HDBank App continued to integrate 2 new features: Tuition Payment (SSC) and Traffic Recharge (ePass).

A representative of HDBank said that the strong and comprehensive promotion of digitization in business activities had created great customer attraction, especially in shifting to digital channels. Specifically, during the past peak holidays, the number of transactions via HDBank’s digital channel increased by about 40% compared to the average number of weekly transactions. In general, the trend from the beginning of the year, the total number of eBanking transactions in the first quarter of 2023 has increased by 108% compared to the same period last year. Because of that, according to a representative of HDBank, instead of overloading and even interrupting transactions like many years ago, the current peak season is an opportunity for commercial banks to create an advantage in attracting and expanding the market and transaction size, as well as affirm the strength in service response thanks to the ability to digitize.

Nguyen Van Huong, Deputy General Director of OCB, also said that building and distributing banking products in today’s digital age must be based on understanding each customer. To do this, banks must apply technology to analyze behaviour, consumption trends, age, gender, etc., from a large database, plus survey customer experience through surveys and evaluate customer needs.

Specifically at OCB, the demand for owning a home for young people today, especially those who just got married, is great. However, the income of this group of customers is only quite average and has to cover living and raising children, so the accumulation is quite small. Therefore, home loan products for this group of customers must be designed with a longer loan period than usual, up to 30 years, because young people still have a very long time to devote. In addition, allowing customers to pay less principal in the early years and gradually increase later so that young people are less pressured, more in line with the trend of increasing income with age. All the above processes, from measuring demand to analyzing customers, according to Huong, must be based on digital data.

Expect a push from the legal corridor

The survey results of the International Data Group in Vietnam (IDG) have shown the strong growth of digital transformation in the payment field of the banking industry. Specifically, the rate of non-cash payment transactions in Vietnam in 2023 has increased to 41% from 28% in 2020.

Sharing at a recent seminar on financial and banking services 2023, Vu Viet Ngoan, former Chairman of the National Financial Supervisory Commission, also assessed that finance - banking is an industry with a high speed of transformation and leading innovation in the Vietnamese economy, even being rated as the leading in the region. Currently, over 30% of the population in Vietnam uses the App to transact with banks, second only to China with over 41%.

Vu Viet Ngoan attributed this achievement to three important pillars for rapid transformation. Firstly, telecommunications technology infrastructure and, more broadly, digital infrastructure have been invested and valued by the Government. Secondly, the legal framework and policies have been improved and renewed according to the requirements from practice. Third, the data platform has grown rapidly in the past few years.

Forecasting the coming time, Vu Viet Ngoan said that the wave of digital transformation would continue to take place strongly in the financial - banking sector. “Through direct discussions with leaders of many banks, most of which are implementing implementation programs focusing on digital transformation, the perception of leaders of banks has changed a lot compared to the last 5 years”, Ngoan shared.

Banks also shared their expectation that the legal corridor will continue to be perfected shortly to create a basis for the bank’s digital transformation. Including documents guiding the implementation of Smart OTP, regulations on exploiting customer data… Pham Duc Duy, Director of Business Development and Management Center, Individual Division of Sacombank, said the bank plans to use AI and big data for credit approval. However, the lack of legal documents guiding banks to exploit user data and big data-based credit approval makes this plan difficult.

From the perspective of the management agency, Pham Anh Tuan, Director of the Payment Department of the State Bank of Vietnam, said that the State Bank is promoting the amendment and supplement of many legal documents, including amendments to the Law on Banking and Finance credit institutions; amending Decree 101/2012/ND-CP on non-cash payments; propose the National Assembly to promulgate a mechanism for controlled testing in banking and financial activities (sandbox). It is expected that 3 areas will be allowed to register for the trial, including peer-to-peer lending, information-sharing services and credit scoring. Pham Anh Tuan also expects that the Ministry of Public Security will soon allow credit institutions to connect to the national database on population so that digital transformation activities in the financial and banking industry can take place more smoothly.