The intense explosion of financial technology companies (Fintech) was tremendous pressure and also a driving force for digital transformation banks.
In the world, since the wave of startup companies focusing on financial technology emerged after the crisis period in 2008, Fintech had become one of the digital revolutions that changed the way activities of the banking finance sector.
In Vietnam, although only forming not long ago, Fintech had developed very strongly. The number of Fintech companies participating in providing services on the Vietnamese market had nearly quadrupled from the number of 40 companies at the end of 2016 to almost 150 companies at present.
Although the financial potential was quite small, Fintech companies were competing for market share with banks in many retail segments. For example, in the field of payment, although many people then owned not only one but several bank cards, they still had to carry cash with them. The reason was that these cards could only be paid at places where the POS was available. While Fintech e-wallets allowed users to store their financial information on their phones, payments could be made anytime, anywhere.
Even in the lending sector, with a slight advantage of process and technology, Fintech companies could approve a loan within hours. While in traditional banks, this procedure could be up to several weeks.
It could be seen that the new products that Fintech companies provided were highly creative, giving customers a more exciting and convenient experience than traditional products of banks. Most importantly, these products expanded opportunities to access financial and banking services for those who had never been customers of the bank or its subordinate customer groups thanks to the risk appetite in higher levels of Fintech companies. That was the factor that powered Fintech.
… to the motivation for digital banking
Nevertheless, in a particular aspect, Fintech was the motivation for banks to accelerate the process of digital transformation. Because according to the World Bank, the digital transformation would help the bank develop electronic products and services such as financial technology companies.
In fact, advances in financial technology had been quickly developed by Vietnamese banks such as mobile payments, standardised QR codes, digital token information Tokenisation, card payment, chip for domestic cards, and so on.
Many banks had researched and implemented a digital transformation strategy with the Internet of Things (IoT) applications that allowed customers to access and use banking services, connecting to other digital ecosystems on the Internet platform. Timo digital banking service of Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), Live Bank of Tien Phong Commercial Joint Stock Bank (TPBank), and E-Zone of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) were the typical examples of that rapid development. Besides, thanks to banking services through applications installed right on mobile phones (Mobile Banking), customers had been able to use many features and utilities than face-to-face meetings at the counter.
For example, TPBank’s Live Bank digital bank provided new experiences to customers, such as supplying remote banking services with the support of video identification technology, biometrics. With Live Bank, customers could open an account and receive a card within eight minutes while it often took three days to four days for check-in at the traditional transaction offices.
Apparently, corporating with Fintech was a solution for banks to accelerate their digital transformation. According to a recent survey by the Institute of Banking Strategy, up to 84 percent of bank leaders said they would like to cooperate with Fintech to develop based on their existing strengths. For example, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) had partnered with Opportunity Network, a leading UK Fintech company, to provide Customer Connectivity Services on a digital platform. Or VPBank was cooperating with Fintech Timo in delivering digital banking services, collaborating with Moca company in providing digital payment services. There was also a model of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) ‘s small value remittance service based on the cooperation of using M Service’s network of telecommunication agents in rural areas.
Bank’s business was not only lending but also having to apply technologies. The bank that mastered all would succeed, said Nguyen Hung TPBank’s general director.