Banks race to the front of Vietnam’s digital transformation

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Digital banking has exploded in popularity around the world, with an assist from the Covid-19 pandemic, and Vietnam is no exception.

According to the Vietnam Banks Association (VBA), Vietnamese banks have invested over US$660 million into digital transformation thus far, with dramatic growth in digital transactions over the past decade.

Before 2016, for example, it was rare for there to be more than 500,000 digital transactions nationwide on an average day. Now, there are up to 8 million such transactions daily.

“With such a huge number of transactions each day, digital transformation has been remarkable in the banking sector, especially given the Covid-19 pandemic,” Nguyen Quoc Hung, the VBA’s Vice Chairman, said at a conference on digital transactions in August.

In some ways, this digital transformation is ahead of schedule.

As of late 2022, over 90% of customer transactions at several Vietnamese banks were done digitally, beating the Banking Digital Transformation Plan of 70% by 2025.

State Bank of Vietnam data shows that in the first six months of last year, cashless payment transactions increased by 77.2% in quantity and 29.8% in value. Mobile payments grew by 98.3% and 84.3%, respectively.

While we wait for 2023 data, there is little doubt that these consumer trends will continue, with e-commerce and mobile payments becoming an entrenched part of daily life, especially in urban Vietnam.

Sacombank, one of the country’s largest privately owned banks, offers one example of how financial institutions are embracing digital processes.

“We deeply understand customers through data mining and analysis, which assists us in introducing products that satisfy customer requirements in the fastest way possible,” said Binh Tran Thai, Director of Sacombank’s Digital Banking Division.

“Furthermore, we are developing new strategies by redesigning branches, embedding new financial technologies in our services, and developing new business models.”

He also points to the pandemic as a key inflection point that banks cannot ignore: “It ushered in a new era in the banking industry that witnessed customers gradually switch to digital banking services for their financial needs. Banks must embrace digital transformation in the current environment to meet growing customer demand for product and service quality.”

As Vietnam’s economy continues to grow, there are ample opportunities to bring new customer demographics into the digital banking fold.

Binh points to street food vendors as an example.

“Back in the day, it was difficult for banks to reach out to vendors, who tended to use cash to make transactions, and had little exposure to smartphones,” he shared. “Now, almost every point of sale allows payment by bank transfer, and many have QR codes for customers to scan. This indicates the opportunity for significant customer growth potential in the current context.”

There are, of course, challenges. These include the considerable amount of capital needed to develop digital systems, a shortage of skilled human resources, and ensuring the security of digital information.

Nonetheless, policymakers are bullish, with the Hanoi Department of Industry and Trade aiming to have 45% of all e-commerce payments be cashless.

Binh is optimistic as well, predicting “a technology explosion in the next five to seven years.”

Given the rapid growth in digital payments in recent years, along with the omnipresence of digital wallet platforms such as MoMo, ZaloPay, and VNPay at businesses across Vietnam, it’s clear there is fertile ground for further digital expansion.

More competition is on the way too, with Apple Pay launching in the country in August, becoming just the third country in Southeast Asia to have this service after Malaysia and Singapore.

For both consumers and financial institutions, the digital future is bright. 

Writing credit Michael Tatarski


Vietnam Holding (VNH) invests in high-growth companies in Vietnam, focusing on domestic consumption, industrialisation, and urbanisation. VNH has outperformed the Vietnam All Share Index (VNAS) on a 1, 3, 5 and 10-year basis and year-to-date, as at 31st August 2023, has outperformed its peers. VNH has a ~30% allocation to the banking sector and the manager sees a more favourable interest rate environment, and renewed credit growth supporting some if its core convictions.  VNH has been nominated for the Investment Company of the Year Awards 2023 in the single country category.

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