Digital Banking Transformation: Opportunities and Challenges for Banks in Vietnam

Abstract

Over the past years, Vietnam has witnessed the emergence of several digital banking models such as LiveBank of TienPhong Commercial Joint Stock Bank, Timo Plus banking of VietCapital Joint Stock Commercial Bank, Digital Banking of BIDV, or YoloBank of VPBank, etc. The article assessed the opportunities and challenges of Vietnamese commercial banks when implementing the digital banking transformation strategy. By statistical and analytical methods, the article found that the digital banking transformation in Vietnam is likely to take place at a fast pace because this process has opportunities from relatively favorable socio-economic conditions, such as GDP per capita 4,700-5,000 USD/year, rate of people using internet 68.7%, mobile broadband subscriptions (3G, 4G) 65.33 million. In addition, the Government also strongly encourages the application of digital banking technology with relevant directives and decisions. However, commercial banks also face challenges when deploying the digital banking transformation. For instance, the percentage of Vietnamese who have transactions with banks is the lowest in Southeast Asia, the penetration of the banking system is not deep enough, the cybercrime has increased, and the legal framework for digital banking has not been completed.