Banks face new wave of technology

LiveBank, an auto banking model launched by TPBank

In order to catch up with the trend of development in Industry 4.0, Vietnamese banks have proactively researched and invested in various advanced technologies in order to develop their products, services, and management. Most prominent is the practical deployment of digital platforms, such as cloud computing, large data analysis, artificial intelligence, and applications, as well as solutions such as biometric authentication, open API, etc., in order to improve their operational efficiency and enhance customer experiences.

According to Deputy Governor the State Bank of Vietnam (SBV), Nguyen Kim Anh, new digital technologies in association with Industry 4.0 will help to transform the traditional distribution channel of products and services from branches, transaction counters, and physical ATMs to digital channels. It not only helps to create more interaction with customers, but also provides the ability to change the business model, and business process, product and services structure.

With the strong development of Industry 4.0, domestic banks have more opportunities to access and expand the supply of suitable banking products and services to those who do not have accounts in remote areas at a reasonable cost, contributing to promoting national financial popularisation, Deputy Governor Nguyen Kim Anh added.

Many banks have also adopted technology to assess customer behaviours, revenue forecasts, market demand, and risk alerts. Several banks have initially shifted their operations, sales and services towards digitalisation, such as TPBank with Livebank, VPBank with Timo, VietcomBank with digital banking space, DigitalBank, VietinBank with new generation CoreBank and Enterprise Data Warehouse (EDW), MB with ChatBot, a virtual assistant application on social networks.

However, besides the opportunities the banking sector also faces many new challenges. According to Deputy Director of Banking Strategy Institute, Pham Xuan Hoe, the level of capacity, and the quantity and quality of IT staff is one of the major challenges facing the banking system. In particular, the SBV will face four challenges including electronic money, cross border payments through 4.0 technology and monetary policy; the control of cash flows, liquidity risk and payment security; the IT infrastructure, card standards, data and information connection standards; and institutional capacity to keep up with the boom of digital finance.

Meanwhile, commercial banks will also face challenges such as the financial capacity for IT investment, the transformation of the traditional business model into digital banking, the quality of human resources and the culture of corporate governance.

According to Deputy Minister of Science and Technology, Pham Dai Duong, besides the advantages, there are many risks and challenges as the development of new technologies, such as blockchain, big data, and AI requires the banking sector to make changes in its management model, product structure; or risks related to network security. The Deputy Minister emphasised that the banking sector is considered one of the active and leading sectors in the application of scientific and technological advances in business management and business.

However, more effort and research are required in order to take full advantage of Industry 4.0. According to member of the Board of the Directors of Vietcombank, Pham Anh Tuan, banks are now able of supporting and serving customers anytime and anywhere, not just through traditional channels such as switchboards and instant messaging, but also via AI using a representative image on mobile devices, virtual-reality applications and three-dimensional holography. This helps banks to increase interoperability, giving customers the same service experience as is provided by people. However without in-depth changes, banks may be lagging behind in the race to provide digital experiences to their customers. Out-dated IT systems with inflexible information structure are hindering the development of the banking sector, he added.