Digital technology enables broader banking coverage

Digital technology is known to reduce transaction and management costs of banks by up to 80-90 percent, especially by minimizing the need for branches. It strengthens financial access for people living in rural and mountainous areas and enables an array of diversified products and services. In particular, digital finance could boost growth in emerging economies and increase the gross domestic product of all emerging economies by a total of US$3.7 trillion by 2025.

However Vietnam’s financial institutions are not comprehensive, and bank coverage remains low. In particular, the banking network is unevenly allocated, with its focus on cities. Commercial banks provide transaction points in only 10 percent of the country’s total rural communes.

Increasing access to financial services for all members of society is one of the tasks of the financial sector in general, and the banking sector in particular. Advances in biometric technology, and the development of internet banking and mobile banking, have created favorable conditions for digital finance.

Tran Phuong, deputy general director of the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), said the bank has paid great attention to the digitization project with a focus on responding to customer needs and encouraging them to participate in online transactions. BIDV has also developed more functions for automated teller machines to facilitate transactions.

Nguyen Thuy Duong, deputy general director of the EY Vietnam’s Financial Services Organization, said the majority of 300 surveyed global banks must change their business practices because customers are increasingly paying more attention to online transactions.

She also said that opportunity to develop a comprehensive financial market is huge thanks to the high proportion of internet users, especially young people.

However the development of digital banking also poses challenges and difficulties, such as risks of cyber attacks, information leakage and online fraud.