The changing face of retail banking in Vietnam
Vietnam's retail banking sector is undergoing a radical transformation, driven by a combination of demographic shifts and technological advancements. Cimigo's recent report on retail banking in Vietnam sheds light on the key trends shaping the industry and offers valuable insights into the future of banking in the country.
Vietnam's retail banking sector is undergoing a radical transformation, driven by a combination of demographic shifts and technological advancements. Cimigo's recent report on retail banking in Vietnam sheds light on the key trends shaping the industry and offers valuable insights into the future of banking in the country.
Rapid rise of non-cash payments
One of the most notable trends highlighted in the report is the rapid rise of non-cash payments in Vietnam. With the acceleration of the middle class and smaller, wealthier households, there has been a significant increase in modern retail trade and e-commerce. This, in turn, has promoted the adoption of non-cash payment methods such as online transactions, mobile wallets, mobile banking, and QR codes. According to the State Bank of Vietnam, non-cash transactions surged by 77% in volume and 30% in value in the first half of 2022 compared to the same period in 2021. Internet banking, mobile transactions, and QR code payments also experienced substantial growth during this period.
Retail loans and customer-centric Approach
Retail loans accounted for a substantial portion (40-50%) of all bank loans in 2021. This emphasizes the growing importance of retail banking, which is inherently customer-oriented and trust-based. In this landscape, factors such as brand image, customer experience, and the overall customer journey play pivotal roles in a bank's competitive positioning.
Dominance and competition
State-owned banks, particularly Vietcombank, dominate the traditional transaction point network with their extensive network of ATMs, transaction offices, and branches. These banks benefit from long-term competitive advantages derived from their widespread physical presence, trustworthiness, and popularity. However, private joint-stock commercial banks, such as TPBank, have been investing significantly in expanding their transaction point network, challenging the dominance of their state-owned counterparts.
Customer experience and digital transformation
The report highlights the critical role of customer experience in the retail banking sector. Customer loyalty and satisfaction are paramount, with factors such as fees, product quality, online services, and efficient processes impacting Net Promoter Scores (NPS). As digital banking gains prominence, the quality of mobile banking applications and online services becomes a key driver for attracting and retaining retail customers.
Digital banking and challenges
Digital banking is pivotal in attracting retail customers, with banks investing in digitalization strategies to remain competitive. However, the report notes that building trustworthiness and overcoming concerns related to cyber risks are significant challenges faced by digital banks. Approximately 31% of retail bank customers express insecurity when using digital and online banking products and services, highlighting the need for robust cybersecurity measures and customer education.
The way forward: Focusing on trust, customer experience, and digital innovation
Looking ahead, the retail banking sector in Vietnam is poised for continued growth, driven by digital innovation and changing consumer preferences. Building trust, enhancing customer experience, and investing in digital technologies will be key strategies for banks aiming to thrive in this evolving landscape. As the industry adapts to these changes, the focus on customer-centricity, convenience, and cybersecurity will remain paramount, ensuring a secure and seamless banking experience for all customers.
Download the Vietnam retail banking 2022 report on Cimigo's website
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