Huge challenges awaiting digital banking

Rising number of Internet users and mobile phone subscribers is smoothing the way for digital banking in Vietnam to thrive, but huge challenges keep lying ahead, according to insiders.
Huge challenges awaiting digital banking ảnh 1A subscriber uses digital banking services on her smart phone (Photo: VNA)
Hanoi (VNA) – Risingnumber of Internet users and mobile phone subscribers is smoothing the way fordigital banking in Vietnam to thrive, but huge challenges keep lying ahead, according to insiders.

As of December 2018, theinter-bank e-payment system has processed approximately 137,600 transanctions,worth a total of 73 quadrillion VND (3.14 trillion USD), equivalent to 13 times the country’s GDP, the State Bankof Vietnam said.

In 2018, Vietnam had about55.2 million Internet and 45.8 million mobile phone users, accounting for 57percent and 45 percent of the population, respectively, with rising number of people using smartphones over the past fiveyears. In 2017, about 84 percent of the population in major cities had at leasta smartphone.

The Viet Dragon SecuritiesCorp has forecast that there will be about 60 millionInternet users and 55.4 million mobile phone subscribers in the country by 2022.

Yet the penetration of banking servicesin Vietnam has been relatively low compared to other emerging and frontier markets.It is estimated that close to 43.2 million Vietnamese, or 45 percent of thepopulation, hold a bank account. The number of commercial bank branches andautomated teller machines (ATMs) per 100,000 adults is 24.3 and 3.4, respectively, lower than other peers.

A majority of Vietnamesestill keep the habit of using cash daily. Since the master plan to developcashless payment in Vietnam was approved by the Government in 2016, thecash/total money in circulation reduced slowly. A survey conducted by FTConfidential Research showed that more than 46 percent of urban consumers inVietnam asked said they use cash exclusively whenmaking transactions, much higher than that of other ASEAN countries, such asthe Philippines (34 percent).

Cyber security is also challengingthe growth of digital banking. According to EY Vietnam, there were nearly 8,320cyber attacks in the banking industry last year with around 560,000 computersaffected by malware probably created for banking information theft. Vietnam ranked 7th globally in the target list of Trojanattacks in 2018.

More importantly, insufficient legal regulations are another major problem tothe sector. Over the past few years, the digital paymentsegment has grown rapidly driven by technology advances, but domestic legalregulations are lagging behind, making banks reluctant to apply newtechnologies and services./.
VNA

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