The increase in active digital bank users is arguably higher in Vietnam compared with APAC's emerging markets and some APAC developed markets. (Photo: vtv.vn) This information was released in the McKinsey report on the digital bankingbehaviours of 20,000 urban banking consumers across 15 APAC markets, includingVietnam.
This change in behaviour has brought the financial services industry to a newlevel of maturity, opening up new opportunities for banks and nonbanks alike.The window for seizing opportunities will narrow quickly as consumers giveserious consideration to innovative propositions from digital banks.
The report identified the gap between customers' interest in digital banking vstheir actual actions, how banks can better capture opportunities from this gap,and the core technologies that can support banks in doing so.
It revealed that the increase in active digital bank users is arguably higherin Vietnam compared with APAC's emerging markets and some APAC developedmarkets.
Between 2017 and 2021, 88 percent of APAC consumers in emerging marketsactively use digital banks, a 33 percentage points increase. In Vietnam, thenumbers rose by 41 percentage points to 82 percent in 2021.
At the same time, fintech and e-wallet penetration reached 56 percent in 2021for Vietnam, a hike of 40 percentage points from 2017. This penetration levelis even higher than the average of APAC emerging markets (at 54 percent) anddeveloped markets (43 percent).
Large majority (73 percent) of Vietnamese consumers are multi-channel bankingusers. This means they use a combination of digital banks and physicalbranches.
Despite the change in consumer behaviours, banks are not doing enough tocapture digital sales, due to limited digital offerings and a lack ofmeaningful engagements with digital users, the report says.
Accordingly, three strategic moves banks can consider in closing this gapinclude rethinking the role of branches. Banks need to strengthen branches'omnichannel delivery – measuring both financial goals and customer’ssatisfaction – ensuring that branch-based human interactions go beyond functionalconvenience to outperform empathy and understanding.
They should transform their business model to digital-first, or integratedomnichannel engagement centred on agile deployment on artificial intelligence(AI) and machine learning capabilities. Banks need to deliver valuepropositions that are intelligent (automating key decisions and recommendingactions), personalised (based on an understanding of customers behaviours), andomnichannel (embed digital banking capabilities within partner ecosystems).
Bank should play a role of digital attacker (digital-only banks using acloud-native, low-cost platform) or an omnichannel incumbent to staycompetitive. In doing so, banks must differentiate their digital valueproposition from existing offerings, focus on gaining access to large customerecosystem to scale fast, and capture transactions and balances as primary bank.
Banks in emerging markets are already leading digital innovation but the marketis getting crowded and competitive. To stay relevant, banks should think aboutbuilding (or acquire) AI and machine learning capabilities in three areas salesand service, operations and IT and develop the right structure as well as hireor reskill the right talent./.
VNA
