Financial Wellness & Digital Money Management Apps are Key to Igniting Vietnam’s Digital Banking Boom
Like other areas of the world, smartphones and digital-only services have changed how people live in
New data published this week in a Backbase commissioned study, conducted by Forrester Consulting, reveals a potential future spark for igniting Vietnam’s race for digital dominance in the retail banking sector. Like other areas of the world, smartphones and digital-only services have changed how people live in Vietnam. However, compared with other developing countries, the uptake of digital banking has been slower.
The race for digital banking is starting, and many banks are not ready
Banks in Vietnam are moving forward into digital, but for some it’s a slow paced journey. Of the Vietnamese retail-banking business decision-makers interviewed as part of the report, 58% said their company was implementing or expanding their digital banking offering, while 28% said their company had ‘no interest in’ or was ‘removing’ its digital banking offering.
According to Riddhi Dutta, Regional Director for Backbase ASEAN & South Asia, “There seems to be a wide disparity between some banks who are progressing and others who are yet to start; this could be a huge opportunity for those disruptors who want to put their ‘pedal to the metal’ and gain first-mover advantage.”
“From our research, 42% of the interviewed Vietnamese retail banking business decision-makers said they are going to increase spending on financial wellness initiatives over the next 12 months. 74% said they were ‘planning to’ or ‘actively expanding’ digital financial wellness initiatives, so there are some positive signs there too,” Mr. Dutta added.
Banks must overcome roadblocks
With banks well aware of the challenges their consumers face, and with the knowledge that digital financial wellness apps are an ideal solution for these challenges, all thoughts go to why some Vietnamese banks are slower in getting started.
The research revealed that in Vietnam, 72% of the banking sector sees a ‘lack of understanding of customer needs and outcomes’ as an obstacle in further developing digital tools for its customers, and 74% said they are ‘unsure of how to work with or partner with a fintech company’ to implement the activity. 70% said it was due to ‘outdated or legacy technology’ and 68% said it was due to ‘competing priorities.’
Talking about the points raised, Mr. Ghodosi said: “It seems there is a lack of understanding; we can empathize with these challenges because at one time every bank in the world faced them. Change is not easy. However, for those institutions who want to take the lead, the slowness of some of the sectors is definitely an opportunity.”
“There is no doubt that financial wellness apps aimed at consumers can play a large part in improving trust in digital banking and adding value to the lives of Vietnamese. 12 months from now, adoption will be much further advanced, and 24 months from now Vietnamese will have a whole different digital relationship with their banks. It all comes down with who wants to be first”, Mr. Ghodosi concluded.