E-banking: Vietnam Develops with Global Trend

Developed nations around the world operating e-banking systems, and this is a logical trend, saving time, cost and human resource as well as raising efficiency. Vietnam cannot ignore this trend and most Vietnamese banks already apply basic e-banking services.

 

An e-bank operates in the forms of internet banking (or online banking), telephone banking, TV-based banking, mobile phone banking PC banking (or offline banking), or ATM (automated teller machine) channels. The common trend is to converge of all of these aspects, including distribution channel, selling culture, back-office process and knowledge administration infrastructure, which are integrated within the electronic environment. Therefore, the e-banking trend is inevitable. Mr Nguyen Duc Vinh, CEO of Techcombank, said successful integration enables banks to develop seamless and transparent product supply chains for customers. This enables banks to shift concentration from the product to the customer.

 

According to a survey by Michael A. Stegman, policy expert of the University of North Carolina at Chapel Hill, US, the average cost for a traditional over the counter banking transaction in the US is US$1.07. With the application of new technologies, the same transaction at an automatic bank costs US$0.04 via call/contact center, US$0.27 via ATM, or US$0.01 via Internet banking service on any PC. This shows that transactions based on internet technology are more economical and efficient for the US banking system, reducing costs and improving service quality for current and potential clients around the globe.

In the UK and Europe, most customers use Internet banking to check account balances, and to access saving accounts and daily transaction reports. In the Asia-Pacific, Internet banking has been used in many nations like China, Hong Kong, Singapore and Thailand. In China, the Bank of China has encouraged the deployment of internet banking services since 2000. In Hong Kong, HSBC began providing Internet banking services in 2000, allowing clients to deposit savings, invest in securities, pay service bills and carry out forex transactions. In Singapore, Internet banking debuted in 1997 and many multinational banks like Oversea Union Bank, DBS Bank, Citibank and Oversea-Chinese Banking Corp are supplying internet banking services in this country. In Thailand, Internet banking services started in 1995. Especially after the financial crisis in 1997, Thai banks were under pressure to reduce costs and internet banking was an option to lower costs and increase customer satisfaction.

 

From March 1995, Vietnam started electronic payments with participation in the SWIFT (Society for Worldwide Interbank Financial Telecommunications) system. By May 2002, the interbank e-payment system debuted, enabling the development of retail and wholesale banks. To date, most banks have applied basic e-banking services and ATM and POS transaction channels. Several foreign banks operating in Vietnam provide e-banking services, including citibanking (Citibank), Hexagon (HSBC), DB-Direct (Deutsch Bank) and ANZ-link (ANZ Bank). However, these services are limited to specific enterprises. Recently, the State Bank of Vietnam licensed Techcombank to provide an international standard Internet banking service (F@st i-Bank) in Vietnam for various types of clients, especially retail clients. Techcombank is also the first Vietnamese bank to provide internet banking payment services.

 

Mr Ta Quang Tien, Director of Banking IT Department under the State Bank said, “At present, more than 80 per cent of professional banking service in Vietnam is processed by computers at different levels and 85 per cent of transactions between banks and their clients are handled by computers or modern devices. Compared with previous years, payments via electronic means and interactive communication channels in Vietnam are developing very quickly.” 17 banks already deploy Internet banking services, with a combined 3-4.5 million online transactions every day. 25 banks have issued e-payment cards and the number of such cards has mounted to 6.2 million. In addition, 3,820 ATM machines are been erected in Vietnam.

 

Mr Bui Quang Tien, Director of Payment Department under the State Bank, added that with the desire of catching up with modern banking service and technology, the Vietnamese Government targets issuing 15 million e-payment (ATM) cards, installing e-payment systems at 70 per cent of commercial centres, supermarkets, restaurants, hotels, and do-it-your-self shops by 2010. The respective figures will be 30 million cards and 95 per cent by 2020. Also by 2010, cash payment will not exceed 18 per cent, and 80 per cent of business-to-business transactions will be made via banks.