If core banking is regarded as the heart, financial switching the artery and payment channels the limbs, the internal administration system is arguably the brain of the bank because it rules and controls every bank activity. But to ensure the effective functioning of the brain, it is vital to have a modern information technology (IT) system.
Competition pressure
Eighty per cent of Vietnamese banks have core banking. However, the implementation of full core banking functions is a problem. For example, until now, only Techcombank has announced successful application of Internet Banking services. The absence of internet banking services not only affects the operational efficiency of the bank, but also prevents the development of other online services such as e-commerce. Besides, only a small proportion of the Vietnamese population use banking services (some 4.2 million payment cards are issued in Vietnam with over 84 million people, while the number of cards in Singapore is 12 million although its population is merely 4.5 million) and this is an obstacle for core banking services.
Regarding internal administration, this is a very old issue in Vietnam and any organisations have to encounter. However, the application of IT solutions to resolve this issue is rather new in Vietnam.
The challenge of effective internal administration is a very old issue in Vietnam that many organisations have encountered. However, the application of IT solutions to resolve this issue is rather new in Vietnam. Internal administration consists of financial management, human resource management, operations management and analysis/assistance for decision-making. According to a survey by Mr Do Cao Bao, general director of FPT Information System Company, internal administration systems in Vietnamese banks are in the initial stage. Domestic banks only apply separate accounting software. Many use only Excel to handle accounting.
Resolving competition with IT
According to Dr. Ta Quang Tien, Director of Banking Technology Department (State Bank of Vietnam), after Vietnam joined the World Trade Organisation (WTO) its banks have to compete with foreign rivals on their home market, and modern technology will be the key tool. Sharpening the competitive edge by introducing modern technologies is the path to victory.
Mr Do Cao Bao said the modernisation of banking technologies and internal administration are the two sides of banking IT modernisation. Modern IT systems will help banks process information more quickly with heavier workloads, to keep up with the growth rate. IT will also enable commercial banks to conduct activities more quickly and accurately, optimise operational efficiency, save costs and update accurate information. Consequently, bank administrators can make decisions accurately and punctually.
Commercial banks have long been aware of the importance of investment in technology.
Chi -Chien
Vietnamese
