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Driving digital transformation in the banking sector
Nguyen Tran
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BIDV has defined technology and digital banking as one of the pillars in its development strategy to 2025, with a vision to 2030.
the lead
Vietnam is witnessing the strong impact of Industry 4.0 which has comprehensively changed the way products and services are supplied. Against that background, transforming into a digital-based business model is inevitable, helping banks overcome challenges, create competitive advantages, and proactively adapt and develop sustainably.
Digital transformation is challenging, but an irreversible process. Mr. Phan Duc Tu, the board chairman at BIDV emphasised: “Digital transformation is no longer a concept, but a specific action, which decides the survival of any organisation, including banks. Digital transformation requires strong will and relentless determination as well as courage of the whole system in discarding the old and creating the new. BIDV defines efficiency as the first goal and modern technology as a breakthrough, with customers as the centre of business and human resources as the core.”
Catching up with the development trend, in March last year BIDV officially launched its Digital Banking Centre, marking an important step in the bank’s development strategy and
Customer using BIDV SmartBanking
vision to 2030. The establishment shows the bank’s efforts and focus in digital transformation beyond the general strategy. The centre aims to be an innovative hub of BIDV, producing advanced and modern customer-centric products as well as experimenting with new technology-based business models.
BIDV is one of the pioneers in establishing a Digital Banking Center
BIDV has focused resources on speeding up digital transformation and synchronously developing modern distribution channels such as internet banking, mobile banking, SMS banking, web chat, Facebook and Youtube. The bank has also built self-service channels (e-Zones) at its transaction offices and cooperated to launch innovative products including Samsung Pay, QR Pay, Chat-bot on Mobile banking applications, Swift GPI, and ATM withdrawal via mobile phones. As well as these, the bank has developed its BIDV Home app, applying Blockchain, new technology in Robotics and artificial intelligence; deploying and building big data exploitation models and unstructured data, and applying analytical models for assessing customer lifecycle value, marketing, and cross-selling.
Previously, BIDV had implemented a number of strategies to realise the digital transformation strategy such as allying with strategic investor Hana Bank to enhance financial strength and learn the most advanced technologies; contracting with Ernst & Young to build a digital transformation strategy; launching high-tech banking products and services; and cooperating with Fintech/Big Tech companies to diversify and expand the ecosystem to gain customer loyalty. Currently, BIDV has connected with 24 Fintech companies and 756 service suppliers to provide more than 1,500 payment services to customers.
Moving for ward
Through applying proactive measures, BIDV has achieved positive results in digital transformation. These include converting a significant number of transactions to digital channels and promoting non-cash payments. These results are of great significance in the current period, while social distancing measures are in place to prevent the transmission of Covid-19.
As of the end of the second quarter of 2020, the number of individual customers registering for e-banking services at BIDV had reached 5.12 million. The proportion of customers using e-banking services to the total number of existing customers had increased to 42.4 percent from 32.4 percent in 2018. By the end of the second quarter, the number of e-transactions had reached 88.4 million, accounting for 50 percent of the total number of transactions compared to 38 percent in the same period last year. Transaction volume in the first quarter of 2020 reached VND1.34 quadrillion (USD57.8 billion), equal to 67.1 percent of the whole of last year. Although the transaction values via digital channels accounted for a small proportion of about 9 percent, the trend is increasing with bill payment transaction volume as of the second quarter of the year 50 percent higher than that of 2019. 24/7 money transfer transactions increased sharply - in the second quarter of 2020 alone they were higher than those of the whole of 2018 and equal to 75 percent of 2019.
The banking sector needs to strongly restructure in order to keep up with the five main trends in the context of Industry 4.0 and post-Covid-19. These are as follows: first, digital finance and banking, including non-cash payment, electronic money, and digital money; second, increasingly fierce competition between commercial banks with Fintech and Bigtech. The banking system should continue to restructure and establish a better financial ecosystem for customers. Third, moving towards standards (such as Basel II, III); forth, increasing integration; and fifth, developing green finance.
With bank wide digital transformation being defined as an indispensable requirement, BIDV has shaped solutions to promote the development of digital banking, specifically: strengthening capacity, standardising IT infrastructure and information security measures; standardising and automating banking operations based on a technological platform; developing digital banking products and services to boost business operations, striving to successfully deploy digital banking model by 2025; integrating distribution channels to create the easiest conditions for customers to access and connect with the bank; and building a financial services ecosystem with the most preeminent digital platforms.
With strength in facilities and people; the solidarity and unanimity of more than 25,000 employees, and building on the achievements of Industry 4.0, BIDV is confident it will achieve more successes on the journey towards digital transformation, creating solid foundations to realise its vision of becoming the leading financial institution in Southeast Asia with the best digital platform in Vietnam, as well as striving to be among the Top 100 largest banks in Asia.
