Insights
Dao Vie n
Mobile money and impact on Vietnamese banks The benefits mobile money brings to the economy and to individuals (especially disadvantaged people) have been the subject of much recent discussion. However, the impact of this new financial service on commercial banks is still a question that needs to be addressed. Impacts on Vietnamese banks It has been recognised that the potential for the development of the mobile money service in Vietnam is huge. According to BIDV Training and Research Institute, currently only 40 percent of Vietnamese adults (aged over 15) have a bank account, a figure much lower than in regional countries such as Indonesia (49 percent), China (80 percent), Thailand (82 percent), Malaysia (86 percent), Singapore (98 percent), and Asia Pacific (70 percent). Vietnam’s proportion of cash to total payment means by the end of September 2020 (according to the State Bank of Vietnam) was 11.15 percent (slight change compared to 10 years ago, at 11.87 percent at end-2011), higher than the target of 10 percent by the end of 2020 according to the government’s target. In addition, developing new and modern forms of payment (including mobile money) to serve rural and remote areas and ‘unbanked’ people, and contributing to promoting financial inclusion is one of the government's focuses as outlined
in the National Financial Inclusion Strategy issued in January 2020.
impact because service providers are not permitted to offer such operations.
As with many other developing countries, mobile money services in Vietnam are aimed particularly at people in remote areas, who do not have a bank account with which to access financial services. However, for commercial banks, this presents both pressure and opportunity. The most significant pressure is increasing competition, especially in the field of domestic payment and transfer. Like e-wallets, mobile money high in convenience and efficiency can become a competitor to the payment market share of banks.
Opportunities and benefits
According to the Global System for Mobile Communications Association (GSMA), the cost of transferring money via mobile money is up to 50 percent cheaper than through traditional organisations (including banks). If banks do not speed up the digital transformation process, develop effective and cost-saving payment and transfer services for customers, this new method is likely to prevail, especially for market segments banks have not yet approached or where access costs are too high. Mobile money's target customers are mainly middle and low-income people who spend and make small payments (worth under VND10 million or USD435). If banks have a good approach to the large number of this customer segment in Vietnam, revenue from transaction fees and product crossselling is not insignificant. For other traditional banking operations (such as lending and capital mobilisation), mobile money has almost no direct
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B I D V revie w
According to BIDV Training and Research Institute, mobile money brings about significant opportunities and benefits for banks, particularly in the four following areas: First, promoting financial inclusion and raising awareness and knowledge about financial services. Mobile money is expected to contribute to increasing people's access to financial services,
