Commercial banks warned on rising foreign competition

Speaking at a two-day ASEAN Bankers Forum in HCM City yesterday, several experts said that retail banking services had developed at a fast pace in other countries.
Le Thanh Tam, CEO of International Data Group, said that the competition in the field would become even more fierce as more foreign banks appear in the country.
He cited the case of Thailand, where the number of ATMs had risen quickly and consumer loan services had developed rapidly. Similar retail banking growth had occurred in Singapore, Malaysia and other countries as well.
Tam said that foreign banks offered flexible services by categorising customers. This was one reason the growth rate of credit cards soared in Singapore.
He said that Viet Nam had high potential for such banking services, as individual expenditures contributed up to 67 per cent of the nation’s GDP. It is estimated that expenditures will be US$78 billion for 2012.
The country has 14,000 ATMs and more than 60 million ATM cards. However, the potential for retail banking still has not been exploited well.
The country, for example, has 18 banks offering internet banking services, but the rate of transactions remains low.
Local banks have invested a great deal of money in ATM booths, but usage remains ineffective, according to Le Thanh Tam, CEO of IDG ASEAN.
Tran Thi Hong Hanh, general secretary of the Viet Nam Banking Association, said that local commercial banks must build a better business strategy to survive in a competitive environment.
This was especially urgent, he said, because the country had become more integrated into the global economy.
Tran Xuan Hoang, deputy general director of the Bank for Investment and Development of Vietnam (BIDV), said that by 2015 BIDV was expected to become Viet Nam’s leader in retail banking and reach the same level of other banks in the region.
However, he said one major challenge was the low rate of loyal or returning customers.
He added that the bank should improve services and update technology to better serve customers.
Pressure from harsh competitions also triggers booming investments in banking technologies in order to expand the distribution channels and improve service quality.
Moreover, with more than 40 per cent of the population having regular internet access, and with more than 3.5 million mobile phone users and 15.5 million home phone subscribers, Viet Nam has huge potential to develop technologically advanced financial services.
This poses a great opportunity as customers are setting higher expectations for quality of service.
Thus, there must be more reform on the banks’ side, with an emphasis on information technology to enhance banking management efficiency and manage credit risks.
There is also a need to improve service functions and offer convenient payment methods, as well as modernise service channels.
The ASEAN Bankers Forum 2012 themed Retail Banking: Building Competitive Advantages That Engage And Retain Customers was organised by the Viet Nam Bank Association in collaboration with the International Data Group (IDG).
The forum provides an interactive platform for bankers and technology corporations to evaluate the growth opportunities for retail banking in Viet Nam. It also serves as a meeting point for Vietnamese bankers and bankers from ASEAN countries.