Vietnam banks spend big on technology

Amid the rapidly changing needs of users and the digital transformation goal set by the government, Vietnamese banks have been investing heavily in technology with the total hitting trillions of Vietnamese dong (VND1 trillion = $39.9 million).

In recent years, with the wave of technology 4.0, digital transformation has become an urgent, irreversible priority in all fields and industries. Digital banking is an indispensable part of the development strategy that will determine the survival of banks.

The Vietnamese banking industry's digital transformation plan has specific goals. For example, by 2025, 50% of banking operations will be digitized; 70% of customer transactions will be conducted through digital channels; and 50% of small loans and individual consumer loans will be digitized and automated.

At the same time, digital banking development has become part of the competition to attract users to the retail banking sector. Providing fast payment services that integrate utilities and are safe draws people to open cards and become loyal customers.

On the other hand, after Covid-19, new payment trends have become more and more popular such as cashless and touchless payments, and that will be the case for digital currencies and cross-border payments in the future.

Amid the urgent needs of the times as well as implementing the goal set by the government, banks have spent trillions of dong (VND1 trillion = $39.9 million) to develop software, with a view to bringing convenience and the best experiences to consumers as well as optimizing operating processes, thus reducing costs.

In addition, as technology develops, cyberattacks have become more common, forcing the banking system to focus on investing in cyber security and information safety. Recently, VNDirect Securities and PVOIL, a subsidiary of state-run Petrovietnam, were hit by cyberattacks which left their entire systems paralyzed. The incidents required a long time to fix, causing huge damage to users and the companies themselves.

The total investment of 25 listed banks in computer software had reached more than VND26.3 trillion ($1.05 billion) by the end of 2023, nearly 70% of which has depreciated.

Techcombank, listed on the Ho Chi Minh Stock Exchange (HoSE) as TCB, has spent the most on technology to date with VND4.55 trillion ($181.4 million). In 2023 alone, the figure increased by nearly VND1.3 trillion. With advantages from the Masan Group ecosystem (HoSE: MSN), the bank has set a development strategy based on talent, digitization, and data.

In recent years, Techcombank has focused strongly on digitizing its banking system, quickly deploying large-scale digital product and service packages, investing in new technology platforms and infrastructure to meet increasingly changing customer needs.

Not only individual customers, the bank has also developed a digital platform for corporate customers, with a completely paperless process and an end-to-end customer experience technology platform.

MBBank (HoSE: MBB) ranked second with over VND3 trillion ($120 million) poured into technology, including VND585 billion in 2023. Determining digital transformation is an inevitable trend, MBBank has strongly promoted the use of technology to enhance its products and services, with the goal of bringing a seamless multi-channel banking experience, from the mobile platform to MB Smarbank's 24/7 proactive transaction channels, and cashless contact anytime, anywhere and for all customers.

Many other banks have invested over VND2 trillion ($80 million) in technology, such as VietinBank, Vietcombank, BIDV, and Sacombank.

The amount of money spent on technology is expected to continue to increase in the near future, with many banks revealing larger-scale and more in-depth technology investment plans.

The Vietnam International Bank (VIB) said that in 2024 it will continue to invest in a large technology project, Core Banking of Temenos, running on the cloud platform of Amazon Web Services. VIB plans to become the first bank to apply Core Banking on AWS Cloud to help increase capacity and flexibility and expand the innovative digital solution ecosystem, thereby enhancing user experience.

Meanwhile, Asia Commercial Bank (ACB) revealed that in the 2024-2026 period, it will research, build and deploy a transaction point model that allows customers to perform self-service transactions; apply AI technology and digital technology in supply of products and services, and in process automation; and research and apply digital technology in risk management.

TPBank will carry out in-depth digitalization and apply new data-driven technology; use GenAI, ML, ChatGPT applications in banking activities; and apply Computer Vision, BioCenter, and chip-based citizen identification VneID into practical operations to reduce risks for customers and save costs.