“72% of fintech firms choose to cooperate with commercial banks in providing products and services instead of direct competition”, said Le Anh Dung from the Payments Department under the State Bank of Vietnam (SBV).
Dung made the remarks at the national conference, entitled ‘Industry 4.0 and innovations in the financial-banking sector”, held in Hanoi, on June 12.
He noted that the banking system remains inactive in terms of innovation and lacks flexibility in technology application, resulting in high transaction costs, while fintech firms have advantages in innovation and the ability to apply technology flexibly and efficiently, which in turn helps to reduce transaction costs and enhance customer experiences.
However, fintech firms lack experience in financial-banking operations, capital and customer bases, in addition to internal compliance controls and risk management systems.
Meanwhile, banks have strengths in customer networks, IT infrastructure, methodical payment systems and strong risk management frameworks. Thus, the partnership between banks and fintech is considered as a premise for enhancing the access to financial-banking services, Dung added.
Professor John Wong said that the bank’s operating costs will be reduced by 80% if they use fintech, as banks will be able to cut down the number of branches and eliminate ATM system, among others.
Chairman of the Board of Director of LienVietPostBank, Nguyen Dinh Thang, also pointed out several major challenges for Vietnamese commercial banks in implementing digital banking systems, including the legal framework, capital, human resources and risk management.