July 24, 2024

Vietnam envisions a ‘Neo’ revolution in Banking

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The Finance Industry of Vietnam has kept a solid growth over the years and is expected to reach USD 336.4 million by the end of 2022 touching an annual growth rate of 66.3%. During the forecast period of 2022-2029, the industry is speculated to produce a Compound annual growth rate (CAGR) of  40.5% with revenues rising from USD 336.4 million as of 2022 to USD 2,886.4 million by 2029.

The Financial Organizations in the country have been advancing technologies such as Artificial Intelligence and digital strategies reshaping their service systems, especially in the insurance sector.

The country’s digital transformation is fueled by the Government of Vietnam which has introduced a meticulously designed program incorporating plans and objectives aimed to pull it off by 2025.    

In 2021, the Banking sector in Vietnam produced an exceptional EPS (Earning per share) of 28.3% increase by the end of the year with high credit growth of 15.1%, 14 basis points (bps) in the net interest margin(NIM), an increase in fee income of 26.7% and has seen a significant reduction in cost to income ratio from 36.3% as of 2020 to 32% by 2021. As promising as the figures are, the EPS growth is expected to reach 23.2% by 2022 and 20.7% by 2023. However, the net interest margin (NIM) is anticipated to reduce by at least 10bps owing to the increase in short-term deposits this year.

Banking beyond Boundaries

As part of the promising banking industry of Vietnam, Vietnam Public Joint-stock Commercial Bank (PVcomBank) has emerged as one of the leading retail banks in Egypt driven by the mission “Bank with no boundary.” It has been widely reported as one of the fastest growing enterprises in Vietnam. Right since leading the bank with a charter capital of VND 9,000 billion and assets worth over VND 100,000 billion, the Vietnamese bank has shown remarkable growth in the last nine years. It has expanded to 113 transaction offices today backed by its massive 4,700 employees and its total assets have reached VND 200,000 billion. PVcomBank has been offering its financial services to Oil and Gas organizations, power and the infrastructure sector, powered by its broad range of exceptional products and services.

The Hanoi based Retail Bank has been lauded for its excellent customer service to its millions of Customers across the nation. PVcomBank has been awarded ‘Best Bank for Customer Services in Vietnam 2022’ and ‘Most Trusted Retail Bank Vietnam 2022 ’ by International Business Magazine. The title was awarded based on the satisfaction expressed by its wide range of customers in Vietnam, sourced by the dedicated research team from the International Business Magazine  

With its well established product ecosystem, the ‘Bank with no Boundary’  has reshaped its quality of banking services for a convenient banking experience for its customers. In the early September of 2022, PVcomBank, jointly with Vemanti Group, a fintech company launched the ‘Pilot Digital Lending Program’ for small and medium sized enterprises (SMEs). The program incorporates deliberately designed products such as unique financing options for US bound exporters to easily access short term loans at affordable interest rates. The program will be made available entirely in the PVcomBank branches and can also be availed on its digital platform, by the end of the pilot period. Providing solutions for liquidity challenges, strengthening the SMEs and introducing innovative and effective financing programs for Vietnam’s business firms have been the core objective of this partnership.

Joining the Digital Bandwagon

Furthermore, PVcomBank has been instrumental in Vemanti Group’s ambitions of providing neobanking solutions to small and medium sized enterprises (SMEs), digitizing its processes,  and introducing tailored banking services. Adding to joint ventures, PVcomBank teamed up with India based Nucleus Software Exports and Vietnam headquartered IT service provider CMC-TS in July 2022 for digitizing loan origination procedures and retail product proliferation, following which the Nucleus software exports soared to 8.09% (Rs 442). By employing nucleus software’s highly flexible loan processing platform FinnOne Neo, PVcomBank established objectives to bring in speedy products and services to provide an ideal banking experience to its customers. PVcomBank is expecting an increase in consumer loans by at least 2 times within the next 5 years, owing to the partnership agreements.

Making the best use of technology, PVcomBank’s service integration backbone was carried to cloud by CMC Telecom in August 2021, a Vietnamese telecommunications provider, while onboarding Amazon web services for hosting. This was a crucial decision made by PVcomBank for greater stability and functional operations of its technical applications and its broad range of projects.   

With strong economic activities in the country and an increase in capital demand, the banking industry of Vietnam has great potential for growth in the coming years. Optimizing end to end business operations and advancing digital transformation are some of the key driving factors that propel this growth.

Blog By Harish Rajulu

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