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EVENT SUMMARY ASEAN BANKER FORUM 2011 1. CONTEXT OF ASEAN BANKER FORUM In such current context of difficult economic conditions, a modern and stable banking system will lay a strong foundation to boost upa nation’sbusiness and commercial activities. Accordingly, the domestic economy will enjoy more favorable conditions for stronger growth and development. Aiming towards a strong and modern banking sector, International Data Group, Vietnam Bankers Association, and the Deposit Insurance of Vietnam have been working in collaboration to host ASEAN Banker Forum 2011. The event’s key objectives are tocreate a networking platform for commercial banks to gather and share information, evaluate and analyze changes in the market, as well as identifying the difficulties and challenges faced by banking sector in the upcoming period, etc. Growth directions and lessons learnt from banks’ best practice will then be presented and discussed. ASEAN Banker Forum was hence developed with the purpose of becomingan interactive networking platform that help to discuss and suggests useful solutions for the development of banking sector in Vietnam and ASEAN region. 2.THE FOCUS ON ‘RETAIL BANKING’The year 2011 has been witnessing many difficulties for banking sector due to troubles in credit activities, which account for 70% total profits of banks. The rest 30% of banking revenue can come from investment activities and service fees. However, in the current economic context, most investments are associated with very high risks. This has urged banks to make a strategic shift in their business with more priority and investment allocated for retail banking. Therefore, the period from 2009 til present has witnessed a fierce race among bank in developing 'retail (1) banking'.In the period 2009 up to now, many banks have invested heavily in technology infrastructure s to diversify banking products, improving service quality and building up a multi-channel system for service delivery. Modern banking services with multi-funcitions are now deployed across various service channels, including: Automatic Transaction Machines (ATMs), Internet Banking, Home Banking, Mobile banking, etc. Statistics from the State Bank of Vietnam showed that by September 2011, the number of non-cash payment instruments in the market has (2) increased to 12,000 ATMs, 50,000 POS / EDC and 33 million banking cards. Retail services
have been implemented in various forms such as loans for house and car purchases, loans for studying abroad, evidencing financial capability, loans for officers and employees, overdrafts, etc. Accordingly, capital mobilizing forms are getting more and more diverse and flexible. The development of retail banking has created opportunity for banks to enhance their brand image and reputation, expanding market shares for credit and non-credit activities, increasing profits, reducing risks, and strenghthening competitive advantages for banks. Given such trends of development in banking sector, ASEAN Banker Forum 2011 will feature the theme:"Retail banking: Identifying key successful factors and The role of technology in building banks’ competitive advantages”3. KEY OBJECTIVES OF ASEAN BANKER FORUM 2011 ASEAN Banker Forum 2011 aims to provide an interactive platform for bankers and technology corporations to discuss and evaluate the growth opportunities for retail banking in Vietnam. It also serves as a meeting point for Vietnamese bankers and bankers from the ASEAN countries to meet and exchange experiences for better development in banking sector. Main areas of discussion at the Forum will be centered around: •Evaluation of Retail banking market in Vietnam: Opportunities and Challenges •Key successful factors for retail banks development in Vietnam •The role of information technology in developing retail banking in Vietnam •Initiatives/ proposals for the development of retail banking in Vietnam in the upcoming years 4. ATTENDANCE STATISTICS AT ASEAN BANKER FORUM 2011 During two days of Conference and Exhibition, ASEAN Banker Forum 2011 has attracted the interest and participation of 28 speakers (11 local speakers and 17 international speakers), 50 sponsors, 30 exhibitors, 500 attendees at the Conference, and 800 visitors at Exhibition. 5. CONFERENCE SUMMARY Revolving around the theme of‘Retail banking: Identifying key successful factors and The role of technology in building banks’ competitive advantage’, ASEAN Banker Forum was started with a Keynote Session featuring 7 reports providing information about‘Overview of Retail Banking market & key technology trends that will matter in 2012’. Following are three additional in-depth sessions focusing on: •Technology Infrastructure Transformation towards a Service-oriented Banking sector •Customer Insights and Market Analysis & Security and Risk Management to build higher quality for Retail Banking products/ services •Payment Solutions and multi-channel systems management for Retail banking
After each session was a panel discussion that helped to facilitate better interactions between speakers and the audience at the Conference. 5.1 EVALUATION ON RETAIL BANKING IN VIETNAM: OPPORTUNITIES AND CHALLENGES. 5.1.1. Vietnam has great potentials to develop Retail banking The report by theState Bank of Vietnam in Ho Chi Minh City has stated three critical factors that can facilitate the development of retail banking in the upcoming years.First of all, for recent years, Vietnam's GDP has been increasing at a considerable high rate. It is forecasted that average growth rate of GDP will reach 12%, of which the service sector will be accounted for 57%. Such growth rate of GDP will set as strong base for the development of banking services in general and retail banking services in particular.Secondly, the rapid development of technology infrastructure and e-commerce in Vietnam also demonstrates the prospects for retail banking services. The growth of e-commerce will lead to the increase in the number of consumers buying through online channel, which in turns will push up online payment business.Thirdly, the banks themselves have also heavily invested in the development of retail banking. Mr. Nguyen Van Dung, Deputy Director, State Bank of Vietnam in HCMC reported that 80% of banks in Vietnam have set the target of becoming a Retail bank(Labor Newspaper - 14 Dec 2009). (3) Many foreign banks are also targeting retail banking segment in Vietnam. The State bank of Vietnam in HCMC also revealed some forecast about target growth rates of (4) banking sector in period 2011 - 2015 as below: •Bank deposits will grow from 22% to 30% on average •Bank credits will increase from 20% to 25% on average •Payments through banking system will grow annually from 30% to 35% on average •Card payment will grow anually from 30% to 40% on average 5.1.2. Some Challenges for the development of retail banking in Vietnam At present, the total revenue from retail banking in Vietnam accounts for approximately 10% the total revenue of banking sector, while in developing countries, this figure is around 50%. To catch up with the growth rate of developed countries, retail banking in Vietnam is currently facing some challenges.The first challenge is the consumer perception in using banking services. At present, citizens are still in the habbit of using cash-payment. Additionally, banks’ inadequacies in ensuring the quality and utility of the retail banking services/ products. A typical example is the payment services. Domestic card payment is not as convenient as international card payment in terms of signal transmission. The fact that quite a few retailers charge additional fees for card payment and banks’ low responsiveness to customers’ complaints for transaction problems have also discouraged buyers to adopt non -cash payment methods.
In addition, through discussions during the two-day Conference, banks have also identified some further difficulties in implementing Retail Banking, including:Small loans value, high cost, scattered borrowers, high risks; Limits in the variety of retail banking products/ services; Service quality not matching with customers’ increasing demands; Limits in the variety of distrubition channels, OTC transactions are still dominant. Banks are still lack of a clear marketing strategy. More well -trained staff are needed to be able to engage individual customers and enhance their satisfaction.According toMr. Pham Anh Tuan, Deputy General Director, Vietinbank, in order to boost up Retail Banking, banks must develop an overall strategy to build competitive advantages, along with an appropriate investment in technology infrastructure transformations, so as to meet the increasingly savvy customers’demand for modern banking services, ensuring the security and (5) risk management that can enhance the quality of banking services. 5.2. Key successful factors of retail banks in Vietnam Form the macro-management perspective, the State Bank identified five factors that can facilitate the development of retail banking including:Banking technology, Development strategy; (6) Competitive advantages; Inter-connection among commercial banks; and Consumers’ perception.From the micro-management perspective of commercial banks, critical factors for the successful development of retail banking are highlighted as:Customer base and Market share; Product/ Service Quality; Distribution channels; and Technology Infrastructure.5.2.1. Customer base and Market share Banks with large amount of individual customers will enjoy better competitive advantage in providing banking services. Therefore, the expansion of market share and the growth in the number of individual clients is regarded as the fundamental condition for the development of retail banking. Mr. Hoang Quoc Dat, Head of E-channels, Techcombankthat in Techcombank, emphasized customers play a centre role in the development of developing products and services to increase the utility ofbanks’ payment channels. Thus, Techcombank's methodology in the development strategy of Retail Banking is'Utilizing new customers', 'Maintain existing customers', and 'Create (7) bonding relationship and customers’ loyalty'5.2.2. Quality of products / services the bank Ms. Pham Thi Ngoc Anh,Executive Vice President, Head of Retail Banking Department, BIDV said one of key successful factors for retail banking is service quality. Banking services must be able to offer the bring core values required by customers such as utilities, high responsiveness, ability to meet customers’ requirements; security and safety.Mr. Nguyen Dang Thanh, Deputy CEO, Sacombank also shared his analysison the customers’requirements for retail banking products/ services. He has spotlighted five core values that customers expect from banking products/ services, including:Convenience & Quickness, Packaged Products/ Services, Simple procedures, Reduced paper-based transactions, and Accessibility (Banking
Everywhere). In summary, customers’ expectation is to easily transact with the bank in a (8) convernient way to satisfy their own needs. 5.2.3. Distribution channels Ability of supplying banking services is built on on the development of customer service channels.Mr. Nguyen Dang Thanh, Deputy CEO, Sacombankthat to meet the various stated needs of customers, banks must focus on creating more options for banking products and services. Banks need to make analyses and evaluate which products/ services can be developed within each of the direct banking channels (Branch, ATM) and indirect channels (POS, KIOS, Contact Center, IVR, SMS, Mobile Applications, etc). Banks should put themselves in their customers’ shoes to understand what customers would like to do within each service channel so that appropriate development strategies for each channel can be developed. Mr. Thanh also confirmed that leveraging channels is a really tough decision. It is a tradeoff between Investment and Return, Cost and Profitablitiy at the early stage. However, it is ‘a must’for the (9) future of the bank. In theirWorld Retail Banking Report 2011, Capgemini, UniCredit and Efma Group have concluded that ‘Channels are the key differentiators in satisfying customers on what they perceive as important’.Customers still consider the branch as a top channel for carrying out their banking business, despite the growing influence of indirect channels.‘The branch is at the center of the customer relationship where they open and manage customer relationships, providing a full array of advisory and day-to-day transactional services. Direct channels are deployed more as aids for basic financial transactions or information gathering’. The report also argued that ‘While the branch is still a valued channel for customers, its role must evolve to meet changing preferences and expectations. Banks are evaluating four major themes for adoption as they transition their branch networks to play a more effective role in today’s retail banking environment, including: Layout & Design, Technology, Sales & Services, and Staff & People.While there is no ‚one-size-fits-all‛ approach, each bank will gradually shift to one or more of these themes as they redefine (10) their channel strategies. 5.2.4. Technology infrastructure Banking technology is regarded as key facilitator for all of the above elements. According toMr. Nguyen Van Dung, Deputy Director, The State Bank of Vietnam in HCMC, ‘The evolution of retail banking is characterized by the deployment of moderntechnologies’. Technology investment plays a vital role in the provision of new banking products/ services such as Internet & Mobile banking. It also helps to accelerate the evolution of non-cash payments, reducing the operating costs, improving service quality, freeing labour workforce to focus more on consulting and cross-(11) selling activities.Likewise,Mr. Pham Anh Tuan, Deputy General Director/ CIO, Vietinbankalso confirmed the strategic direction for technology infrastructure development at Vietinbank as'Service quality is (12) the key differentiator in competition’ and ‘Aligning technology development with business strategies '
5.3. Solutions/ Initiatives for the development of Retail banking in the upcoming future During the two-day Conference, experts from regional leading technology corporations such as Polaris, NetApp, TIS, Verint, SecureMetric, APC, Avaya, IBM, Clear2Pay, Feitian, Samsung, etc. ... have presented a wide range of technology-based solutions that help to transform banking infrastructure, improving business processes, enhancing market and customer insights that can help to grow retail banking activities. Key trends in banking technology in the year 2012 are identified as Virtualization, Data Center, Unified Communications, Risk Management, Outsourcing, Digital Certification, Security, CRM, and Business Intelligence. However, presentations of the above solutions are just the starting point which aims at offering basic information and an overview of new technologies that are currently available on the market. We - the organizers, hope that after the Conference, more interactions between banks and solution consultants will be conducted so that further discussions to assess and evaluate the relevance and feasibility of each solution so that they can be deployed successfully. We also hope that in the year 2012, ASEAN Banker Forum will continue to receive your valuable support, interest and participation. We expect more successful practices in retail banking will be shared by banks in the upcoming year. Best regards IDG Vietnam
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References 1.Scientific Conference ‘Developing retail banking services at commercial banks in Vietnam’. Vietinbank Human Resources Development and Training Center. 11/ 2011. 2.‘Developing e-payment as foundation for non-cash payment’. 09/2011. The State Bank of Vietnam -Sbv.gov.vn.3. 4. 6. 11.‘Vision and Development trends for Retail Banking in the period 2011 –2015’.Mr. Nguyen Van Dung,Deputy Director, The State Bank of Vietnam in HCMC. 12/2011. ASEAN Banker Forum 2011. 5. 12.‘Conforming IT Strategy to Retail Banking Strategy: Best practice from Vietinbank’. Mr. Pham Anh Tuan,Deputy General Director, Vietinbank. 12/2011. ASEAN Banker Forum 2011. 7. ‘Techcombank’s Initiatives in Enhancing Non-cash Payments’.Mr. Hoang Quoc Dat, Head of E-channels, Techcombank.12/ 2011. ASEAN Banker Forum 2011. 8. 9.‘Leveraging different channels to diversify banking products and services that can drive customer engagement and satisfaction’. Mr. Nguyen Dang Thanh, Deputy CEO, Sacombank. 12/2011. ASEAN Banker Forum 2011. 10. ‘World Retail Banking Report 2011: Key Findings and Implications for ASEAN region’. Mr. Bhalaji P Raghavan, Financial Services Solution Leader, Asia Pacific, Capgemini Financial Services GBU. 12/2011. ASEAN Banker Forum 2011.
