Dr. Dinh The Hien: Digitalization and the transition to retail are along with processing, requiring banks to be decisive and persistent.
According to the General Secretary of the Vietnam Banking Association, Mr. Nguyen Quoc Hung, the statistics show that in 2021, bank credit has to change in the right direction; the proportion of retail lending of medium and large-sized banks accounted for 40% – 50%, especially with banks up to nearly 90%.
For example, according to the General Director of ACB, the bank’s retail lending accounted for 94%. Meanwhile, at VIB, the retail balance accounts for 87% of the total outstanding debt of the whole goods; at Sacombank is about 70%…
It has been suggested that the ratio of 40-50% is close to developed countries, the retail segment of banks has lost the growth inertia and the motivation to develop retail banking of Vietnamese banks is not much.
However, expressing his views on this issue, Dr. Dinh The Hien said that in Vietnam, the retail sector is somewhat different than the other countries in the world.
In the modern economy, the banking system is divided into many different types of banking. In particular, the largest bank is a commercial bank, while the bank with a smaller size but equally important is the investment bank. The number of people using services through banks will also increase; it will not be like the cash economy in the previous period.
In this context, commercial banks will focus on developing the retail sector. In particular, focus on increasing the proportion of services. The proportion of retail loans and service income will also be higher in the bank’s balance structure and income. The service sector is also an area where banks only have a net profit, and at the same time do not cost capital mobilization costs.
Vietnam is focused on credit as important meanwhile services have not focused on development. To develop, expand market share and bring the fastest profits, non-state banks or “underdog” banks in Vietnam often focus on lending to the real estate sector. According to a report National Economic University in 2017, retail banking growth is up to 50-70%. Behind that, however, is real estate lending.
Dinh The Hien also affirmed that the story is not the motivation to develop retail banking or not, but must consider retail banking as a determinant of the sustainable development of a commercial bank.
However, developing retail banking is a difficult task. As it requires products that lend to products and services to be uniformly synchronized and convenient. At the same time, banks must also develop dynamic and well-trained service teams. Such work requires a long time. It’s not just about lending, it is about customer care and service improvements.
The development of retail banking must be associated with digital banking. Currently, banks have only digitalized in the form of bringing internet tools into the banking business. On the second floor of digital banking is the construction of an ecosystem. In particular, retail banking will be integrated into this ecosystem. However, most banks have not yet done it. The digitization and shift to retail is a long process, requiring banks to be truly decisive and persistent in implementing it.
According to NHIP SONG KINH TE