4 trends in applying innovation and digital transformation in finance.

Professor Hoang Van Cuong, a member of the National Assembly's Finance and Budget Committee and Vice Rector of the National Economics University, stated that finance is a pioneering sector in digital transformation. This creates convenience and speed, helping taxpayers better comply with their obligations, contributing to accelerating the circulation of goods, promoting production and business, and enhancing competitiveness and economic growth.

Digital transformation has changed management methods, shifting from pre-audit to post-audit, and from a management-oriented approach to a service-oriented one.

Speaking at the seminar "Innovation in the Financial Sector: Innovation for Sustainable Growth," Dr. Nguyen Quoc Hung, Vice President and General Secretary of the Vietnam Banking Association (VNBA), stated that according to data from the State Bank of Vietnam (SBV), in the first six months of 2023 compared to the same period in 2022, non-cash payment transactions increased by 55% in volume, via the Internet by 76% in volume and 1.79% in value; via mobile phone by 65% and 77% respectively; via QR Code by 152% and 301% respectively; and via ATM by 4% in volume and 6% in value.

This reflects the growing trend towards electronic payments. Banks and payment intermediaries are interconnected, with transaction times measured in seconds. The average value of transactions through banks is 900 trillion VND, equivalent to 40 billion USD, with approximately over 8 million transactions per day.

Furthermore, with over 70% of adults having bank accounts through digital transformation, the revenue-to-cost ratio of banks has also decreased by approximately 30%, contributing to significant cost reductions for banking operations.

“ Depending on the size, financial capacity, and resources of each bank, the level of digital transformation will vary. However, currently, most commercial banks in Vietnam have launched digital banking applications, striving to differentiate their digital products ,” Mr. Hung assessed.

The digital transformation of the financial market will go through four trends in the coming period.

According to Mr. Vo Xuan Hoai, Deputy Director of the National Innovation Center (NIC), the finance and banking sector in Vietnam has been overcoming these challenges and witnessing positive changes thanks to the dominance of digital transformation and green growth trends.

Domestic fintech companies are accelerating the application of new technologies such as artificial intelligence (AI) and cloud computing to automate and optimize business operations.

According to a 2023 survey by DBS Financial Services Group on digital transformation, Vietnam ranked second among 10 countries surveyed in terms of applying digital transformation to enhance customer experience and engagement, trailing only Singapore.

" Vietnam has always identified innovation and digital transformation as the main driving force for national economic growth, and Fintech is an essential part of the national innovation and digital transformation process ," the NIC representative emphasized.

Speaking about the innovation and digital transformation trends in the financial market in the coming period, a representative from JobHopin recently pointed out four specific trends.

Firstly, businesses are moving toward digital transformation in a more cost-effective way due to concerns about a recession.

Global statistics show that 74% of bank executives believe that aggressively promoting digital transformation plays a crucial role in their competitive strategy. However, 46% of them have had to temporarily halt or scale back their digital transformation strategies due to concerns about a potential recession in the near future.

The financial sector is a pioneer in digital transformation.

Secondly, the economic situation in Vietnam is more favorable, offering many opportunities for innovation in general and financial innovation in particular. Domestic financial services businesses are accelerating the application of new technologies such as artificial intelligence (AI) and cloud computing to automate and optimize business operations.

According to a recently published survey, Vietnam ranks second among 10 countries surveyed in terms of applying digital transformation to enhance customer experience and engagement, higher than even powerhouses like the US, UK, Australia, China, and India.

A survey of Vietnamese businesses shows that approximately 63% believe digital transformation helps increase profits. Meanwhile, 57% of businesses affirm that digital transformation helps increase competitive advantage; and 56% apply digital transformation to improve customer engagement and care.

Vietnam ranks 48th out of 132 countries in the global innovation index, and 4th in Southeast Asia.

Thirdly, sustainable development and green growth are strategic priorities for financial businesses, especially environmental, social, and governance (ESG) factors.

In market forecast reports, experts suggest that banks should re-evaluate traditional products and services to find ways to create new sources of value. Areas considered to have high potential include embedded finance, fintech, electronic identity, and green finance… Many avenues can be explored, but the challenge for the banking industry is how to transform quickly and efficiently while conserving resources to avoid falling behind in the long-term race.

Beyond revenue and profit, digital transformation must also consider factors such as transparency, risk management, and social responsibility, with close scrutiny from the public, investors, and international organizations. In the survey, 54% of banks mentioned "climate" in their financial reports, indicating that this is a key element in their business development vision. 38% of bank CEOs believe that ESG programs help improve financial performance, a 26% increase compared to the previous year.

Fourth, collaborative development is one of the top priorities for businesses. According to experts, there is no single formula that can guarantee the success of a digital transformation strategy. However, exchanging experiences and cooperating among financial institutions is considered a necessary approach to building a strong financial foundation. In fact, 26% of surveyed bank executives said that strategic cooperation with third parties is their top priority in driving growth.

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