4 trends in applying innovation and digital transformation in finance

Prof. Dr. Hoang Van Cuong - Member of the National Assembly's Finance and Budget Committee, Vice President of the National Economics University said that finance is a pioneer in digital transformation. That creates convenience and speed, helps taxpayers comply with their obligations better, contributes to accelerating the circulation of goods, promoting production and business, and improving competitiveness and economic growth.

Digital transformation has changed the management method, shifting from pre-control to post-control, shifting from the state of the management agency as the manager to a service mechanism.

Sharing at the workshop "Innovation in the financial sector: Innovation for sustainable growth", Dr. Nguyen Quoc Hung, Vice Chairman and General Secretary of the Vietnam Banks Association (VNBA) said that according to data from the State Bank of Vietnam (SBV), in the first 6 months of 2023 compared to the same period in 2022, non-cash payment transactions increased by 55% in quantity, via the Internet channel by 76% in quantity and 1.79% in value; via mobile phone channels by 65% and 77% respectively; via QR Code method by 152% and 301% respectively; and via ATM by 4% in quantity and 6% in value.

This reflects the growing trend of shifting to electronic payments. Banks and payment intermediaries are interconnected with transaction times measured in seconds, with an average transaction value via banks of VND900,000 billion, equivalent to USD40 billion, with approximately more than 8 million transactions per day.

In addition, over 70% of adults have bank accounts through digital transformation, the cost-to-revenue ratio of banks also decreased by about 30%, contributing to significantly reducing costs for bank operations.

“ Depending on the scale, financial capacity and resources of each bank, there will be different levels of digital transformation. However, at present, most commercial banks in Vietnam have launched digital banking applications, making efforts to create a difference for their digital products ,” Mr. Hung assessed.

Digital transformation of the financial market will go through 4 trends in the coming time.

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

Domestic financial technology service businesses are promoting the application of new technologies such as artificial intelligence (AI) and cloud computing to automate and optimize business and operations.

According to the 2023 survey by DBS Financial Services Group on digital transformation, Vietnam ranked 2nd out of 10 countries surveyed in terms of the level of digital transformation application in improving customer experience and engagement, second only to Singapore.

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

Talking about the trend of innovation and digital transformation of the financial market in the coming time, JobHopin representative recently pointed out 4 specific trends.

First, businesses are moving towards digital transformation in a more cost-effective manner due to concerns about a recession.

Global statistics show that 74% of bank CEOs believe that accelerating digital transformation plays an essential role in their competitive strategy. However, 46% of them have had to pause or cut back on their digital transformation strategies due to concerns about a possible recession in the near future.

The financial industry is a pioneer in digital transformation.

Second, the economic situation in Vietnam is more positive, with many opportunities for innovation in general and financial innovation in particular in Vietnam. Domestic financial services enterprises are promoting the application of new technologies such as artificial intelligence (AI), cloud computing to automate and optimize business operations.

According to a recently published survey, Vietnam ranked 2nd out of 10 countries surveyed in terms of the level of digital transformation application in improving customer experience and engagement, higher than the powerhouses of the US, UK, Australia, China, and India.

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

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

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

In the market forecast report, experts said that banks should review traditional products and services to find ways to create new sources of value. Areas that are considered to have great potential include embedded finance, financial technology, electronic identification, and green finance... Many directions can be exploited, but the problem for the banking industry is how to transform quickly and effectively while still saving resources so as not to "lose steam" in the long-term race.

In addition to revenue and profit, digital transformation must also consider factors of transparency, risk management, and social responsibility, with close monitoring from the public, investors, and international organizations. In the survey, 54% of banks mentioned the "climate" factor in their financial reports. This shows that this is a keyword with weight in the business development vision. 38% of bank CEOs believe that ESG programs help increase financial performance, an increase of 26% compared to the previous year.

Fourth, development cooperation is one of the top priorities of enterprises. According to experts, there is no general formula that can ensure the success of a digital transformation strategy. However, the exchange of experiences and cooperation between financial institutions is considered a necessary approach to building a strong financial foundation. In fact, 26% of bank directors surveyed said that strategic cooperation with third parties is their top priority in promoting growth.

In particular, in the Asia-Pacific region, financial CEOs are 6% more willing to engage with new partners than the global average.

Hien Yen

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