Banking security is also a significant issue in the development of retail banking. — Photo VNA/VNS Photo Hoang Hai

HCM CITY (Biz Hub) — Viet Nam is thought to have huge potential for the growth of retail banking, and this throws up both opportunities and challenges for local banks, experts say.

"The retail banking sector in Viet Nam is immature compared with the huge potential [offered by] a young population, rising middle class and the low number of people using banking services," Tran Thi Hong Hanh, general secretary of the Viet Nam Banks Association, said in her opening speech at yesterday's ASEAN Bankers Forum in HCM City, which is titled "Transforming retail banking into a futuristic banking model."

Ernst & Young's 2014 Retail Banking Global Survey found that of the country's 90-odd million people, 75 per cent do not use banking services.

Viet Nam Outstanding Banking Awards 2014 The Viet Nam Outstanding Banking Awards were given away for the third year by the International Data Group and Viet Nam Banks Association within the framework of the 2014 ASEAN Banker Forum. VIB won the award "Bank with the best branch" under Viet Nam Outstanding Banking Awards and at the same time, the bank has also achieved the ASEAN CIO Award 2014. Viet Nam Outstanding Bank Awards aims to seek and honor importance role of banks and IT solution companies to banking sector to the development of banking in particular and of financial-economy in general. — VNS

Hanh said, "Local banks have to deal with competitive pressures from foreign banks, especially when these banks are gradually approaching the market through retail banking strategies and clear customer segmentation."

Information security and operational risk management are two elements threatening banks.

According to KPMG's 2013 Viet Nam Banking Industry survey, 57 per cent people said that operational risk management is the most important issue, especially since many banks have only begun to implement operational risk management.

Besides, Viet Nam lacks a formal legal framework for operational risk management.

Banking security is also a significant issue in the development of retail banking. Information security statistics from TUVRheinland Viet Nam show that every year banks have to fork out millions of dollars due to attacks on the trading system and 300,000 personal credit accounts are stolen, with some getting published online.

"These incidents pose a major problem for retail banks in the collection and management of data loss, building risk measurement solutions and strengthening surveillance of the Government's and banks' activities and advancing information network security," Dr Can Van Luc, a financial and banking expert, said.

He stressed that globally one of the key issues in retail banking development is the enhancement of customer experience, in which the integration of various channels continues to play an important role.

According to a 2013 customer survey by Capgemini, over 50 per cent of customers who had negative experiences with banks felt that these banks did not bring a consistent multi-channel experience.

"If in previous years internet banking played a dominant role, in 2014 mobile banking has seen rapid growth of 20-30 per cent a month," Luc said.

According to card services company Smartlink, there are 32 banks offering mobile banking services and providing new features that are simpler and more convenient to carry out transactions. With over 3 million mobile-banking customers being added each month, this promises to be a key development in the coming years.

Luc listed seven strategic solutions for retail banking: identifying the customer as central to service; changing and maximising distribution channels; new product research and development; simplifying processes and operational models; promoting innovation; setting up and implementing digital bank strategies; and actively managing risks.

The forum comprised two sessions.

The first was about "The convergence of information security and compliance risk management towards operational excellence and process efficiency" and consisted of six topics related to risk management and building a technology infrastructure to strengthen operational capabilities in banking operations.

"Maximize customer experience via retail banking channel transformation" was on the agenda of the second, which focused on advanced technology solutions, new payment methods to promote banking services, and enhancing customer experience.

The 2014 ASEAN Banker Forum was organised by the Viet Nam Banks Association and International Data Group. — VNS