CEOs of banks in Việt Nam share their view on retail banking at the forum. — VNS Photo Thu Ngan

"The experience of the monetary crisis in 1998-1999 and 2007-2008 showed mistakes. Commercial banks had invested a great deal in sectors that easily brought high profits such as real estate and security. They forgot retail, a potential, stable sector," Ha Huy Tuan, deputy chairman of the National Financial Supervisory Commission, told the forum.

Bankers, financials experts and technology consultants attending the forum agreed that the fast pace of urbanisation, the country's rising population and higher incomes, and an increasing number of small- and medium-sized enterprises (SMEs) had pushed the development of retail banking in the country.

During the one-day meeting, experts spoke about operational excellence and the need to differentiate and transform banking channels.

Tuan said the increase in population and income had created "much potential. Moreover, 90 per cent of companies in Viet Nam are SMEs, a potential customer for the market."

"That's why developing retail banking is becoming the key strategy of banks and financial institutions," he said.

Le Cong, CEO of Military Bank, said that only 30 per cent of Vietnamese residents had been approached by banking services, and the remaining 70 per cent represented a huge market for retail services.

Nguyen Tu Anh, CEO of Smartlink Card Joint Stock Company, said that retail banking had become more important in the Vietnamese banking sector in the last three years.

"For big banks like Vietcombank and Vietinbank, capital mobilisation from the retail sector accounts for 50-55 per cent. Meanwhile, the figure is more than 80 per cent at smaller banks," she said.

Tu Anh said the number of cards and banking accounts had continued to surge.

"As of June, there were about 50 million banking cards and many other payment tools. The payment network has also developed with more than 16,000 Auto Teller Machines [ATMs]. Many companies are accepting online payments. In addition, many other payment methods such as mobile banking are being used," she said.

Despite the potential, many forum participants said that competition was tough as the banking sector was one of the first to open to foreign players.

To win the market, banks must be able to differentiate themselves in service and products from their competitors, they said.

The forum said that service payments and money transfers at banks in Viet Nam were too similar and as a result customers did not distinguish between banks.

Developing better management skills and investing more in information technology were two other necessary steps, speakers said.

"Banks in Viet Nam have to create differentiation and make big changes. They need to upgrade their distribution systems as well as services and products," said Tran Thi Hong Hanh, secretary general of the Viet Nam Banks Association.

The Asean Banker Forum was organised by the Viet Nam Banks Association and International Data Group (IDG). This was its third annual meeting. — VNS