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Global, domestic banks prepare for battle
Retail banking in Vietnam is about to undergo a transformation as major international financiers seek more and yet more of the Vietnamese market.
And not surprisingly in a country where the average age is 25, the new arrivals are likely to bet on youth.
Vietnam ’s young adults-from 21 to 29- are twice as likely to be attracted to new bank products as older Vietnamese who are likely to keep their wealth in gold.
The young are also more inclined to bank with aa global institution.
“Retail banking services have yet to develop in Vietnam ,” said Techcombank director general Nguyen Duc Vinh.
A bank in a developed country was likely to have about 1,000 banking products to offer its customers but the maximum for a Vietnamese bank was about 1000, a senior State Bank of Vietnam official told Vietnam News.
Revenue from retail banking accounts for 6-12 percent of the total in Vietnamese banks; in developed countries it is about 50 percent. As a result, the assets of Vietnam ’s banking industry are less than one-third of those of Thailand ’s banks.
In Thailand , retail-bank penetration is put at about 60 percent or 70 percent suitable target for Vietnam during the next five to six years.
Domestic retail banks are likely to always share the biggest slice of the market but the heavy growth projected for Vietnam means that the foreign banks will not have to win customers from them.
A constant supply of new customers is assured.
Four State-owned banks dominate the Vietnam market supplemented by 39 joint-stock and part-private banks. Just a few are able to offer a variety of retail products.
But Sacombank, Asia Commercial Bank, Techcombank and the Bank for Investment and Development of Vietnam (BIDV) all aspire to become retail banking corporations.
BIDV deputy director general Le Dao Nguyen said bank made development of retail products are priority in 2006.
Domestic banks are acutely aware of the importance of developing retail services and their heavy investment in opening numerous branches is part of this process.
Banks have spent substantially on core banking software and information technology. They have also made intense efforts to develop ATM systems, Internet Banking, Phone Banking and Home Banking.
Still their services remain poor. Most do not provide ‘over-the-counter’ services and there is no self-service system.
Domestic banks that do have retail baking services, do not cooperation with each other.
Their managers blame-lack of properly define laws and security for the failure of retail banking services to develop.
Yet a handful of global banks are aggressively making inroads into the Vietnam market where some estimates suggest the industry could grow by a yearly 25 percent over the next decade.
Often these banks announce their intention to conquer Vietnam ’s retail banking market.
vna
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