Vietnam’s digital banking adoption catches up with developed markets

The adoption of digital banking in Vietnam has increased remarkably among Asia-Pacific emerging markets which have caught up with the region’s developed economies, according to a recent McKinsey report.

Hanoi (SVBG) – The 2021 report on the digital banking behaviors surveyed 20,000 urban banking consumers across 15 Asia Pacific (APAC) markets with eight emerging and seven developed ones.

The emerging economies include Mainland China, India, Indonesia, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam; and seven developed ones are Australia, Hong Kong SAR, Japan, New Zealand, Singapore, South Korea, and Taiwan.

The report revealed that the increase in active digital bank users is arguably higher in Vietnam compared with APAC emerging markets and some developed ones, a Vietnam News article cited McKinsey figures not included in the public report.

Between 2017 and 2021, 88% of APAC consumers in emerging markets actively use digital banks, a 33 percentage points increase.

In Vietnam, the numbers rose by 41 percentage points to 82% in 2021.

At the same time, Vietnam’s fintech and e-wallet penetration reached 56% in 2021, a hike of 40 percentage points from 2017.

This penetration level is even higher than the average of APAC emerging markets (at 54%) and developed markets (43%).

Large majority (73%) of Vietnamese consumers are multi-channel banking users. This means they use a combination of digital banks and physical branches.

Room for improvement

This change in behaviour has brought the Vietnamese financial services industry to a new level of maturity, opening up new opportunities for banks and nonbanks alike.

The window for seizing opportunities will narrow quickly as consumers give serious consideration to innovative propositions from digital banks, McKinsey report projected.

The local banks, however, are not doing enough to capture digital sales, due to limited digital offerings and a lack of meaningful engagements with digital users, the report says.

It suggests banks should transform their business model to digital-first and deliver value propositions that are intelligent, personalized and omnichannel.

To stay relevant, banks should think about building or acquiring AI and machine learning capabilities in three areas: sales and service, operations and IT, and develop the right structure as well as hire or reskill the right talent. SVBG