Vietnamese Most Open To Digital Banking In Asia-Pacific | Vietcetera

Vietnamese Most Open To Digital Banking In Asia-Pacific

77% of Vietnamese are open to the idea of experimenting with fintech and new financial services, but 24% fear identity theft.

Vietnamese Most Open To Digital Banking In Asia-Pacific

Is traditional banking dead? | Photo by Vietcetera

Vietnam used to have one of the highest cash dominated economies in the world. In 2017, the country had very low banking penetration, lacked ATMS, and cashless payment systems as customers were hesitant to turn to online banking, digital wallets or card-based payments. Many were concerned about security issues, as well as identity thefts. 

But as technology became more reliable and secure, and smartphone usage increased, many Vietnamese became more willing to adapt to anything digital (the convenience of online purchasing and paying is just indisputable). It’s also a big help that the government is undertaking numerous measures to improve consumer trust.

A study by global analytics leader, FICO, found that Vietnamese are now the most attuned to digital banking services than people in other parts of Asia-Pacific, including Singapore, Malaysia, New Zealand and Australia.

The survey on consumer experience in digital banking services, conducted in 10 countries and territories in the region, revealed that 77% of Vietnamese are more open to the idea of experimenting with fintech and new financial services as a welcome addition to using branch banking. Along with Thais, Vietnamese demonstrated willingness to embrace digital banking and the opportunities that exist for banks to further develop their offering.

Stay-home policies imposed during coronavirus outbreaks also accelerated people’s need to open accounts digitally. At least 63% of those surveyed in Vietnam said they are more likely to open an account digitally than a year ago, when the impact of the health crisis wasn’t too apparent yet.

Surprisingly, Vietnam’s Gen Z — considered digital natives — are more reluctant to use digital banking than older people. “The youngest adults are digitally savvy with social media and entertainment, but without a corresponding financial literacy, this does not confer confidence to managing their finances digitally,” says FICO.

Vietnamese are also more willing to provide more personal financial information to their banks in exchange for differentiated services such as better interest rates or reduced fees. With 49%, Vietnam ranked second to Thailand’s 51%.

Along with this openness to digital banking comes high demand for seamless experiences while using the services. From shorter money transfer waiting time to easy-to-access features, people demand for banks to create simple, fast and personalized service. Gone are the days when banks focused on promoting their products. To keep up with growing demands, banks must shift to consumer-based thinking, such as providing what their users need.

Vietnamese demonstrated willingness to embrace digital banking, but as an addition to going to a physical branch rather than a complete alternative. | Photo by Vietcetera

The need for identity proofing

While it’s true that digital banking has made purchasing, paying and managing our finances easy and convenient, it also raises an important question: is our personal data protected?

About 24% of Vietnamese said their identity has definitely or is likely to have been used by a fraudster to open an account. That’s equivalent to more than 16 million people — a number that cannot be disregarded.

“Identity theft is a tangible threat for people in Vietnam. Those aged 45 and over are most likely to say they have been the victims of identity theft — 13% of this age group said they know that a fraudster used their identity to open an account and an additional 15% said it’s likely,” according to FICO.

Because of this, 72% of Vietnamese recognize identity proofing is a way to protect their data. However, a significant minority — 28% — think that financial institutions check their identity to sell more products. FICO said banks and financial companies need to do more to help customers understand the reasons for identity proofing.

The acknowledged level of risk from identity theft, and the understanding of the role of identity proofing plays in protecting their accounts, suggests that people should be tolerant of the processes needed to check their identities. However, if the process becomes tedious, such as opening or going to another channel to complete the process, users usually end up not signing up at all.

If customers are asked to move out of channel to prove their identities, many of them will abandon the application, either giving up on opening an account completely or by going to a competitor. Of those who don’t immediately abandon, up to an additional 21% will delay the process, reads the report.

Any kind of disruption matters, yes. Asking people to scan and email documents or use a separate identity portal causes hassle, and thus encourages people to abandon the product or service altogether. 

While it’s highly important, the whole process of identity proofing must happen completely within the channel customers are already using.

Interestingly, when it comes to biometrics, Vietnamese are more open to providing their banks with a biometric authentication such as facial scan, fingerprint or voiceprint to secure their accounts. Many understand why banks ask for such - security.

More than 40% of the respondents said they’re happy to provide biometrics as long as they understand why. A similar percentage said they’d be happy to do it without question. Only 9% said banks or any company should have it as a requirement.