Financial services offered by banks in the

Vietnam financial market:

OPPORTUNITIES AND CHALLENGES

PRESENTED BY GROUP 1
TCDN CLC 64D
 members
1.Nguyễn Danh Vĩnh An – 11220027
8.Nguyễn Khánh Linh – 11223569
2.Hoàng Thị Minh Anh – 11220208
9. Phạm Khánh Linh – 11223706
3.Trần Gia Bảo – 11220816
10.Hoàng Đức Mạnh – 11224115
4.Lê Tùng Dương –11221563
11.Hoàng Minh Nguyệt – 11224850
5.Lưu Vân Giang – 11221765
12. Lê Nhật Thành – 11225807
6.Lương Minh Hạnh – 11222149
13. Hoàng Xuân Trường – 11226635
7.Trịnh Ngân Hương - 11222729
 TABLE OF CONTENT

Definition Financial services Opportunities Recommendations

provided by banks and challenges
 I
DEFINITION
 I
DEFINITION

1 2 3
FINANCIAL BANK FINANCIAL
SERVICES MARKET
 1
FINANCIAL
SERVICES

• Financial services refer to services provided by the banks

and financial institutions in a financial system.

• It includes all activities involved in the transformation of

savings into investment.
 •Banks accept deposits and lend them directly or indirectly
through market capital.
2
BANK •A bank is a connection between a customer with a capital
deficit and a customer with a capital surplus.
 3
FINANCIAL MARKET

 Financial markets are where traders buy and

sell assets.

 Financial markets become the intermediary

between people or institutions that need capital
and those who have capital to invest.
 II
FINANCIAL
SERVICES that
offered by banks
 1 3

OVERVIEW OF Financial

VIETNAM’S services that 4 Evaluating

2
FINANCIAL offered by banks financial
BANKING SYSTEM
MARKET services
IN VIETNAM
 1

OVERVIEW OF VIETNAM’S FINANCIAL MARKET

- In 2023:
• Inflation control policies targeted around 4.5%.
• Listed companies saw a 49.5% increase in net profit. (HOSE, HNX, UPCOM)
• Commercial banks gained approximately 32% in pre-tax profit, taking 80% of the
market.
• Digital banking, especially mobile banking, grew quickly while operating
expenses fell 15%.
• The bad debt coverage ratio rose to 152%.
• Credit orientation was expected to grow by 14-15%.
- In the stock market, indices and market capitalization rose, with foreign investors net
buyers, but market liquidity plummeted.
• By January 31, 2023, the VN-Index was 1,111.18 points, up 10.34% from 2022.
- Compared to 2022, insurance premium revenue rose 13.38%, as did assets,
investments, and owner's equity.
 2
BANKING SYSTEM IN VIETNAM
a) State bank of Vietnam
- The State Bank of Vietnam is a ministerial-level agency of the Government, acting as the Central Bank of
the Socialist Republic of Vietnam.
 a
State bank of vietnam

Function
• Issuing currency function:
- The central bank is the sole financial institution authorised to issue legal currency.
• Bank of banks function:
- Receive intermediate bank deposits
- Crediting intermediaries
• Government bank function
- The central bank will advise the government on financial and monetary policies and provide
banking services.
 State Bank of Vietnam cut
interest rates four times by 0.5-
2.0% annually in 2023 to help
the economy amid rising global
rates.
 Average interest rates on new
VND loans and deposits have
declined by 2-3% since 2022, a
significant decline.
b) Commercial Bank of Vietnam
Commercial banks can conduct all banking and
business activities for profit.
 Function
+ Credit intermediary function
• Commercial banks connect capitalists and capital seekers.
+ Payment intermediary function
• Deposit, withdrawal, EFTs, wire transfers, check clearing, credit and
debit card issuing, online and mobile banking, currency exchange, and
more.
+ Money generation function
• The money production function is based on commercial banks' credit and
payment functions. Through this function, the commercial banking
system has boosted the economy's overall payment methods, meeting
society's payment needs.
 3
Financial service that offered by banks
in the Vietnam financial market

Capital Mobilization Money Lending

Money Transfer
CAPITAL MOBILIZATION
Definition
• The Bank collects money, assets or financial
resources from many different sources to use for its
business activities.
• The main goal:
 Capital needs.
 Create funding sources to provide financial
services.
 Common types
Deposit sources Borrowings

•Payment deposit •Central banks

•Saving deposit •Interbanks

•Demand deposit •Financial market

Role of capital mobilization
Providing financial services

Capital Investment

Financial Risk Management

Competitive Advantages
 EXAMPLE
 Vietcombank's capital mobilization
rose 6.6% in June 2023 while credit
rose 2.6%. Thus, capital mobilization
grows 2.5 times faster than credit.
Capital mobilization and credit totaled
1.3 and 1.2 million billion VND.
 Despite weak credit growth,
Vietcombank has introduced several
customer assistance solutions.
Vietcombank reduced deposit and
lending interest rates by 10 and 5
respectively in the first half of 2023 for
all individual and corporate customers
 Money lending
Definition

• Money lending is the process by which a

financial institution provides funds to a
borrower.
• Banks provide loans to businesses and
consumers.
 Money lending
Forms of lending activities

• Based on the loan period

• Based on the nature of loan rotation
• Based on the purpose of using capital
• Based on loan security measures
• Based on the refund method
 Money lending
Forms of lending activities
 Based on the loan period
o Short-term loan
o Medium-term loan
o Long-term loan
• Based on the nature of loan rotation
• Based on the purpose of using capital
• Based on loan security measures
• Based on the refund method
 Money lending
Forms of lending activities
• Based on the loan period
 Based on the nature of loan rotation
o Fixed capital loan
o Lending working capital
• Based on the purpose of using capital
• Based on loan security measures
• Based on the refund method
 Money lending
Forms of lending activities
• Based on the loan period
• Based on the nature of loan rotation
 Based on the purpose of using capital
o Production and business loans
o Consumer loan
• Based on loan security measures
• Based on the refund method
 Money lending
Forms of lending activities
• Based on the loan period
• Based on the nature of loan rotation
• Based on the purpose of using capital
 Based on loan security measures
o Property secured loan
o Unsecured loans with assets
• Based on the refund method
 Money lending
Forms of lending activities
• Based on the loan period
• Based on the nature of loan rotation
• Based on the purpose of using capital
• Based on loan security measures
 Based on the refund method
• Installment loan
• Non-installment loan
• Overdraft loan
• Lending one at a time
• Lending according to the credit limit
 Role of money lending
Increased economic growth

More jobs

Reduced borrowing costs

Improved economic stability

EXAMPLE
 Money transfer
Definition
• Money-transferring service is when a payment
service provider performs at the request of the paying
party to transfer a certain amount of money to the
beneficiary
• It includes:
 Money transfer services through payment accounts
and not through
 Not through customers’ payment accounts
 Way to transfer money

Mobile Banking Internet ATM Bank counter

Banking
Role of money transfer
With customers
• Money transferring services make every transaction safe, convenient,
simple. .

With Economy

• Money transferring services have important implications for saving the

amount of cash in circulation,
• Thereby reducing huge social costs related to the issuance and
circulation of money..
With banks
• Reducing operating costs and improving banks' efficiency.
 Example
- From July 3, 2023, Vietcombank officially launches its overseas money
transfer service via the online channel
 Customers can now transfer money abroad directly through VCB
Digibank without visiting physical bank branch
- Supported transfer currencies: AUD, CAD, CHF, DKK, EUR, GBP,
HKD, JPY, NOK, SEK, SGD, THB, USD (subject to VCB's regulations)
- Service charges:
For senders: Fees vary depending on the type of transfer.
For receivers: Charges are contingent on the tariff set by foreign banks.
 4. Evaluating financial services

Capital mobiliztion

Money lending Money Transfer

Money lending Money transfer
Money lending Money transfer
 III
Opportunities
And
Challenges
Opportunities
Digital Banking Services
Opportunity

• Utilize mobile banking apps, online account

management, and digital payment services to
serve people's needs more conveniently and easily
.
 Sacombank, 50% of customers are now “digital customers
The bank's digital channel transactions surged fivefold
from 2018 to 2022, with an average annual growth rate of 43%”
2022: 97% of transactions at Sacombank – digital transaction
 VIB, In the first half of 2022, recorded almost 160 million
customer transactions on digital channels, comprising over 90%
of total transactions
Ending balances of online payment accounts surged by
149% in the first half of 2023, while online deposit balances
soared by 329% compared to end of 2022
In the first half of 2023, the number of new credit cards
opened through MyVIB website and app traffic is set to exceed
200% of the total for 2022
Opportunities
Expanding Financial Inclusion
Opportunity
• Expand financial services to rural areas for greater inclusion
and market expansion.
Example
• Workshop on Digital Transformation in Banking for Farmers with a
presentation “Digital transformation of banking industry associated with
agriculture and rural areas”, organized by Vietnam Farmers' Association
and State Bank of Vietnam, focusing on agriculture and rural areas
Opportunities
Bancassurance
Opportunity
• Successful collaboration between banking systems and
insurance organizations in Vietnam for payment processes.
Example
• Notable partnerships: Techcombank – Manulife, SCB – Manulife, VP
Bank – AIA, MB Bank – MB Ageas Life, Vietinbank – Aviva Vietnam.
Among others.
• MBBank's insurance-related revenue in 2022: Over VND 10,180
billion, a 21% increase from the previous year
• Insurance-related revenue constituted 72% of the total service sector
revenue, surpassing other activities like payment services, fund
management, consultancy, debt processing, valuation, and asset
exploitation.
Opportunities
ESG
Opportunity
• Minimize long-term costs and risks
• Adopt new technologies, improve operational efficiency, develop new products,
• Expand markets, and enhance business reputation
Example
• Vietcombank ranks among the top 20 companies listed with the highest
Sustainable Development Index (VNSI), announced by the Ho Chi Minh City
Stock Exchange on July 17. The VNSI index reflects investment trends based
on ESG criteria
• Vietcombank has dedicated over VND 3,000 billion to social security and
volunteer initiatives, targeting health, education, poverty alleviation, and policy
support
• Honored with the title of Labor Hero during its 60th anniversary celebration
Challenges
Regulatory Challenges
Challenges
• Regulatory frameworks are vital for maintaining stability and protecting customers
• Most banks in Vietnam face challenges adapting and complying with evolving
regulations.
Example
• Changing regulatory landscape.
• Compliance cost.
• Anti-Money Laundering (AML) and Know Your Customer (KYC)
compliance.
• Cybersecurity and Data protection.
• Capital Adequacy and Risk Management.
• Interest Rate and Foreign Exchange Rate Regulation.
• Sustainable Finance Regulation.
Challenges
Technological adoption
Challenges
• Legacy System and Infrastructure
• Cost of Technology Implementation
• Skills and Talent Gap.
• Data Security and Privacy Concerns.
• Technology Obsolescence.

Example

• The NY Attorney General alleges that

o Citi improperly denies compensation to fraud victims
o Lacks adequate measures to prevent unauthorized account takeovers
o Misleads clients regarding their rights post-account hacks
Challenges
Cybersecurity Risks
Challenges

• Sophisticated Cyber Threats

• Data Breaches
• Lack of Cybersecurity
Awareness.
• Phishing Attacks.
Challenges
Credit Risks
Challenges

• Economic Downturns.
• Sector Concentration.
• Small and Medium-sized Enterprises (SMEs) Risks.
• Retail Lending Risks.
• Lack of Collateral.
• Over Reliance on Credit Ratings.
 IV
Recommendations
 Transformation of Organizations
Banks' Responsibilities
Providing Digital Services

Handling Bad Debts and Effective

Creating an Equitable Market Credit Growth
 Banks' Responsibilities
•Balancing capital needs for production and
Transformation of Organizations
business.
•Improving loan application approval Providing Digital Services
processes.
•Enhancing the legal framework for
consumer protection and supplier
responsibility related to information security
for crypto accounts. Handling Bad Debts and Effective
Credit Growth

Creating an Equitable Market

 Transformation of Organizations Providing
Digital Services
• Adopting new business models and
Banks' Responsibilities
governance structures.
• Developing digital transformation plans.
• Leveraging financial and human resources
while minimizing risks.

Creating an Equitable Market

Handling Bad Debts and Effective

Credit Growth
 Banks' Responsibilities

Transformation of Organizations
Providing Digital Services
Creating an Equitable Market
• Exploring connection models between
banks, payment intermediaries, and
national public service portals.
Handling Bad Debts and Effective
• Implementing electronic one-stop systems
Credit Growth
to streamline processes across ministries,
branches, localities, and units.
 Transformation of Organizations
Providing Digital Services

Banks' Responsibilities
Handling Bad Debts and Effective Credit
Growth
• Proactively addressing bad debts while
ensuring sustainable credit growth.
• Focusing on strategies to increase
Creating an Equitable Market
income, reduce costs, and generate
positive impacts from credit activities
THANK YOU!