DIGITAL TECHNOLOGY TRENDS FOR FINANCIAL PRODUCTS & SERVICES IN 2022
In 2022, digital transformation is the crucial driver for economic recovery and growth after the pandemic. The emergence of technology is transforming the financial industry, which improves access to financial services in more profound and inclusive ways.
Digital finance in Vietnam, like in other parts of the world, is the result of three major waves of technology that have contributed to the formation of the ecosystem. These are as follows: digital payments, crypto assets, and artificial intelligence. In Vietnam, the digital financial ecosystem matures in the early stages with the “boom” of the digital payment service division. Other ones: crypto-assets and AI have only made minor changes in the financial system, necessitating a legal corridor and appropriate solutions to promote development in the trend of the digital economy and digital society.
E-wallets account for 90% of the payment intermediary market share in terms of transaction volume and value, making digital payment the fastest growing service segment. Also, Vietnam has 43 non-banking companies licensed to engage in payment activities as of the end of April 2021, providing customers and retailers with online payment services or digital payment solutions such as MoMo, Grabpay by Moca, Airpay, VinID pay, Zalo pay, VNpay QR, and others. These are companies that have experienced rapid growth in their e-commerce services.
Meanwhile, when it comes to crypto-assets, Vietnam has consistently ranked among the world’s top groups in terms of interest since 2017. Secondary trading on exchanges is the most common activity involving crypto-assets in Vietnam; other activities such as initial coin offerings (ICOs), securities cryptographic assets (STOs), bitcoin ATMs, crypto-asset payments, and so on are not yet common.
In terms of artificial intelligence, some banks have used and are using it in the development of digital banking, but mostly in the service consulting stage, answering customer questions, and not yet in the field of providing core services.
Digital financial services, in particular, will have new opportunities to promote financial inclusion in the context of governments implementing social distancing measures to control the COVID-19 epidemic. According to International Monetary Fund (IMF) research, Fintech has contributed to improved financial inclusion and has the potential to positively contribute to economic recovery and growth during and after the crisis. In addition, Dr. Can Van Luc, Chief Economist of BIDV, stated that Fintech has grown rapidly in recent years, which has resulted in increased investment capital. Globally, it is expected to be around 310 billion USD next year. The rate of growth is very fast, and the trend of digital transformation is being promoted much more strongly in the context of the outbreak of the Covid-19 epidemic.
However, Ms. Pham Minh Tu, Deputy Director of MobiFone Service Center – MobiFone Telecommunications Corporation, stated that Vietnam must continue to take stronger steps to promote digital infrastructure, digital finance, and digital society, such as mandating e-wallets without banking links. The reason for this is that customer demand for banking services and financial management is increasing, which creates opportunities for both traditional financial institutions and Fintech firms.
Currently, according to the website digipay.guru, there are 8 typical digital financial technology trends that need attention:
Digital-only banks: provide virtual banking services such as P2P, transfer, Lending, Saving..
Blockchain: provides many benefits to the financial segment, reducing fraud, automatic transaction processing, smart payment, secure payment processing.
Open banking: provides OpenAPIs that shape the financial industry with many participating providers.
AI and machine learning (ML): enhancing information collection, using AI and ML for business processing, anti-fraud.
Biometric security systems: Using biometric systems in registration and transactions to improve security.
Robotic Process Automation (RPA): automates many tasks including authentication, fraud detection, loan validation, and onboarding.
Promote financial inclusion with the application of fintech: Mobile Money, Brand agency is promoted.
Promote technology for monitoring, reporting and compliance to ensure compliance with transaction regulations and policies (Regulatory Technology – Reg-Tech).
These are also the eight technology-related trends mentioned by Ms. Tu at the World Mobile Broadband & ICT conference in 2022. In which three trends of Open Banking, process automation by robots (Robotic Process Automation – RPA), and financial inclusion promotion through the use of fintech will be mentioned and discussed by industry leaders and experts at the upcoming Financial Services and Open Banking Forum 2022 event. The forum’s specific goals will be to share experiences, innovate and develop financial products and services on a digital platform, and promote open creative startups toward a financial ecosystem of digital inclusion.
In addition, for the near future trend order, Ms. Tu believes that biometric technology and RPA will create a breakthrough in the development of Vietnam’s digital financial market in the near future to both increase customer experience and ensure security for digital financial transactions. Then there’s AI and machine learning in eKYC customer identification, credit scoring, and so on.
In summary, the digital financial ecosystem in Vietnam is currently centred on three major waves: digital payments, crypto-assets, and artificial intelligence. Digital payment technologies have the most impact and are rapidly developing, while the other two are only beginning to make small changes in the financial industry. In the context of the Covid-19 epidemic, digital financial services will have opportunities to develop and promote financial inclusion, as well as strong steps to achieve the goal. This is also the goal of the upcoming Financial Services and Open Banking Forum 2022.
On the upcoming 17th of June, IDG Vietnam cordially invites you to the Financial Services and Open Banking Forum 2022 to gain a better understanding of the experiences, innovation orientation, and development of digital-based financial products and services, as well as to promote open innovative start-ups toward a comprehensive digital financial ecosystem.