This rapid growth in digital banking has also come with many security concerns, which need to be tackled at the earliest.
Online account in minutes
While at a coffee shop in a shopping center in Ho Chi Minh City, Ms. Thuy Linh was invited by a bank staff named V. to open a payment card with a gift voucher of up to VND 10 million. In order to open this payment card, the bank staff asked Ms. Linh to fill in her personal information and sign the registration form. Along with this form she was asked to submit a photo of her citizen identity card and send it to the bank, and at the same time download the digital bank application on her phone.
After these simple procedures, the bank immediately sent several emails informing about her new payment account, how to activate the payment card and OTP authentication. Ms. Thuy Linh had only to log in to her account and change her password, and after this procedure she could use her payment account immediately. Her physical ATM card was also delivered to her home address by post a few days later.
Even if you have no guidance from a bank staff, you can still open and activate an online account through Electronic Customer Identification (eKYC ) which allows banks to identify customers online, without meeting them face-to-face over the bank counter. Just by downloading the Bank App on Appstore or Google Play, entering your phone number, and uploading photo of citizen ID card or passport, you can receive authentication from the bank to use your account online. Customers who complete this registration procedure will immediately have an account in use within a few minutes for online transaction limit of up to VND 100 million per month.
It has never been easier than now for people in Vietnam to open a bank account. This is the outcome of fast and strong digital transformation of some banks. The fastest and strongest growth rate has been assessed in Vietnam, by McKinsey Global Management and Consulting Company. Vietnam has now the fastest digital banking application in the region, increasing from 41% in 2015 to 82% in 2021, higher than the average growth rate of 23% of the whole region and higher than the average growth of 33% of emerging markets. This result comes after banks invested about VND 15,000 billion in digital transformation in recent years.
With this fast-paced development, monetary transaction habits of people have also changed rapidly. In the last two years, many banks have announced that they have added millions of customers through offer of this online service, and payments via mobile phones have also increased sharply. According to data from the State Bank of Vietnam, many banks in Vietnam have over 90% of transactions done digitally. If five years ago, there were 50,000 transactions per day, now it has reached 8 million transactions per day at an average value of VND 900,000 bln per day.
According to the survey results in 44 countries by the market research company Statista of Germany, as of August 2022, Vietnam was the second-ranked country with a rate of 33.2% in smartphone users making online payment transactions. China is leading with 40.4%, South Korea with 27.5%, U.K. with 26.7%, India with 26.6%, and the US with 25.6%.
Security very worrisome
The quick opening of an online account was an advantage for banks in the past, to have more customers. However, now this can cause banks to lose customers quickly if the application does not satisfy the requirements of the customer. The story of customers leaving also happens when banks upgrade their system, causing service interruptions where remittance transactions are affected.
Earlier people chose banks according to convenience and habit, but now customers chose banks because of popularity in digital services. Besides this, customers also consider three factors in choosing the right bank, namely, service fee, experience, and savings interest rates.
Currently, the competition in banks is getting more and more fierce. The reason is that behind the opening of a current account, banks can attract demand deposits with low-interest rates to reduce funding costs, improve Net Interest Income (NIM), and have more competitive lending rates. However, the race to open an account by tricking a bank is also potentially risky as some people intentionally change the image on their citizen identity card, and fake personal information to open an account. This leads to the creation of an uncontrollable number of virtual payment accounts that can conduct illegal transactions.
At the recent event titled Smart Banking 2022, Mr. Đỗ Ngọc Duy Trác, General Director of VinCSS Cybersecurity Service Joint Stock Company, shared that banks are racing towards digital transformation, but some places are not really interested in investing in security and are creating opportunities for hackers to attack the weakest link, which is the end user.
According to Mr. Trác, the electronic identification and authentication technology used by most commercial banks in Vietnam is not enough to fully protect users from common types of attacks. Current OTP and password authentication technologies are outdated and are also weak points that hackers can attack. Therefore, the upgrade and application of advanced security technologies such as strong authentication without passwords, such as fingerprint biometrics and face recognition, should be prioritized by banks. Banks need to take into account that scams through impersonation messages are on the rise.
Therefore, in the current digital transformation process, banks must not only rush to advertise their services but also improve authentication and security at all stages of digital banking. This must be dealt with as a priority issue if banks are to retain their customer base.