Foreigners dominate retail banking

Despite efforts to compete against foreign rivals in the retail banking market, domestic commercial banks haven’t yet made much of a mark, say industry insiders.

HSBC general director Thomas Tobin admitted that Viet Nam had a huge untapped potential for personal financial services, but domestic commercial banks have failed to capitalise on their advantages in staking out this market.

While a few major State-owned banks, such as Vietcombank, have made a dent in this market, the field is largely dominated by foreign-owned banks such as ANZ Bank and HSBC.

The director of the State Bank of Viet Nam’s Department of Banking Development Strategy, Le Xuan Nghia, attributed the lack of success to domestic banks’ backward and ineffective work habits.

Nghia explained that, while domestic commercial banks have offered retail banking services for years, most still wait for customers to walk into the bank and open an account, instead of marketing to customers.

Echoing Nghia, Tobin said the banks needed to listen to customer needs and provide products and services to meet demands.

However, it was easier said than done for domestic banks to access customers, said Eastern Asia Bank director Tran Dao Vu.

One marketing avenue is to market directly to the employees of large private or State-owned enterprises, Vu said. But the management of such firms remained concerned for their responsibility in allowing staff to access banks’ personal credit programmes.

Vu suggested that domestic commercial banks join hands and co-operate to develop ATM and payment card services.

"Co-operation, for instance, in connecting ATMs among banks, will help local banks cut investment costs and enhance their services," Vu said.

A few banks are making the effort to develop electronic banking services. Asia Commercial Bank has e-Bank, a 24-hour service centre and a 24-hour lending service; it has also launched lending programmes for individuals to finance home and vehicle purchases or small businesses. An Binh Commercial Bank has offered YOUmoney, a mortgage and consumer lending programme aimed at individual customers.

Still, Vu said, "the improvement of services, diversification of transaction methods and customer policies are indispensable to help local banks attract customers."


Foreign banks, meanwhile, have accelerated their campaigns to exploit and hold onto the retail banking market, said Nghia.

HSBC recently made its personal mortgage and credit services more attractive.

Its borrower base is drawn from employees of private and State-owned enterprises as well as staff of joint ventures and foreign enterprises. HSBC has also lowered the minimum monthly salary required of borrowers from VND8-10 million to only VND3 million. These flexible policies have produced impressive results: the bank’s retail customer numbers increased by nearly 580 per cent and its total loans have risen 482 per cent since the beginning of this year.

The appeal of the Visa debit card on the domestic market, a convenience to customers in shopping and in travelling overseas, has spurred ANZ Bank to set up a payment card joint venture with Sacombank, in which ANZ has bought a 10-per-cent stake.

"For domestic banks, especially those operating on a small scale, to survive in the long run as Viet Nam opens its banking market to foreigner competitors, they must make preparations to enhance their strengths now," said the director of the State Bank’s Banks Department, Kieu Huu Dung.

Source: VNS