The impact of fintech industry on traditional banking in viet nam

FinTech (financial technology) refers to software, mobile application, and other technologies which enhance and automate traditional forms of finance for businesses and consumers. It is driven by the increasing adoption of digital channels and the need for more efficient and costeffective financial services. The fintech industry has been a rapidly growing field that is disrupting traditional financial services. In this qualitative study, the research group examined how Fintech has affected Traditional Banking in Vietnam. Although the Fintech industry has brought positive impacts on financial products and services as well as the Vietnamese financial market, there are also challenges facing the Fintech industry in general and the Vietnamese traditional banking in specific. As the industry continues to grow, it will be important for companies and regulators to work together to address these challenges and ensure that the benefits of fintech are realized for all. This study can serve as the foundation for business decisionmakers to make wellinformed choices regarding technology platforms in the international financial market.

FOREIGN TRADE UNIVERSITY ECONOMIC FACULTY

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INTERNATIONAL FINANCE REPORT

THE IMPACT OF FINTECH INDUSTRY

ON TRADITIONAL BANKING IN VIET NAM

Lecturer: Assoc Prof Dr Mai Thu Hien Group:

Ha Noi, June 2023

TABLE OF CONTENT

ABSTRACT 2

INTRODUCTION 3

I An overview of the Fintech industry in Vietnam, 5

1 An overview of the Fintech industry 5

2 An overview of the fintech industry in Vietnam 6

II Traditional Banking 8

1 An Overview of traditional banking in Vietnam: 8

1.1 What is traditional banking? 8

1.2 The traditional banking sector in Vietnam: 9

2 Key players in the traditional banking sectors in Vietnam: 10

2.1 National key players: 10

2.2 International key players: 11

3 Benefits and disadvantages of traditional banking in Vietnam: 11

3.1 Benefits: 11

3.2 Disadvantages: 12

III Impact of Fintech on Traditional Banking in Vietnam 12

1 Positive 12

1.1 Improved Customer Experience 12

1.2 Increased Efficiency and Productivity 13

1.3 Access to New Markets 15

1.4 Collaboration and Partnership Opportunities 15

1.5 Conclusion 16

2 Challenges 17

2.1 New competitive landscape for traditional banks 17

2.1.1 Solutions for customers with poor credit scores 17

2.1.2 Peer-to-peer (P2P) lending platform 18

2.1.3 Personal wealth management tools 19

2.1.4 Implications 21

2.2 Traditional banks’ partnerships with fintech firms expose banks to a unforeseen set of risks 21

2.2.1 Strategic risks 21

2.2.2 Operational risks 22

2.2.3 Cyber risks 23

2.2.4 Compliance risk 24

CONCLUSION 25

REFERENCE 27

FinTech (financial technology) refers to software, mobile application, and other technologieswhich enhance and automate traditional forms of finance for businesses and consumers It isdriven by the increasing adoption of digital channels and the need for more efficient and cost-effective financial services The fintech industry has been a rapidly growing field that isdisrupting traditional financial services In this qualitative study, the research group examinedhow Fintech has affected Traditional Banking in Vietnam Although the Fintech industry hasbrought positive impacts on financial products and services as well as the Vietnamese financialmarket, there are also challenges facing the Fintech industry in general and the Vietnamesetraditional banking in specific As the industry continues to grow, it will be important forcompanies and regulators to work together to address these challenges and ensure that thebenefits of fintech are realized for all This study can serve as the foundation for businessdecision-makers to make well-informed choices regarding technology platforms in theinternational financial market

This paper aims at reviewing the Fintech industry and key players in traditional banking sectors

of Vietnam The study will also provide the different cases with realistic statistics to illustrate theimpacts of Fintech on the market and provide insights into how it affects traditional banking inVietnam For this purpose, the data of the Fintech market was collected from several sources andcritically analyzed from 2011 to 2022 By dissecting each year, this paper can observe that.Through this paper, we can also gain a broader understanding of the opportunities and challenges

of Fintech’s effects on traditional banking Thus, we made some recommendations toconventional banks and businesses with the aim to boost the quantity and value of transactions,and to further secure the financial technology’s position as one of the leading trends in themarket

1 Necessity of the report

Firstly, the necessity of studying the impact of the Fintech industry on traditional banking

in Vietnam arises from the increasing prominence of digital technologies in the financiallandscape In recent years, especially after the long periods of lockdown and social distancingcaused by Covid-19 pandemic, the financial technology (Fintech) industry has experiencedremarkable growth and has revolutionized the way financial services are delivered and consumedworldwide Fintech startups, armed with innovative digital solutions, are rapidly gaining traction

in the market, challenging the traditional banking sector's established norms As a result, it iscrucial to examine the consequences of this disruption and understand how it affects thefunctioning, competitiveness, and sustainability of traditional banks in Vietnam

Secondly, this topic holds scientific importance as it bridges the gap between technologyand finance, two interconnected fields that drive economic progress Investigating the impact ofFintech on traditional banking in Vietnam enables researchers to explore the dynamics of arapidly evolving financial ecosystem and understand the underlying mechanisms that shape therelationship between technology adoption, customer behavior, and financial services Thisscientific exploration not only contributes to the existing body of knowledge but also providesvaluable insights for policymakers, regulators, and industry stakeholders to make informeddecisions and design effective strategies to navigate the evolving landscape

Thirdly, Vietnam's unique socio-economic context makes it an interesting case study forexamining the impact of Fintech on traditional banking With a young and tech-savvypopulation, rising smartphone penetration, and a growing middle class, Vietnam represents afertile ground for Fintech innovation Exploring how traditional banks in Vietnam respond to theemergence of Fintech and adapt to changing customer preferences can shed light on potentialstrategies and best practices for banks in other developing economies facing similar challenges

In conclusion, the impact of the Fintech industry on traditional banking in Vietnam is atopic of utmost necessity and scientific relevance Understanding the implications of thisdisruption not only helps traditional banks survive and thrive in the digital age but also paves theway for an inclusive and technologically advanced financial sector that fosters economic growth

and financial well-being By delving into this subject, we can contribute to the ongoing discourse

on the transformative power of technology in shaping the future of financial services

(3) Discover the challenges faced by traditional banks due to the activities of the fintechindustry and potential risks during the collaboration between the financial serviceproviders

3 Scope

The research focuses specifically on the impact of the Fintech industry on traditionalbanking in Vietnam It examines the Vietnamese financial ecosystem, including bothFintech startups and traditional banks operating within the country Regarding the timeframe, the research primarily considers the recent developments and trends in the Fintechindustry and its impact on traditional banking in Vietnam It may refer to historicalcontext when necessary but primarily focuses on the present and near future

4 Methodology

(1) Data collection

Secondary data collection: This involves gathering existing data from sources such asacademic journals, industry reports, government publications, and regulatoryframeworks Secondary data can provide a comprehensive understanding of the Fintechlandscape, market trends, regulatory environment, and financial inclusion efforts inVietnam

(2) Qualitative analysis

This involves analyzing qualitative information from secondary sources It can includetechniques such as thematic analysis to identify patterns, recurring themes, and keyinsights related to the impact of Fintech on traditional banking

(3) Case studies

Case studies are used to gain deeper insights into specific Fintech companies and theirimpact on traditional banking in Vietnam These case studies can involve analyzing thebusiness models, strategies, and customer value propositions of selected Fintech startupsand how they have disrupted or collaborated with traditional banks

I An overview of the Fintech industry in Vietnam,

1 An overview of the Fintech industry

A wide range of definitions of the term "fintech" have appeared in academic practice aswell as business journals "Financial technology" or "FinTech" refers to technology-enabledfinancial solutions FinTech describes a business that aims to provide financial services bymaking use of software and modern technology (Fintech Weekly, 2016) The term FinTech is notconfined to specific sectors (e.g., financing) or business models (e.g., peer-to-peer (P2P)lending), but instead covers the entire scope of services and products traditionally provided bythe financial services industry (Arner, DW; Barberis, JN; Buckley, RP) Fintech refers to theintegration of technology into offerings by financial services companies to improve their use anddelivery to consumers (Investopedia 2016)

Regardless of the variances, fintech is generally used to describe a variety of innovativebusiness models and emerging technologies that have the potential to transform the financialservices industry Fintech is profoundly altering finance, impacting everything from capitalraising to investment management In each of these domains, fintech innovation has reducedbarriers to entry, widened access to financial services, and upended conventional beliefs abouthow finance functions

Digitization can reduce friction in each step along the financial service lifecycle, fromopening an account to conducting customer due diligence, authenticating transactions, andautomating other, product-specific processes, such as assessing creditworthiness Fintech istherefore characterized by low marginal costs per account or transaction and scale efficiencies.Fintech can also enhance transparency and reduce information asymmetries since digitalprocesses generate a data trail, which can be used to better understand consumers, improveproducts, manage risks, and promote regulatory compliance

Fintech covers a wide range of use cases across business (B2B), consumer (B2C), and peer-to-peer (P2P) markets

by users include Chime, Varo, and Revolut

Investing

In recent years, the number of investing and saving apps has exploded due to fintech.While these applications take different approaches, they all introduce users to the markets bycombining savings with automatic small-dollar investing techniques, such as immediate

round-up contributions on purchases The barriers to investing are being broken down by businesses like Robinhood, Sofi, Wealthfront, and Acorns.

Payment

One of the most popular services provided by fintech is payment services Consumers cansend money to friends and family through digital payments, use contactless payment methods toshop, and pay their bills Some examples include Venmo, Cash App, Zelle, PayPal, and Stripe

Lending

Fintechs in lending simplify the loan application procedure for both lenders andborrowers In addition to offering customers early payday loans or flexible payment plans, theymay grant lenders access to information about potential borrowers to make lending decisions.Within the fintech lending space, some companies worth noting include Plaid, Affirm, andKlarna

Cryptocurrency

Cryptocurrency and blockchain intersect with fintech in a variety of ways For starters,several cryptocurrency trading platforms have appeared in recent years that enable users to tradevarious cryptocurrencies and benefit from decentralized exchanges Additionally, a variety ofcryptocurrency wallets have appeared to protect people's digital currency Additionally, severalfintech businesses use blockchain technology for secure digital identity management, moneytransfers, and payment processing

2 An overview of the fintech industry in Vietnam

In recent years, Asia has emerged as one of the world's top fintech markets, recording thelargest fintech revenue worldwide Vietnam is one of the developing fintech markets in thisregion Additionally, the Vietnam market has a young and rapidly expanding population withmore than 100 million tech-savvy consumers, which accelerates the rapid transformation ofbanking and financial systems Hence, Vietnam is regarded as one of Southeast Asia's mostcompetitive FinTech markets

In 2017, fintech began a significant expansion in Vietnam The State Bank of Vietnam(SBV) proposed that the government introduce a sandbox, which would serve as a test-runlegislative framework for fintech in the nation In March of that year, a Steering Committee onFinancial Technology was established by the State Bank of Vietnam to develop a legalframework for the growth of the fintech ecosystem and open doors for regional fintechbusinesses The authorities then discussed proposals for crafting a fresh decree through the start

of 2020 The approval of that agreement a year later signaled a dedication to fintech in Vietnam

For technology firms that enable digital banking, digital payments, blockchains, andencryption, the rapidly expanding FinTech business in Vietnam offers significant marketopportunity Vietnam is currently home to more than 130 FinTech startups that cater tonumerous clients and cover a broad range of services such as digital payments, alternativefinance, wealth management, and blockchain, among others

Vietnamese fintech firms provide services for a variety of industries, but digitalpayments, peer-to-peer (P2P) lending, cryptocurrencies and blockchain, investment technology,and point of sale make up the major sub-sectors, accounting for 76% of the overall market share.The COVID-19 epidemic also caused a change in the purchasing patterns of Vietnameseconsumers With lockdowns and social isolation, the market is growing both numerically andqualitatively, spurring demand for digital transactions and e-commerce.

E-wallet and Digital Payment

In recent years, investors in Vietnam have focused their money and attention mostly onthe fintech industry of digital payments The e-wallet market is still expanding at a phenomenalrate, and this has had a significant impact on the development of digital payments in Vietnam.Due to the COVID-19 pandemic, using digital payment systems, especially e-wallets, hasbecome the "new normal" for many highly connected customers According to a recent Visasurvey, 85% of respondents use at least one e-wallet or payment app, and 71% of respondentsuse these applications at least once each week

The Vietnamese market has become fairly crowded in recent years with more than 40 wallet companies The top 3 e-wallets, Momo, Moca, and Zalo Pay, hold 90% of the marketshare, leaving little to no room for other suppliers MoMo is consistently ranked as the leadingmobile wallet brand among all available payment methods, holding more than 50% of the market

e-as of 2020

MoMo is an electronic wallet that enables users to perform peer-to-peer (P2P) transfersand make payments online, owned by the M_Service company As of October 2018, MoMo hadapproximately 10 million users as of October 2018 across iOS and Android Goldman Sachs,Standard Chartered, and the US private equity firm Warburg Pincus all have investments inMoMo

GrabPay by Moca is Grab's e-wallet This wallet was created in collaboration betweenGrab and Moca using their e-payment service platform Moca has a network of 11 local banks aspartners and was granted a license by the State Bank of Vietnam (SBV) for payment services in

2016 Grab Vietnam purchased shares from Access Venture SPV, a Hong Kong investment fund,

in 2018, and as a result, became a shareholder in Moca

Zalo Pay, owned by ZION company, is an e-wallet that offers payment services and isconnected with Zalo, the most widely used messaging app in Vietnam Users can attach theircredit cards to make P2P payments, NFC payments, and QR code payments, as well as onlinepurchases of goods and services

P2P lending

Peer-to-peer lending (P2P) is a business strategy that links lenders with borrowers by use

of Internet platforms Global markets are noticing a strong rise in this tendency This type offinancing has also been observed in Vietnam for a while

According to Vietnamese P2P lending specialist Mr Nguyen Tri Hieu, there are fourmain approaches The company first acts as a go-between, using technology to connect potentialinvestors with parties looking for money Second, businesses assess people in need of cash and

pair them up with lenders Third, businesses evaluate the conditions and procedures for repayingdebt Finally, businesses that mobilize capital and offer funds while also acting as a bank andmaking connections With more than 20 businesses, P2P lending is the second-largest Fintechmarket in Vietnam.

Time is a platform for peer-to-peer lending and a consumer finance startup This businessclaims to have given 2.8 million borrowers loans totaling roughly 1.7 billion USD, and it hasinked cooperation agreements with financial institutions like Vietinbank and Dong A Bank Italso claims to have more than 30,000 lenders on its platform

Vay Muon - Vay Muon Joint Stock Company was first launched at the end of 2017.Currently, "VayMuon.vn" is one of the top platforms for peer-to-peer lending in Vietnam,linking over 2 million users with close to 400,000 investors while expanding by more than 20%each month

As one of the top five blockchain-producing nations, Vietnam is home to roughly tencutting-edge start-ups with a combined valuation of more than USD 100 million According to adecree made by the Ministry of Home Affairs, the Vietnam Blockchain Union was founded Itwas created to advance Vietnam's digital economy and elevate the country as a leading contender

in the field of emerging technologies It links global blockchain organizations and communitiesand allows users to exchange knowledge and resources for studying, experimenting with,implementing, and trading blockchain technology Vietnam can compete in the global marketand develop into a technology hub with a rise in blockchain technology applications and a quick,widespread digital transformation

II Traditional Banking

1 An Overview of traditional banking in Vietnam:

1.1 What is traditional banking?

Banking has, for a very long time, been an old-fashioned industry This is logical, seeing asbanks have been around for hundreds of years at this point Traditional banking refers to bankswith a physical presence with a domestic banking license A traditional bank typically hasPhysical presence; Regional headquarters in each country where they are active; Own-brandedATMs; A large number of employees; Face-to-face or one-to-one customer service andDedicated account managers Traditional banking includes management strategy, bankingoperations, information technology (IT) center, marketing, call center, back office, accounting,

and legal services management, business director, and other support services The centraldepartment sets out the workflow, designs and brings products to market, and manages thebanking network's operations The banking network includes branches, agents, affiliatedtransaction counters, automatic teller machines (ATMs), and points of sale (POS - Point of Sale).

1.2 The traditional banking sector in Vietnam:

The traditional banking sector in Vietnam has undergone significant changes in recentyears Historically, the banking sector was dominated by state-owned banks, Vietnam's bankssuffer from low public confidence, regulatory and managerial weakness, high levels of non-performing loans (NPL), non-compliance with the Basel capital standards, and the absence ofinternational auditing The foreign investment limit into the national banks of Vietnam iscurrently set at 30 percent But since the introduction of economic reforms in the 1980s, Vietnamhas made efforts to liberalize its banking industry and introduce modern financial practices.Since 1992 Vietnam's banking system has consisted of a combination of state-owned, joint-stock,joint-venture, and foreign banks, but the state-owned commercial banks predominate, and theysuffer from high levels of NPL, most of them to state-owned enterprises Consequently, inSeptember 2005 Vietnam decided to equitize all five state-owned banks—a change fromprevious plans to equitize only two of them In addition, Vietnam plans to boost the transparency

of its financial system by establishing a credit-rating agency and performance standards for stock banks The four major top state-owned banks include the Bank for Investment andDevelopment of Vietnam (BIDV), Vietnam Joint Stock Commercial Bank for Industry andTrade (VietinBank), Vietnam Bank for Agriculture and Rural Development (Agribank), andJoint Stock Commercial Bank For Foreign Trade Of Vietnam (Vietcombank)

joint-In the past few years, the government has encouraged the entry of foreign banks into theVietnamese market Large foreign banks are balancing their strong interest in servingmultinationals in Vietnam and their frustration with continuing restrictions on their activities.Some of the largest foreign banks operating in Vietnam are HSBC, Standard Chartered, ANZ,and Citigroup The sector has also seen significant growth in recent years in terms of the number

of branches and ATMs Although Vietnam is a cash-based society, there were 12,811 automatedteller machines (ATMs) as of January 2012, and 40 million ATM Cards in circulation Thisexpansion of services, combined with growing consumer demand, has led to an increase in

profits for many banks The foreign investment limit into the national banks of Vietnam iscurrently set at 30 percent The government is working on a law that would include this FDI cap.However, the sector still faces challenges such as high levels of non-performing loans,lack of transparency, and weak risk management practices The government has implementedmeasures to address these issues, such as tightening regulations and encouraging consolidationthrough mergers and acquisitions.

Overall, the traditional banking sector in Vietnam is growing and evolving, with a mix ofnational and international banks driving competition and innovation

2 Key players in the traditional banking sectors in Vietnam:

Vietnam has a relatively young banking system compared to many of its Asian neighbors,which officially started with the establishment of the State Bank of Vietnam after the VietnamWar in 1976 However, the banking industry in the country, like the development of theVietnamese economy, has been among the fastest-growing worldwide

2.1 National key players:

JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM (VIETCOMBANK): Joint Stock Commercial Bank for Foreign Trade of Vietnam

(Vietcombank) was established on April 1, 1963 It was formerly known as the Foreign

Exchange Department (under the State Bank of Vietnam) This is the first unit to be selected bythe Government to pilot equitization in the banking sector On June 2, 2008, Vietcombankofficially operated as a joint stock commercial bank On June 30, 2009, Vietcombank shares(VCB) were officially listed on the stock exchange After more than half a century of operation,Vietcombank is now one of the largest commercial banks in Vietnam It currently has more than

560 domestic and foreign branches, transaction offices, and representative offices In 2020,Vietcombank business activities were still effective despite the difficulties caused by the Covid-

19 pandemic Total assets of this bank exceeded VND 1.3 million billion, an increase of 8.5%compared to 2019 while its consolidated profit reached over VND 23 trillion (about 1 billionUSD), equivalent to 2019

VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE (VIETINBANK): VietinBank officially came into operation on March 26, 1988, after being

separated from the State Bank of Vietnam Currently, VietinBank has 100,000 branches andtransaction offices As of December 31, 2018, its charter capital was 37,234,045,560,000 VND.VietinBank business results in 2020 both met and exceeded the planned targets Non-interestincome increased by 35.2% compared to 2019 while profit from capital business increased by70% compared to 2019, and the NPL ratio was less than 1%

THE JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM (BIDV): Joint Stock Commercial Bank for Investment and

Development of Vietnam (BIDV) was established on April 26, 1957, under the name Bank for

Construction of Vietnam Through many changes, on May 1, 2012, BIDV was successfullyequitized and officially transformed into Joint Stock Commercial Bank for Investment and

Development of Vietnam (BIDV) As of December 31, 2020, BIDV's total assets had reachedVND 1.49 million billion, an average growth of 10.4% per year during the period 2016-2020 In

2020, the profit before tax of this bank’s commercial segment reached VND 8,515 billion whileits consolidated pre-tax profit was VND 9,017 billion

VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (AGRIBANK): Agribank was established on March 26, 1988 At first, the bank was named

Vietnam Agricultural Development Bank At the end of 1990, the bank was renamed toAgricultural Bank of Vietnam In 1996, it was renamed to Vietnam Bank For Agriculture andRural Development In 2020, Agribank's total assets reached over VND 1.57 million billion.Agribank credit growth rate increased by 7.8% while net interest income reached VND 43,660billion, the highest in the banking system

2.2 International key players:

Shinhan Bank Vietnam Limited (“Shinhan Bank”) is a subsidiary of Shinhan Bank Korea, anaffiliate of Shinhan Financial Group (SFG)

In Vietnam, Shinhan Bank’s history can be traced back to 1993 when the bank first opened itsrepresentative office in Ho Chi Minh City Over the history of nearly 30 years, Shinhan BankVietnam has built a broad network of up to 46 branches/ transactions offices from the North,Central, and the South of Vietnam Currently, Shinhan Bank Vietnam has been offering adiversified portfolio of tailored corporate and individual banking products and solutions

Shinhan Bank Vietnam was awarded the “Best Retail Foreign Bank in Vietnam 2020”, the “BestInternational Bank in Vietnam 2021 and 2022” by International Business Magazine; the “BestForeign Digital Bank in Vietnam 2021 and 2002” by World Economic Magazine and the “BestCompany To Work For In Asia” for four consecutive years (2019-2022) by HR Asia Publication The Hongkong and Shanghai Banking Corporation Limited (HSBC) aOn January 1, 2009, HSBC became the first foreign bank to establish a subsidiary in Vietnam HSBC Bank

(Vietnam) Limited (HSBC Vietnam) is a 100% owned subsidiary of Hong Kong and Shanghai Banks HSBC Vietnam is also the first 100% foreign-owned bank and at the same time put branches and transaction offices into operation in Vietnam Currently, HSBC is one of the largest foreign banks in Vietnam

3 Benefits and disadvantages of traditional banking in Vietnam:

Traditional banking overall has certain benefits and certain disadvantages

3.1 Benefits:

In-person Visits: Traditional banks are the go-to guy for people who are skeptical abouttransactions over the Internet Traditional banking offers in-person visits during their designatedoffice hours You can go there for diverse financial transactions, including cash deposits andwithdrawals, ATM services, international transfers, account opening, etc You also have access

to a safe deposit box where you can store your most valuable possessions This offers the

opportunity for face-to-face communication and human interaction which reduces the risk offraud and identity theft as well as provides an overall better experience for customers

Financial Security: With traditional banking, you're always sure that your money is safeand insured, regardless of any casualty that the bank may suffer Also, there's little or no fear ofhackers, impersonators, and other security threats when it comes to your account information ormoney So long as you take the necessary precautions

Access to Loans: Traditional banks have years of experience lending money and havestrict regulations on interest rates and repayment durations to ensure you get a fair deal and thatyou are not taken advantage of Unlike the recent happenings with loan sharks who parade asdigital loan platforms to exploit people with high-interest loans with ridiculous payment options

3.2 Disadvantages:

Cost of transaction: Traditional banks charge a fee for a variety of financial services,from ATM maintenance down to checking your balance; there’s a fee for virtually everythingand these charges can add up over time if you don't find your account You also have to pay a fee

to transfer money to other banks For some accounts, you must have a certain minimum balance

at all times

Complexity in handling customer complaints: Although traditional banks offer face customer service, they sometimes take a longer time to resolve customer complaints thaninline banks This procedure also requires a series of paperwork and bureaucracy to processwhich can be time-wasting

face-to-Availability: Traditional banks have designated office hours and days at which theyoperate This means that you can only visit the banks during this period Hence, if you have acomplaint outside these hours or days, you can only contact their online representatives or waittill the next office day/hour, depending on the services you need Nowadays, modern customerswant to receive banking services on their mobile devices and be able to perform services fromhome, from work, or on the go Therefore, banking Traditional banking needs to change,allowing customers to use and receive financial services from anywhere and at any time

New-generation digital banks have been creating potential attraction, developmentopportunities, and a booming financial market However, this is a fierce battle, the pressure to

"end" traditional banks

III Impact of Fintech on Traditional Banking in Vietnam

1 Positive

While fintech has disrupted traditional banking in Vietnam, it has also brought about positiveimpacts and opportunities for the industry There are some of the positive impacts of fintech ontraditional banking in Vietnam:

1.1 Improved Customer Experience

Fintech has revolutionized the banking experience for customers in Vietnam by making itmore accessible and convenient With the implementation of digital technologies, customers can

now access banking services, perform transactions, and interact with their banks from anywhereand at any time The enhanced security procedures provided by Fintech have also ensured thatclients are protected from cyber attacks, data breaches, and fraud.

Furthermore, Fintech has reduced the need for physical branches and humanintermediaries, thereby lowering operational costs and passing on savings to customers Theentry of Fintech firms in the market has increased competition, compelling traditional banks tooffer new products and services to improve the customer experience

Fintech firms are known for their innovative use of new technologies to enhancecustomer experience, and traditional banks can learn from these innovations and adopt them toimprove their services Digitizing their services is one way that traditional banks can improvecustomer experience and meet the demands of modern customers Additionally, Fintech firmsuse data analytics to make informed decisions about customers' needs and preferences, andtraditional banks can also adopt these technologies to better manage their data and offerpersonalized services to customers A survey by Ernst & Young found that 69% of Vietnameseconsumers are willing to use fintech services The same survey found that 94% of Vietnameseconsumers are comfortable with using digital banking services The State Bank of Vietnam hasset a target of increasing the number of people with bank accounts to 70% by 2020, which isexpected to be achieved with the help of fintech solutions Fintech solutions in Vietnam havehelped increase financial inclusion, with the number of unbanked adults decreasing from 70% in

2011 to 59% in 2017 These statistics suggest that fintech has the potential to have a significantpositive impact on traditional banking in Vietnam by increasing financial inclusion, improvingefficiency and productivity, and opening up new markets It can be argued that the perception ofusefulness plays a critical role in positively influencing a customer's intention to use fintechservices (Ryu, 2018) This effect is also supported by empirical studies conducted by Kim et al.(2016), Lee (2017), Wonglimpiyarat (2017), Tran, Han, and Yun (2018) Based on thisfoundation, the authors propose the following research hypothesis: H1: Perception of usefulness(PU) has a positive impact on the intention to use fintech (INT) services The authors suggestthat the perception of usefulness is a key factor in determining customers' intention to use fintechservices, and empirical studies have consistently supported this relationship The proposedresearch hypothesis reflects this understanding and provides a framework for further research inthis area

In summary, Fintech has transformed the banking experience for customers in Vietnam,making it easier, more accessible, and more secure Traditional banks can adopt Fintechinnovations to improve their services and meet the changing demands of customers

1.2 Increased Efficiency and Productivity

Fintech has significantly enhanced the efficiency and productivity of traditional banks inVietnam by streamlining banking transactions and reducing paperwork The implementation ofdigital technologies has made banking transactions faster and more efficient, allowing customers

to complete transactions online or through mobile devices 24/7 without the need to visit a