Transformation needed for banks' sustainable growth
Banks need to focus on transformation to boost their internal strength and achieve sustainable growth as the banking sector enters new stages of development, the “Banking Forum 2019” held on May 8 in Hanoi heard.
Ms. Nguyen Thi Hong, SBV Deputy Governor speaing at the event (Photo source from sbv.gov.vn)
The forum attracted a host of banking leaders, representatives from the State Bank of Vietnam (SBV) and government agencies, banking analysts, as well as delegates from international financial institutions looking to invest in Vietnam’s banking sector.
Those in attendance heard an overview of the SBV’s monetary policies in 2018 and directions for the future while taking into account external factors affecting the macro-economy. A major part of the forum was dedicated to discussing solutions to help the banking system improve its internal strength for future growth. Key topics included bank restructuring, non-performing loans, technology investments, human resources development, and green credit.
The restructuring of the banking sector saw positive results in 2018, according to analysts, as evident in a gradual reduction of bad debts. Some small banks began reporting profits again, while several large banks achieved their profit targets. Faced with fluctuations in the global market in 2019, the SBV is adjusting its monetary policies in order to support the development of the banking sector.
Many analysts shared their expectations that domestic banks would improve their capital mobilization, technologies, and human resources to keep pace with their regional peers. They also agreed that banks will need to prioritize bolstering their internal capacity to overcome challenges on their growth journey.
Sharing experience gained from advising banks on both strategies and operations, Mr. Vo Tan Long, Technology Consulting Partner at PwC Consulting Vietnam, said that local banks should focus on two key tasks: improving management capabilities and raising operational efficiency. These can be achieved by means of transformation, including digital transformation and workforce transformation.
He also emphasized that digital transformation is not just about technology, as it can drive a fundamental change in existing processes and procedures in banks. Banks can expect positive changes, such as higher productivity and accuracy, better management of operational and credit risks, and lower cost-to-income ratios, etc. Banks can also improve their customer service quality, and create new products and services with digital transformation.
Digital transformation is tightly linked with workforce transformation, he went on. The latter is a major concern not only for local banks but also their global peers. In fact, PwC’s latest global CEO Survey revealed that nearly 80 per cent of CEOs in the banking and capital markets sector are worried about a lack of skills, particularly those needed to innovate effectively and provide a winning customer experience.
PwC’s approach is to put people at the heart of banks’ transformations. That means that banks should train or recruit talent to employ technology in a way that caters to customers’ needs and facilitates human interaction between banks and their customers.
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