Why change is essential: Market forces driving transformation
- Evolving customer expectations
Vietnamese consumers, particularly younger generations such as Gen Z and Millennials, expect seamless, innovative, and technology-driven banking experiences. Influenced by agile fintech disruptors, they demand personalized, fast, and convenient digital services that traditional banks must now strive to provide or risk losing relevance.
- Digital innovation as a driver of customer retention
Banks investing in digital transformation are seeing measurable improvements in customer satisfaction and are better positioned to compete. Digital innovation is no longer a differentiator but a necessity to retain customers and grow market share in an increasingly competitive landscape.
- Innovation gap and legacy challenges
Despite progress in modernizing digital channels, many banks still lag behind fintechs in delivering truly innovative products and services. Legacy core banking systems create operational bottlenecks that slow innovation, frustrate business and IT teams, and limit agility — all critical factors in today’s fast-moving market.
- Shifting client preferences
Younger generations are increasingly turning to fintechs and digital-first banks, signalling a fundamental shift in client-bank relationships. Traditional banks must adapt quickly to meet these changing preferences or risk losing a significant share of future customers.
- The need for a business-technology partnership
Digital transformation is not just a technology project, it requires close collaboration between business and technology teams. Only through aligned governance, leadership, and shared vision can banks successfully redefine their future and deliver innovative, customer-centric solutions.
Why now? The perfect moment for digital banking innovation in Vietnam
Vietnam’s market conditions create a unique window of opportunity for financial services transformation:
- Strong market demand: With a young population and over 80% smartphone penetration, digital banking and payment services are growing rapidly.
- Supportive regulatory environment: Policies from the State Bank of Vietnam and the Ministry of Finance encourage digital banking innovation, financial inclusion, and secure technology adoption.
- Limited foreign competition: Local digital banks currently enjoy a first-mover advantage before international entrants accelerate competition.
However, this is rapidly evolving. Regional super apps such as ShopeePay (Sea Group) and Grab Financial Group are increasingly integrating financial services into their ecosystems, posing a rising competitive threat with their embedded user bases and payment platforms.
- Proven business models: The success of Cake by VPBank, Vietnam’s first profitable digital-only bank in 2024, demonstrates the viability of digital banking models.
- Untapped market segments: Underserved SMEs, rural customers, and low credit card penetration present significant growth opportunities for digitally enabled financial services.
- Improving financial inclusion:
Vietnam’s National Financial Inclusion Strategy (2020–2025) is making headway. MoMo, ZaloPay, and VNPay are among the digital wallets expanding their services to rural areas, thereby helping to bridge the financial access divide.
- Digital trust and cybersecurity: As digital adoption increases, consumers want secure systems. Vietnamese customers are becoming more conscious of fraud and privacy threats; therefore, banks must invest in secure eKYC, anti-fraud technologies, and data governance to maintain trust.
