VIETNAM NATIONAL UNIVERSITY

UNIVERSITY OF ECONOMICS AND BUSINESS

PRESENTATION REPORT

TOPIC: FUTURE OF BANKING 5.0 IN THE WORLD

AND VIETNAM

Lecturer: Mrs. Phung Thi Thu Huong

Mr. Pham The Thanh
Student: Vuong Tien Dat
Vu Thu Huong
Nong Thi Huong Ly
Ha Bao Tram
Vu Thi Phuong Anh
Nguyen Minh Duy
Nguyen Hoang Tung
Class: QH2019E TCNH CLC4
HA NOI, 2021
1. Scenarios
The complicated developments of the Covid-19 epidemic have negatively
impacted the globalization process of the world, supply chains were broken, goods
could not be circulated, profoundly affecting the global economy and the banking
industry is no exception.

Against the background of an economy with low growth, epidemics and growing
nationalism in some countries, The examination of what could happen to banking
5.0, is fascinating,referring to the classic four Ps of the marketing mix: product,
price,promotion or advertisement, and place or location.

 From the product point of view, dematerialization is prevailing. This

trend pushes the services toward a sharing economy, the sharing of material
products, and consumptions. Outsourcing is the traditional mode of
sharing economy for organizations. The expectation is that in a joint
environment with complex ecosystems outsourcing will also grow for
banking.

 From the price perspective, the trend will include in the economic
balance of a product or service factors not connected with the price but
with the general’s financial gains.

  It is interesting to note the diffusion in the banking of some multimedia

promotions to the customers.

  The place and the help in selling and delivery of banking will expand
through online and mobile channels with a push to an omnniaccess
approach
2. Proposition of value

New cryptocurrencies from private organizations such as Facebook threaten

the current monetary power of the central banks. The central banks could
counteract launching Central Bank Digital Currencies (CBDCs).One of the
most popular decentralized currencies is Stable-coin tied to the US dollar. For
example. Tether is expanding. It is backed by the US dollar. The support of
governments to the issue of digital currencies will be fundamental. It means
that most cryptocurrencies, including bitcoin and Ethereum, might lose value
in the future. They might be replaced by digital curren-cies backed by central
banks or Stablecoin-like currencies supported by real assets, including US dollars,
euros, yuan, gold, and other investable
asset types.

Benefits of using CBDCs

  CBDCs could consider being licensed for worldwide circulation. With
the increased use of cryptocurrencies by the people and the decrease in
cash usage, it can help the government easily control inflation.

 A CBDC built with an interest-bearing structure would act as

competitor to deposit accounts, as they offer low-interest rates. The
CBDC rate would act as a floor for how low the commercial banks can
set their deposit rates. The technical base of digital currencies is the
blockchain solution.

There are several reasons to consider blockchain solutions and deep learning
together :

• It appears that there is the emergence of a new class of global network computing
systems.

• Blockchain solutions and deep learning are both necessary to ease the
development of the other solution. This solution includes using deep learning
algorithms for setting fees and detecting fraudulent activity. Blockchain peer-to-
peer nodes might supply deep learning services as they already supply transaction
hosting and confirmation, news hosting, and banking (payment, credit flow-
through) services.

Challenges of using CBDCs

 Suppose central banks could run a techno-ledger using cryptocurrencies

that they issue digitally. In that case, it becomes unclear the role of
banks, SWIFT, MasterCard, Visa, or any of the systems currently in
use. Those systems become redundant, and banks would change role.

In a digital currency or cryptocurrency world, financial institutions’ proper role is

to store and exchange value with trust. That is why they are regulated the way they
are and why they exist the way they do.

3. Proximity
Some financial institutions are trying to first change the customers’ attitude
about the customer proximity centers: from the “welfare” approach (the
center is necessary to solve problems, and at any cost) to cooperating,
proactively and more demanding from the center.

Some financial institutions are already moving in this direction due to the exciting
revenue and cost savings that it brings. The tools that can help are self-diagnosis
technologies, automatic identification of failure, the connection with monitoring
and control systems, and databases of statistical information of the non-quality
made available to the customers. These new tools focus less on accessing a
customer proximity center and more on perfecting the system and preventing
malfunctions.

Thanks to this self-help activity, financial institutions can save up to 40

percent on some support/maintenance contracts costs. Financial institutions
agree: the higher the customer’s self-service ability, the more financial
institutions can expand their radius of action. All this should be a target for the
banking 5.0 customer proximity centers. Self-help makes it more challenging to
measure the quality of the service offered to the customers. It is interesting to
deepen the financial goals associated with a policy of this type. It is interesting to
explore the concept of complex support concerning simple advice. It is moving
from servicing services to the provision of a service. There is a growing need for
financial institutions to perfect the performance of the system. To do this, the
support service must move toward constant monitoring and remote control. These
actions allow the tuning of the system and the prevention of defects and not only of
the interventions after the onset of a problem.

The CPC should look increasingly to improve the efficiency of the customers’ use
of banking services. All this implies that it is necessary:
• Change processes.
• Supply suggestions for the optimization of the services,
• Assure the customers with the continuity in their use of the services
without harm.
• Change completely the characteristics of the CPC to be much more
proactive and “outbound.”

4. Partition
1. AI, robots, and sustain- ability has been mostly limited to retail banking.
Wholesale banking is essential. In the future, the solutions for retail banking
will be applied to wholesale banking.

2. Mobile banking was initially introduced in retail banking. Now, there are
solutions for corporate and small- and medium-sized financial institutions. It
is now time to rethink this approach and understand how to use fintech
organization initiatives for wholesale banking services

3. Digital wholesale banking (5W and 1H):

 Why: To go digital could help set up wholesale banking players to

become more active, productive, efficient, and economical.

 Where: To cloud computing

 What: Big data analytics can help to improve the analysis of the risks.
It is helpful for capital markets, security, customer insight, channel
marketing, and new data sets for risk-based pricing and assets
checking and tracking.

 Who: Artificial intelligence (AI) and robotics.

 When: Mobile technologies can help reduce the time to decide and
especially make decisions also when the operator works remotely.

 How: Another opportunity connected with innovative solutions is

blockchain. Blockchain is a solution introduced with the virtual
currency of bitcoin. Its base is an online, distributed ledger solution.

4. Retail financial institutions currently use chatbots. They are automated

service assistants offering customers the convenience of resolving their
queries via online messaging system using devices like personal computers,
laptops, and mobile phones, limiting to necessary complex level support to
human operators and the personal visits to their branches. An example is
Nina, Swedbank’s AI chatbot.
 5. Management of customer data is a prominent area where the application of
AI is continually progressing.
6. Global banking groups with retail and corporate banking segments are
finding that they can no longer support parallel strategies for B2C and B2B
regarding the user experience. Chatbots will become common also in
commercial banking.

5. Place

COVID-19 has given a significant boost to the digitalisation of banking in the

world. Even before the pandemic, online banking was an integral part of
retail banking, but during the pandemic, customers have been moving online
in considerably larger numbers. And this radical transformation continues:
online banking is now here to stay, but customers want it to form part of a range of
services. The latest survey, which questioned 2,021 of a bank in US shows that the
number of those using online banking services for the first time during the
pandemic continues to rise year on year. However, this increasing digitalisation
is not limitless: despite growing customer demand, not everyone wants to
bank online, and even those who do would not choose it for every banking
service. The findings show how important a persuasive multi-channel
strategy, including hybrid solutions, is to satisfying the needs of different
groups of customers, particularly where complex banking transactions such
as mortgages or more complex investments are concerned.

Chart 1. First-time users of online banking for different services during the
pandemic
Proportion of all respondents reporting that they used the following services online
for the first time during the pandemic; results of the 2020 and 2021 surveys.
The pandemic has therefore accelerated the shift to online banking, advancing the
existing trend by several years. Moreover, this was not just a one-off impact but is
continuing. Many of those switching and using online services for the first time
intend to continue doing so – and in greater numbers than in the 2020 survey. 59%
of respondents now report that they plan to use both online and in-branch
services after the pandemic (8 percentage points up on the 2020 survey), while
18% say they will prefer online services (4 percentage points up). The growing
number of customers who say they will continue using online services at least
some of the time after a lengthy period of use during the pandemic suggests that
online banking is likely to become a permanent fixture in the range of services
banks offer. Overall, younger people are more open to online solutions, but
there has been a significant increase in the proportion of over-50 year-olds
who bank online. This group also shows above-average interest in hybrid
solutions, with almost two-thirds (65%) reporting that they plan to make use
of both online and in-branch services post-pandemic.

Not everyone wants online solutions

Nevertheless, the future world of banking will not be wholly digital – or at
least not for all customers. Depending on the service, between 8% and 22% of
customers still prefer to bank in-branch. And not all first-time users have
been won over: almost a quarter (23%) say they would prefer to return to in-
branch banking after the pandemic, a figure that also includes younger
people.
A majority still want branches
The split is even more marked when it comes to the importance respondents attach
to bank branches. The existence of a branch is a traditional – perhaps the most
traditional – part of the services a bank offers. For decades, observers have seen
branches as old-fashioned and falling out of favour, yet US still has a significantly
higher density of branches than many other countries . Moreover, although the
pandemic has prompted many customers to try out online banking for the
first time, a branch network remains a mainstay of the banking sector. Just
over half of all respondents (52%) say it is important to have a local branch,
with just 18% rating this as unimportant; the remaining 30% are neutral.
The distribution of responses across age groups reflects expectations, with
older people more likely to consider the availability of a local branch
important. However, as Chart 2 shows, even among those aged under 30,
more than twice as many think it is important to have a local branch
compared with those who think it is unimportant (48% and 19%
respectively).
Chart 2. Branches remain important for all age groups
Proportion of all respondents who think it is unimportant or important to
have a local bank branch.
In responses to a separate question, 55% report that they plan to visit a branch
at least as frequently as before the pandemic, with 8% saying they are likely
to do so more frequently. By contrast, just 6% plan to make less use of the
branch network than before the pandemic. The remaining 31% report that
they did not previously use branches and do not plan to do so in future. There
is no significant difference in the pattern of responses across age-groups.
Significant desire for digital signatures for bank transactions
The desire to access in-branch advice may well be one reason why branches
continue to be important. Another may, however, be that digital alternatives are
still patchy. While major progress has been made in customers’ ability to open
an account online, for example, not all banks offer the same service in this
respect, and the service is not equally smooth across all customer segments,
particularly for special cases. By comparison with leading global retail banks,
many US banks lag behind when it comes to offering online services, as our
current study of 320 banks in 38 countries shows . Nor does US yet make
electronic signatures or e-ID available to banking customers. Nearly twice as
many respondents think that electronic signatures are important for banking
transactions compared with those who think they are unimportant (43% and
23% respectively). There are no major differences between age groups on this
question, and across the age spectrum, almost twice as many respondents
believe that digital signatures are important compared with those rating them
as unimportant.
 

6. Platforms

AI and blockchain solutions are still at an early stage. Financial institutions are
examining the areas in which they can apply these solutions. These tools will
become more complex.
Platforms Development
From a technical and business model point of view, and following some
researches, it is reasonable to think of a future in which scientific and technological
works focus on some of the following aspects:
 Emergence of specific hardware for the implementation of AI solutions.
 Standardization of the internal structures of neural networks that make up
the deep learning algorithms.
 Development of realistic simulations of behaviors and attitudes considered
to be human to improve the perception of AI applications in the interaction
with the customers.
 In terms of economic activity, AI is a disruptive process, both in the
financial institutions’ activity and in their different departments’ secondary
activity.
 Incorporation of AI-based services in more functions.
 Improvement of the relations of all the departments with the finance
departments and with other organizations in the exchange of information
contextualized.
 Incorporation of AI in decision-making at the highest level, such as the
board of directors and auditing.
Multi-Sided Platforms
Financial institutions have not yet made full use of innovative models and
tools to streamline their value networks, increase transparency and speed, and
reduce administrative costs and contract prices. In connection with AI and
Business process intelligence (BPI), these solutions can support significant
improvements to cope with the banking’s strategic and tactical challenges.
One exciting development is the increasing diffusion of innovative
Multi-sided platforms (MSP). A multi-sided platform is a business
model that allows multiple participants (producers and customers) to
connect and interact with one another and create and exchange value. Two critical
functions that platform leaders aim to deliver are:
(1) bringing together disparate resources and knowledge from different
organizations
(2) matching and connecting users with producers of products and services.
Multi-Sided Platforms Architecture
Multi-sided platforms are telematics platforms that allow the matching of
four Ps (Fig. 15.2):
 The Proprietor of the platforms is the one that has founded and funded this
type of online information system.
 The Provider of the platforms supplies the infrastructure, the service, and the
software supporting the platform.
 The Producers supply the products and the services made available on the
platform.
 The Purchasers buy the products or the services on the platform.
Fig. 15.2 Multi-sided platforms

MSPs have two critical features beyond any other characteristics (such
as indirect network effects or non-neutrality of fees):
 They enable direct interactions between two or more distinct sides. The
interactions involve trading.
 Each side has an association with the platform. Users on each side
consciously take platform-specific actions necessary for them to interact
with each other directly.
There are two economic theories at the base of a platform business model that are
crucial. They are the main reasons that platforms thrive over traditional “pipeline”
business strategies. These are the transaction costs and network effects theories:
 Transaction costs are the search, the coordination, the negotiation, and the
information asymmetry cost an organization faces while choosing its
processes. If the total costs are lower externally, the organization sources
production outside in the market.
 Network externalities or network effects describe the impact the number of
network adopters has on each user’s utility on a platform. In other words, the
marginal benefit (or cost reduction) that platform users gain increases as the
number of users on the platform increases.

Multi-Sided Platforms in Banking 5.0

MSPs in the banking value network can:
 Increase Competition among traditional financial institutions.
 Facilitate Coordination among financial institutions, customers, and other
stakeholders.
 Enable Cooperation with financial institutions.
 Improve Collaboration among financial institutions and other organizations
in the same ecosystem.
Value creation in banking can undergo a massive transformation due to the
emergence of MSPs. This change has three main implications for banking:
specialization, modularization, and higher complexity of the value network.
The regulatory frameworks (PSD2 in the EU and open banking) offer
a unique opportunity to apply some of the concepts in banking 5.0 across
the entire banking sector. Opening the APIs of financial institutions supplies an
opportunity for a platform business model to be implemented and its effects to be
realized in banking. This move is called Banking-as-a-Platform (BaaP):
BaaP describes the premises upon which financial institutions can adopt a
platform strategy model and change competition rules. In doing so, financial
institutions will need to revisit their role as financial intermediaries and prepare to
become re-intermediaries by providing “online automated tools and systems that
offer valuable new products and services to participants on [all] sides of the
platform.”
Benefits and Challenges of Multi-Sided Platforms
Platforms change the nature of competition as businesses aim to help
interactions between producers and customers, competing on network effects and
value captured onto the platform to win market share. On that basis, the most
attractive platform would be the most appealing value proposition for customers on
both sides of the market, enhancing network externalities and customer retention.
Orange Bank
Orange Bank works in France and Spain. It uses the Orange brand and
distribution network to cross-sell high-volume products such as device insurance
and device financing. It also uses its modern core and API network to orchestrate
an ecosystem supported by a load balancing network solution. The bank
collaborates with several players, such as the real estate services platform Nexity
for real estate loans.
The Orange Bank value proposition is to put the customer journey first, served
through its network of stores (not branches), its mobile app, and
mobile-first processes. The bank reports a 500,000-customer base (with
20,000 customers joining each month) and more than 60% of acquisitions
originating from Orange stores.

7. Processes
Processes will become increasingly integrated. For too long, financial
institutions have leaned processes only with organizational or logistic
measures. The lean and digitize method will become more used to make
processes thinner and integrated into an increasingly digital world.
8. Persons
Data analysis, customer relationship management, and the production
processes of certain financial services will be highly conditioned applying
an autonomous AI to make decisions. This situation has implications both
in the labor relations and in the legal frameworks.
AI will need new job profiles: data scientists and, machine learning
engineers, AI behavior analysts, and so on. There will be fewer persons
in financial institutions. They will work more as consultants for customers
or other organization functions rather than on operational tasks. Signifi-
cant roadblocks for financial institutions include talent management and
inadequacy in talent strategy. Many traditional financial institutions
organizations lack the proper competencies to upgrade their banking
business model to banking 5.0.
AI is a disruptive solution, as were the other technologies at the base
of the other industrial revolutions. Financial institutions should be aware
of the value of the human workforce in solving unexpected problems and
their ad hoc solutions situations in which automation of any kind cannot
be able to cope.
One of the most important aspects is how people’s civil rights can be
preserved when AI systems manage certain activities. The preservation of
the right to privacy, the responsible management of personal data, and
the right to anonymity can be violated when AI applies analysis to the
data. AI feeds on specific information.
Remote work will become very diffused, especially after the pandemic
outbreak.50 Financial institutions should ensure that employees can access
the necessary files and conduct business from remote locations securely.
Chief information security officers (CISOs) need to set up new cyber
security policies and tools to support the secure exchange of confidential
information among employees connecting from outside the office.
9. Partnerships
Bigtech
Four big tech companies, Big Four, Gang of Four, GAFA, Big Five, GAFAM, or
Bigtech are names used to describe four or five multinational online services or
companies. Computers and software dominated the cyberspace in the 2010s:
Google, Amazon, Facebook, Apple, and sometimes Microsoft.The best known
bigtech organizations in the Western world are GAFA: Google, Amazon,
Facebook, Apple
As Covid-19 raged around the world, Big Tech played the hero in the public eye.
In 2020, Amazon recruits half a million new workers to provide non-stop goods to
every corner of the world despite the epidemic.
Amazon's business, already strong compared to its e-commerce and cloud-
computing rivals, has become even more important to businesses and households.
Its stock is up more than 50% from its pre-pandemic peak, showing how confident
investors are about Amazon's pandemic benefits.
Google and Facebook quickly built maps and official information pages about
Covid-19, removing billions of fake news related to viruses and vaccines.
Bigtech also contribute to the anti-epidemic achievements through frontline
support, donating vaccine research funds, donating money to non-profit
organizations or donating materials and machines, building mining applications.
Medical report/vaccine passport…

The gross profit of the Bigtech group in 2020 is 244 billion USD, both increasing
compared to 2019 despite the global situation of the Covid-19 epidemic.
Apple has launched Apple Pay in several countries that let users pay for customer
products with their Apple device.
Apple Pay is a wireless payment service and e-wallet introduced by Apple on
October 20, 2014. Apple Pay allows transactions without a card (via NFC),
minimizing the risk of revealing bank card information and customer personal
information. With quality service and high security, Apple Pay is predicted to
account for more than 10% of all global cash transactions by 2025.

Currently, Apple Pay supported countries and regions include:

Area Country

Africa South Africa

Australia, Mainland China, Hong Kong, Japan,

Asia Pacific Macau, New Zealand, Singapore, Taiwan,
Kazakhstan

Europe Austria, Belarus, Belgium, Bulgaria, Croatia,

Cyprus, Denmark, Czech Republic, Estonia,
 Faroe Islands, Finland, France, Georgia,
Germany, Greece, Greenland, Guernsey,
Hungary, Iceland, Italy, Jersey , Isle of Man,
Latvia, Liechtenstein, Lithuania, Luxembourg,
Malta, Monaco, Montenegro, Netherlands,
Norway, Poland, Portugal, Romania, Russia,
San Marino, Serbia, Slovakia, Slovenia, Spain,
Sweden , Switzerland, Ukraine, United
Kingdom, Vatican

Caribbean and Latin

Brazil, Mexico
America

Israel, Saudi Arabia (Saudi Arabia), United Arab

Middle East
Emirates (UAE)

North America Canada, USA

Amazon sellers are provided with loans, Google allows to send money, and
Facebook launched people-to-people payments within North America, with an
ongoing application for an emoney license in Europe.
Libra was built by Facebook and is considered "a global monetary and financial
ecosystem", Libra is built and operates on a Blockchain platform created by
Facebook itself and will be backed by digital security. The amount of assets is
reserved for the purpose of stabilizing the price of this Facebook coin. Moreover,
many believe that Libra is a tool that can help this company realize its ambition to
reach customers who do not use bank accounts or services and can still pay easily.

Capgemini’s World Retail Banking Report 2019 shows the public’s acceptance of
fintech and bigtech organizations instead of traditional banks:
• 75% of tech-savvy customers use at least one financial product from a bigtech
organization.
• Customers choose non-traditional options for lower fees (70%), user experience
(68%), and speed (54%);
• Over 80% of customers that would switch financial services providers in the next
three years, use a banking service from a bigtech organization or a digital bank.
Bigtech Organizations Architecture
Bigtech organizations present a distinctive business model due to the combination
of two key features:
• Network effects (generated by e-commerce platforms, messaging applications,
search engines, and so on).
• Solutions (for example, AI and big data analytics).
Because of their dimensions and digital nature, bigtech organizations could supply
their services at almost zero marginal cost. The provision of credit lines and other
services to small vendors could be made without human intervention through a
combination of AI and robotic process automation, in the spirit of banking 5.0.
Bigtech Organizations and Banking 5.0
The financial services activities of bigtech organizations have snowballed in some
countries, particularly in payments, lending to small and medium enterprises
(SMEs), and other specific market segments, such as unbanked. Most bigtech
organizations start in payments. There is considerable diversity in the sequencing
of banking areas attacked and how bigtech organizations conduct payments
services. Available data shows that China is the largest market, with bigtech
organization mobile payments for consumption reaching CNY 14.5 trillion in
2017, or 16% of Gross domestic product (GDP).
The drivers of bigtech organization activity in finance, significantly beyond
payments, may be like fintech organizational activities. In some cases, there might
be unique drivers. There is a growing body of research in the past few years
considering why investments in fintech organizations or fintech credit have grown
more in some jurisdictions than others. Broadly, these drivers can be broken down
into demand and supply factors.
On the demand side, crucial factors are:
• Where organizations or customers are underserved by financial institutions, as
shown by a low share of the population with a financial institution account or
credit card, there may be an opportunity for the more rapid growth of lending by
bigtech organizations.
• Customers and small businesses are more likely to use the financial offerings of
bigtech organizations when they are broadly comfortable with innovative
solutions, significantly if financial institutions do not change their provision of
financial services.
• Traditional financial institutions with no innovation or entrepreneurial spirit. •
Customers might prefer to use tools that they often use, like Google or Amazon.
On the supply side, the principal factors are:
• Bigtech organizations have access to a wide range of customer data, which may
supply them superior information to assess the potential customers’ habits and
solvency, leading either to correct credit and insurance assessments or to lower
costs of the intermediation process.
• Due to their extensive use of innovative solutions like AI and robot process
automation,
• Securing adequate funding could be one limitation for bigtech organizations in
expanding lending, even if they tend to be rich in cash thanks to their core
activities.
By entering a widening range of financial services, bigtech organizations are
increasingly competing with traditional financial institutions. There are other forms
of interactions. For example, bigtech organizations are relevant third-party service
providers to financial institutions. Amazon Web Services is the largest vendor of
cloud services in the world, including many financial institutions. Microsoft and
Google are large cloud services providers. Ali Cloud (an affiliated organization of
Ant Financial in the Ali Group) is a dominant player in Asia. Many bigtech
organizations offer specific tools supported by AI and machine learning to
corporate customers, including financial institutions. The activity of bigtech
organizations as both vendors and competitors with financial institutions, raises
several potential conflicts of interest. On the other side, their dominant market
power in some markets is coming under greater scrutiny
Benefits and Challenges of Bigtech Organizations
The rapid growth of bigtech services in finance will bring both benefits, challenges,
and risks to the financial system. Bigtech organizations may enhance competition
and financial inclusion, particularly in emerging markets and economies. They can
contribute to the overall efficiency of financial services. On the other side, such
organizations may further concentrate market power or even give rise to new
systemic risks. It is essential to understand how bigtech organizations fit within
current financial regulation frameworks and under which principles regulation
should be organized.
Given significant network effects and economies of scale and scope, bigtech
organizations could lead to greater concentration also in banking. With a deep
reliance on third-party service providers, especially for data storage, transmission,
and analytics, operational failure or cyber events can more easily lead to systemic
events.

10. Banking 5.0 in the world

Banking 5.0 in China

 China digital banking is being driven largely by established companies and
consortia. Despite structural challenges with regard to governance, consortia bring
significant advantages in terms of achieving scale.
Just five years after launch, Tencent-backed WeBank serves some 200
million people, and Alibaba-supported MYbank has more than 20 million SME
customers. Over a short period, China’s digital banks now have a roughly 5 percent
share of the country’s RMB 5 trillion (~$700 billion) unsecured consumer loan
market and more than 7 percent of online SME loans.
In China, for instance, regulators have introduced additional rules related to
risk management (including for systems, data, risk model management, and IT risk
management)5 as well as limitations on online microlending business.

Artifical intelligence of banking in India

Artificial Intelligence (AI) acts as the powerhouse of all the growing industries. At
a time like this, the banking sector is trying its hand, leg and even head to give a
head-start to the AI developments. The financial services industry is appealing to
enter AI market to avail the luxury of accurate data and investment. The
development assists banks with better customer service, fraud detection, reduction
of managing cost and easy decision-making through AI analysis.
Customers have expectations that can’t be turned down. Expectations to get work
done faster and with zero error. The only by-standing solution is the utilisation of
AI in the everyday banking sector. AI has the ability to keep the data private, give
accurate answers and provide security for the customer’s money.
Indian banks are taking baby steps to incorporate with the developing technology
of using AI in its everyday banking system. One thing that the industry should
remember is that the privacy and data security in the country is still at stake. A
long-standing solution for this could be framing regulations on flourishing
technologies and data security and privacy by the Reserve Bank of India (RBI).
Like all other industries, banking should also go with the flow to adopt new
business modifications in order to thrive in the developing era. It will be of no
interest to anyone if banks follow the old retro style banking today. However, the
issues on the legacy system, lack of data handling and high expenses have
prompted the banks to espouse the AI technology. The banking sector focuses on
some key aspects to get a better outcome:
Chatbots interactions
The text chat system identifies the context and emotions of the customer and
replies in the most appropriate way. Some of the known AI Chatbots in India are
the SBI Intelligent Assistance (SIA) by State Bank of India that helps customers
with everyday banking tasks like a bank representative, HDFC bank’s Electronic
Virtual Assistant (EVA) where customers get to chat with the AI system and iPal
by ICICI bank that answers questions through Amazon Alexa and Google
Assistant. Chatbots improve the customer’s experience and make banking easier.
Malpractice detection
AI is quick to diagnose the abnormal activities and transactions in the decade of
rampaging cyberattacks. According to 2019 annual report released by RBI, loss
due to banking fraud has surged 73.8% despite the government’s efforts to curb
them. The more shocking news is that banks took around 22 months to recognise
the fraud since its occurrence. This makes it nearly impossible to revive the lost
money.
When the technologies evolve, the digital frauds develop itself to the improvement
and find new ways to thrive. Banks must deploy content-sensitive AI solution to
advance the monitoring. The content-sensitive AI identifies transaction frauds,
detect anti-money laundering patterns and make customer recommendations.
Money laundering is identified when an illegal sum of money is portrayed as legal
by money launderers. The AI analyses the suspicious patterns and identifies the
hidden action.
Cost-efficient
A research report suggests that banks could save an estimated amount of US$447
billion by 2023 if they switch to the AI banking system. The report further unravels
that the front and middle office accounts to US$419 billion of the total savings.
Enforcing AI in banking reduces the time consumed by bankers on digitizing,
discovering and onboarding document template. It also minimises the rate of error
and reduces the document digitisation cost, which accounts to over hundreds of
millions of dollars for a single department, according to IBM .
Easy mobile digitisation
The extended way of mobile banking and tracking service aids the customers to no
longer wait in queues and makes banking handy. It also gives the insight of users
spending patterns and provides recommendations on investment and risk profiles.
One such initiative is the ‘Know Your Customer’ service which keeps away the
submission of physical documents and verification processes. The AI-based
computer technology verifies the documents; use Optical/Intelligent Character
Recognition (OCR/ICR) technologies to digitize scanned documents, and Natural
Language Processing (NLP) to make sense of them in the KYC service.
Accurate decisions
AI has far better memory compared to humans that make the banking sector get its
help when it comes to an accurate diagnosis. AI can predict the future with the
inputs from past structured and unstructured data and make a diagnosis out of it.
This can make a potential loan defaulter face loss mitigation strategies. It can also
suggest the best time to approach the customer to sell products and furthermore.

The banking industry should come together as a consortium to share the AI system.
By this, the co-operative and regional banks will get the chance to experience AI at
a combined cost and security. The future of the developing AI in the banking
sector is the evolving customer-based humanoid robots that could take its role to
guide through the customers in the banking process. The world is fast evolving to
the AI concept and the banking industry is looking forward to a positive and
helpful growth through AI mechanism.
11. Banking 5.0 in Vietnam
Banking landscape in Vietnam: Recent developments and trends

By the end of 2019, 60 per cent already had digital transformation

initiatives in place.
Two basic approaches to the digital transformation of banking in
Vietnam.
The first involves the digitalisation of an existing bank: digitising certain
business segments, internal processes and front-end channels (eKYC, QR code
payment, virtual assistants/chatbots and 24/7 call centres).
Ex: Vietcombank, TPBank and Techcombank (omni-channel platform to
ensure a consistent customer experience)
Digitising the information database and the utilisation of technologies and
tools such as big data warehousing, automated data collection, cloud computing,
data analytics, artificial intelligence, open API and blockchain are still in their
infancy.
 However, significant growth potential.

The second approach is a combination of the first along with the

development of stand-alone, digital-only banks, focus on a specific target customer
segment. Ex: YOLO, Timo.
 Vietcombank, in July 2020: VCB Digibank on the basis of online transaction
platforms, replacing Internet Banking and Mobile Banking services before.
 TPBank has developed an ecosystem with closely connected products and
channels, enhancing access to banking services
- LiveBank operating 24/7 at strategic locations.
 - Savy, MyGo, QuickPay meet the specific needs (savings, purchases) of
young customers and attract new customers
- eBankX is a financial management portal for existing customers
- T'Aio virtual assistant applies artificial intelligence and machine learning
technology to answer customers' questions on online channels.
- Biometric identification (fingerprint, face, voice) at transaction channels
(LiveBank, eBankX) and support channels (hotline) to prevent fraud and
improve customer experience.
- The first bank in Vietnam to successfully apply blockchain technology to
international money transfers
- Implementing new technology applications: open application
programming interfaces (Open API), Big Data into a number of banking
activities, contributing to significantly improving efficiency
 VPBank
- Cooperated with Lifestyle Project Management Vietnam to establish the
new generation digital bank Timo.
- Yolo digital bank, was the first digital bank operating on the Amazon
web service cloud
 VietinBank
- Ipay Mobile application version 5.0 updates more than 50 new diverse
utilities, helping to optimize the user experience.
- Introduced a technology platform based on Open API called Vietinbank
iConnect.
 Nam A Bank
- A digital transaction space integrating a modern device ecosystem,
applying artificial intelligence with the appearance of OPBA robot and
VTM OPBA branch. This is the first bank to put robots into serving
customers.

 Collaborations between banks and Fintech organizations in Vietnam

A win-win manner
Banks:
- Apply and update modern technologies without spending too much on
basic investment costs in original infrastructure
 - Meet the higher requirements of customers in terms of quality, price and
reliability.

Fintech companies:
- Exploit the customer network, data and capital of the bank to provide
products and services to meet the needs of the market.

VPBank has actively cooperated with large and reputable fintech partners in
Vietnam such as VnPay, Napas, Payoo , Bankplus, Momo... to deploy online
banking and payment solutions
Collaborations between banks and Bigtech organizations in Vietnam

Big Tech both competes and cooperates with banks.

According to the State Bank, in the first seven months of 2020, the number
of payment transactions via the internet and mobile phones increased by 39.1% and
184.2 percent, respectively, over the same period in 2019.
Currently, only about 31% of Vietnamese people have a bank account
According to a report by Hootsuite, in January 2020, Vietnam had 65
million active social media accounts, accounting for 67% of the population.
Banks should learn from Big Tech: Care about customer experience,
personalize them, meet their needs, not just pushing the product to market
According to a survey from Deloitte, while Amazon's bank existing or not,
consumers in the US give this Big Tech loyalty score much higher than their
current bank score.
The platform company has an absolute advantage to expand into financial
services: 37% of people don't even use Amazon to make e-commerce purchases,
but would try their free online bank account.
Development orientation of digital banking in Vietnam

The State Bank continues to implement the digital banking transformation

plan to 2025, with a vision to 2030, establishes the goals of developing a model
bank, increasing convenience and customer experience. In order to achieve the
goals
- Converting the Accreditation and Standardization as a ready source for
the operation of the transformations;
- Improving the legal framework to facilitate the transition.
- Developing digital infrastructure, connecting and sharing the data budget
with the data industry
 - Developing Digital banking model and application technology to provide
safe and convenient products and services at low costs.

Vietnam aims to have:

- 5 technology unicorns by 2025
- 10 technology unicorns by 2030.

Vietnam has nurtured a single unicorn: VNG Corporation, which is a digital,

content, entertainment and technology company.

REFERENCE
 BernardoNicoletti (2021)Banking 5.0 How Fintech Will Change Traditional
Banks in the ‘New Normal’ Post Pandemic
 Banking review magazine (2021), Developing digital banking in the current
digital transformation context
 Australian government (2020), Digital Banking In Vietnam Report: A Guide
To Market
 PwC Vietnam’s Digital Readiness Survey (2020), What’s next in digital
upskilling for the Financial services sector?
 Stock investment magazine (2020), Big tech and cashless payment society
 Financial magazine (2019), Cooperation between banks and Fintech
companies in Vietnam: Some problems raised
 Government magazine (2021), Fair competition helps convert Vietnamese
banks to be the fastest in the region
 Phiên An (2020) Sự thống trị của Big Tech trong kinh tế Mỹ
 Trọng Đạt (2021) Big Tech lỗi thời và cơ hội cho mạng xã hội thế hệ mới
 Phương Nguyễn (2021) Khi quyền kiểm soát thế giới nằm trong tay Big Tech