“A wider spectrum of products are being offered by local banks to cater to more sophisticated needs of the global client. This helps boost the competitiveness of Vietnamese banks,” he said.

 

However, the AEC and TPP would also put up bigger challenges for local banks.

 

He said most of the Vietnamese banks were faced with funding difficulties. They should be technologically strong to have access to the development of other countries in the region.

 

He suggested merger and acquisitions as one of the solutions for banks in the digitalisation process as several local banks had encountered the problems of bad debts and modest scales.

 

He noted that small banks could implement digitalisation successfully thanks to cheap solutions from start-ups.

 

The wave of fintech in recent years has made investments in technology and has not been too expensive, he said.

 

He also suggested that Việt Nam’s government should consider unlimited room for foreign investors. The penetration of foreign banks would also open opportunities for Vietnamese banks to approach modern, cutting edge technology, dedicated expertise and state-of-the-art banking practices.

 

“The issue is how to open the banking market to foreign investors while balancing the benefits. Việt Nam could step-by-step lose their room,” he said, and added that the government should complete the capital market.

 

The role of the capital market in Việt Nam has seen limitations. The funding for the economy has still depended on bank loans. If there is no foreign investment, local banks could find it hard to resolve several targets.

 

Sharing these ideas, Nguyễn Thùy Dương, EY Việt Nam Finance & Banking Service deputy director said there would be a risk of brain drain when the highly skilled, English proficient world force of Việt Nam could move to other more developed countries such as Singapore and Malaysia.

 

“Presence of more foreign banks will make competition among banks in Việt Nam more severe, especially when foreign banks possess more advantages of cutting edge technology, abundant capital base and other competitive edges compared to domestic banks,” Dương said.

 

She said Vietnamese banks had to meet the requirement on capital, management capacity among others. This would create pressure on domestic banks to enhance their capacities in order to achieve standards to meet with qualified ASEAN bank status.

 

She suggested that banks should be active in enhancing risk management, seeking new capital resources and providing training to staff.

 

“Local banks should quickly move to implement common standards on risk management when the country is integrating deeper into the international playground. Vietnamese banks could find it hard to meet with Basel II standards this year. However, Việt Nam has completed the legal framework with specific regulations toward the standard,” she added.