On April 18, 2025, the State Bank of Vietnam (NHNN) announced an extension of the pilot program for Mobile Money, a service allowing users to make payments for small-value goods and services using telecommunications accounts. This program, which has been in effect since November 2021, is now set to continue until December 31, 2025, per Decision No. 1811/QD-NHNN.
The NHNN's decision underscores the growing importance of cashless transactions in Vietnam, particularly in rural, remote, and island areas. After more than three years of implementation, Mobile Money has made significant strides in promoting cashless payment activities, with over 9.8 million accounts registered by the end of September 2024. Notably, Viettel dominates the market, accounting for 73% of these accounts, followed by VNPT-Media at 21% and MobiFone at 6%.
According to reports from the NHNN, a remarkable 7.1 million of these accounts are utilized in rural and remote regions, illustrating the service's reach and impact. The active accounts stood at over 6.56 million, representing approximately 66.46% of total registered accounts. Furthermore, the cumulative number of transactions conducted through Mobile Money has surpassed 159 million, amounting to nearly 5,685 billion VND in total transaction value.
As digital payment solutions gain traction, the banking sector in Vietnam is undergoing a significant transformation. Between 2023 and 2024, digital transformation has emerged as a critical strategic priority for banks, with technology spending constituting 14.85% of total operational costs—the highest in four years. This shift is reflected in the cost-to-income ratio (CIR), which has improved from 44.67% in 2023 to 43.16% in 2024.
Leading banks like Techcombank, MB, TPBank, and ACB are at the forefront of this digital revolution. TPBank has reported that 94% of its customer transactions occur on digital platforms. Techcombank, in particular, has maintained the lowest CIR in the system, below 30%, thanks to its comprehensive digitization of processes and services. This indicates that banks are leveraging technology not only to enhance customer experience but also to improve operational efficiency.
Moreover, the adoption of artificial intelligence (AI) in areas such as credit approval, electronic identification (eKYC), and transaction automation has drastically reduced loan processing times from several days to just a few hours. BIDV exemplifies this trend, having reduced its workforce by over 1,100 employees in 2024 while still achieving profit growth through increased labor productivity.
Investment in digital transformation is proving advantageous for banks, creating sustainable competitive advantages in a challenging economic environment. As credit growth slows and net interest margins (NIM) remain under pressure, banks are increasingly focusing on cost control, particularly through CIR improvements. This trend suggests that digital transformation is not merely a short-term cost-saving measure but a long-term strategy for competitive positioning.
However, the transition to digital banking is not without its challenges. The rise of digital-only banks, such as Timo, which once garnered significant attention but later struggled with profitability and scalability, serves as a cautionary tale. The experience of Timo highlights the necessity for digital banks to differentiate themselves through unique products, services, and customer experiences to avoid blending into the traditional banking landscape.
As the market evolves, traditional banks are also enhancing their digital offerings, blurring the lines between digital-only and traditional banking models. This creates a competitive landscape where smaller banks, particularly those undergoing mandatory restructuring, face difficulties in directly competing with larger institutions.
In this context, the shift towards digital banking is not just a strategic choice but a vital necessity for many institutions aiming to optimize resources and regain market positioning. Digital banks, especially those targeting younger, tech-savvy consumers or underserved regions, can operate more efficiently and flexibly, allowing them to innovate and test new financial products.
Globally, digital banks have shown resilience and growth, with successful models like Monzo in the UK, N26 in Germany, and KakaoBank in South Korea attracting millions of users and achieving substantial valuations. In Vietnam, the legal framework is gradually improving, and with over 70% of the population owning smartphones, the groundwork is laid for the expansion of digital banking.
Despite these favorable conditions, challenges remain. Most digital banks currently offer only basic services like account opening, payments, and simple savings products, lacking more complex financial offerings such as mortgages and integrated insurance solutions. Additionally, while younger customers drive demand for digital banking, older generations—who possess greater financial means—often remain hesitant to engage with technology, creating a demographic gap that is difficult to bridge in the short term.
Furthermore, digital banks must compete not only with traditional banks that are rapidly digitizing but also with agile fintech companies. To ensure sustainable growth, digital banks in Vietnam will need to invest heavily in core technology, personalize services, and develop a comprehensive digital financial ecosystem that meets customer needs and distinguishes them from traditional models.
In summary, as the Vietnamese banking sector continues to evolve, the capacity for digital transformation will be a key determinant of which banks thrive in a competitive landscape. The ability to adapt and innovate will define the future of banking in Vietnam, ensuring that institutions remain relevant and responsive to the changing needs of consumers.
