The banking sector is required to renew its business model, as well as products and services, especially e-banking, in this era of digital banking.

These remarks were made by Douglas Jackson, Regional Director in the Southeast Asia for Boston Consulting Group (BCG), when discussing the sustainable development of the nation's banks.

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Jackson spoke at the annual conference, entitled ASEAN Region 2015: Banking and Finance Innovation, held in Hanoi on October 9, saying banks that continue operating under traditional models without modernising their practices have removed themselves from the modern banking system.

"The changes have been performed with an increase and expansion of several online transaction services, creating large amounts of banking data and strengthening positions of banks," he said, adding that banks throughout the world have thousands of branch openings each day.

With the modern banking model, customers' data has been integrated onto electronic chips and stored in banks. Every banking procedure can now be carried out on computers or smartphones.

The back-office at banks might not continue to exist, as all work is conducted online. The opening of a new bank accounts might take only five minutes, instead of the current 30 minutes, while approval for loans might take only 10 minutes, rather than the current 3-5 days.

This banking model has seen success in Malaysia. Easy RHB bank was started at a cost of one-seventh of a traditional bank. However, its profits were eight times higher, accounting for 60 percent of the banking market share in Malaysia.

Meanwhile, William Anthony Jennings, Vice President and General Director of Institute of Manpower, Banking & Finance, said that over the past few years Vietnam had seen large changes in the banking sector. Of these changes, creation has been the first priority for local banks.

Jennings said the country's banking system had witnessed the development of retail banks. It was due to pressures of modernising and restructuring that banks provided new products and renewal in their operations, as well as focusing on developing high quality human resources.

Nguyen Huu Thai Hoa, former Strategy Director of FPT Group, said information and technology had provided momentum for new developments. If banks did not implement modernisation, they would not be able to participate in international integration, he noted.

"Improving competitiveness by IT would add five percent to Vietnam's GDP per year," Hoa said.

Sharing these ideas, Shahrizal Suffian, Director of Hay Group Malaysia, said Vietnam remained a potential market, as it has more than 40 million people connecting to internet together with a high rate of using hi-tech products.

Additionally, banks should invest in their human resources, especially young people, to fully exploit their potential.

However, legal frameworks have been a barrier for banks to expand their services, said Do Tuan Anh, Vice Chairman of Techcombank's Management Board.

Anh said the State Bank of Vietnam has paid attention to this issue, adding that there should be a breakthrough in thoughts, as well as a stronger move towards development.

Source: VNA