Foreign banks, which up until now only focused on wholesale services and mostly served foreign clients, have been trying to expand their market share by providing retail banking services.
One of the commitments Vietnam made when it officially joined the World Trade Organisation (WTO), is that from January 1, 2011, it will allow foreign banks to operate like domestic banks, i.e. that foreign banks will have the right to provide the banking services which domestic have the right to. This means that from 2011, foreign banks and domestic banks will operate on a levelled playfield.
Representatives from foreign banks all have expressed their satisfaction about the business environment in Vietnam, saying that the banks are gearing up to expand retail services. This also means that the market shares being held by domestic banks have been threatened by foreign banks.
In mid October, Citibank officially launched the retail banking service in Hanoi. Some days ago, Standard Chartered Bank also made a similar move. In late September 2010, the Hong Kong and Shanghai Banking Corporation (HSBC) opened its fifth branch in Vietnam.
The fact that foreign banks continuously open new branches and transaction offices in Vietnam shows that the banks keep optimistic about the business environment in Vietnam.
Brett Krause, General Director of Citibank Vietnam, said the competition among banks will benefit customers. Ashok Sud, General Director of Standard Chartered Bank has also expressed his satisfaction about a levelled play field for both foreign and domestic banks. “We are glad that our basic expectations have been realized. Now we have the right to provide all the banking products and services we want to,” he said.
Anticipating the stiff competition to be triggered by the market opening as of January 1, 2011, foreign banks are rushing to scramble for the retail market share. Mr Ashok Sud said Standard Chartered Bank is planning to expand its presence in Vietnam both in width and in depth. According to the bank, by 2015-2016, the average income per capita is estimated to reach $2000 per annum, which will lead to the higher proportion of people using banking services.
The current story that only 10 percent of Vietnamese population uses banking services will not be heard of after five or 10 more years. At present, every Vietnamese person has not only one, but two or three mobile phone numbers. And the same scenario will also happen with banking services in the near future, according to Mr Ashok Sud.
Currently, domestic banks are still holding 90 percent of the retail market share in Vietnam. However, foreign banks would be their fierce competitors as they are trying to provide services with high technologies which domestic banks do not have. Standard Chartered Bank, for example, has the branches which operate in non-office hours and on weekend. The bank will also be the first foreign bank which joins the card alliance Smartlink from January 2011.
Meanwhile, Citimart has been targeting young and dynamic clients, who love high technologies, by providing retail banking services through Internet and mobile phones. Especially, though foreign banks do not hold big market share, they have obtained the most lucrative market segment: their clients are mainly VIPs, high income earners (who have the monthly income of 10 million dong and higher).
While foreign banks are racing against the time to expand their business scale, it seems that domestic banks still keep indifferent to the race. A finance expert has warned that some kinds of services which are being provided by domestic banks such as international payment, project funding may fall into the hands of foreign banks in the future, because foreign banks have high technologies, good corporate governance and better financial capability.
The expert said that the biggest banks in Vietnam now focus on serving state owned enterprises, while private and foreign invested enterprises find it hard to access bank capital. Most of joint ventures and 100 percent foreign invested enterprises are still the clients of foreign banks.
One of the commitments Vietnam made when it officially joined the World Trade Organisation (WTO), is that from January 1, 2011, it will allow foreign banks to operate like domestic banks, i.e. that foreign banks will have the right to provide the banking services which domestic have the right to. This means that from 2011, foreign banks and domestic banks will operate on a levelled playfield.Representatives from foreign banks all have expressed their satisfaction about the business environment in Vietnam, saying that the banks are gearing up to expand retail services. This also means that the market shares being held by domestic banks have been threatened by foreign banks.
In mid October, Citibank officially launched the retail banking service in Hanoi. Some days ago, Standard Chartered Bank also made a similar move. In late September 2010, the Hong Kong and Shanghai Banking Corporation (HSBC) opened its fifth branch in Vietnam.
The fact that foreign banks continuously open new branches and transaction offices in Vietnam shows that the banks keep optimistic about the business environment in Vietnam.
Brett Krause, General Director of Citibank Vietnam, said the competition among banks will benefit customers. Ashok Sud, General Director of Standard Chartered Bank has also expressed his satisfaction about a levelled play field for both foreign and domestic banks. “We are glad that our basic expectations have been realized. Now we have the right to provide all the banking products and services we want to,” he said.
Anticipating the stiff competition to be triggered by the market opening as of January 1, 2011, foreign banks are rushing to scramble for the retail market share. Mr Ashok Sud said Standard Chartered Bank is planning to expand its presence in Vietnam both in width and in depth. According to the bank, by 2015-2016, the average income per capita is estimated to reach $2000 per annum, which will lead to the higher proportion of people using banking services.
The current story that only 10 percent of Vietnamese population uses banking services will not be heard of after five or 10 more years. At present, every Vietnamese person has not only one, but two or three mobile phone numbers. And the same scenario will also happen with banking services in the near future, according to Mr Ashok Sud.
Currently, domestic banks are still holding 90 percent of the retail market share in Vietnam. However, foreign banks would be their fierce competitors as they are trying to provide services with high technologies which domestic banks do not have. Standard Chartered Bank, for example, has the branches which operate in non-office hours and on weekend. The bank will also be the first foreign bank which joins the card alliance Smartlink from January 2011.
Meanwhile, Citimart has been targeting young and dynamic clients, who love high technologies, by providing retail banking services through Internet and mobile phones. Especially, though foreign banks do not hold big market share, they have obtained the most lucrative market segment: their clients are mainly VIPs, high income earners (who have the monthly income of 10 million dong and higher).
While foreign banks are racing against the time to expand their business scale, it seems that domestic banks still keep indifferent to the race. A finance expert has warned that some kinds of services which are being provided by domestic banks such as international payment, project funding may fall into the hands of foreign banks in the future, because foreign banks have high technologies, good corporate governance and better financial capability.
The expert said that the biggest banks in Vietnam now focus on serving state owned enterprises, while private and foreign invested enterprises find it hard to access bank capital. Most of joint ventures and 100 percent foreign invested enterprises are still the clients of foreign banks.
