HO CHI MINH CITY —
Think of it as motorbike banking.
For Vietnamese who live far from a retail bank branch, VietinBank scrambles scooters so its officers can meet clients where they live, tablet in hand.
There’s also the strategy of DongA Bank, which decks out a van with four ATMs and parks it near factories to reach laborers.
All across Vietnam, people are heeding the government’s call for “financial inclusion,” the global buzzword for bringing banks to the masses, and all the better if it can be digital. Hanoi has staked out some national targets for the year 2020, including an ambitious reduction in the share of transactions based on cash, down to a whopping 10 percent.
That goes hand in hand with other targets, like increasing the number of point-of-sales (POS) devices to 300,000, and getting 70 percent of utility payments done electronically.
But most seem to think those will be a tough goal to meet and that cash, the Vietnamese dong, will stay king.
“Cash will not disappear in Vietnam soon,” State Bank of Vietnam payment director Le Anh Dung conceded, even as he’s promoting a cashless society.
But nevertheless, the communist country is seeing a very visible sea change in the digitization of the economy.
Take utilities. To pay for water or power, Vietnamese used to have only the cash option, which meant either stopping in at the post office, or waiting for a collector to ring the doorbell. But now convenience stores from 7-Eleven to Circle K have mushroomed around cities, and with them comes an explosion of POS devices that accept utility payments.
Downsides to branchless banking
But the push toward more sophisticated finance is not all smooth sailing. Customers worry their bank accounts can be hacked, in the same way that thieves can purloin Vietnamese dong stashed in the mattress. Programs that let workers borrow against their salaries to buy phones or fridges risk breeding a culture of debt and consumerism. And citizens have been slow to adopt branchless banking tools like e-wallets Moca, MoMo, and Payoo, which are Vietnam’s answer to PayPal.
“At the moment, the mobile wallet has really taken off -- in terms of institutions,” but not so much in terms of customer use, said Kalidas Ghose, CEO of the consumer finance company FE Credit, speaking last week at the Seamless e-commerce conference in Ho Chi Minh City.
At the conference, Dung praised the innovations of global brands like Alibaba’s use of QR codes, Amazon’s one-click pay option, and Uber’s “invisible” transactions, meaning users don’t have to lift a finger and the app charges them instantly after each ride. What the three have in common is to make it close to effortless for customers to hand over their money.
Uber, though, also provides a counter-example of a foreign business adapting to the indigenous reliance on cash in Vietnam. This is one of the few countries where the San Francisco-based company allows riders to pay with hard currency.
Google, similarly, allows people in a number of places, including Vietnam, to make purchases in Google Play through their phone credits.
These are a workaround to keep customers who don’t have debit cards, and they demonstrate the transition that societies undergo on the road to cashless economies.
For Vietnam the transition has been multifaceted.
Vietnam’s financial evolution
About a decade ago, most businesses paid their employees in physical dong. Then policymakers and bankers campaigned to turn that process into direct deposits.
“We encountered huge challenges because everybody wanted salary in cash and thought it was a hassle to use the card,” DongA Bank deputy CEO Nguyen An said. But the bank collaborated with employers and union leaders to change people’s minds.
Then came online retail. Vietnam’s e-commerce market was worth $400,000 in 2015 but will grow to $7.5 billion in 2025, according to a report from Google and Temasek, the Singapore sovereign wealth fund.
Officials are happy to see more people move to the Internet, but they’re not quite as digital as hoped: 89 percent of Vietnam’s online shoppers use cash on delivery, said Dung, who wants more buyers to pay with plastic or wire transfers.
Next in the Southeast Asian country’s financial evolution are plans to digitize public services,so that Vietnamese can pay electronically for hospitals, traffic tolls, schools, and other fees.
After that, locals predict further use of blockchain, the virtual ledger system behind bitcoin. Nicole Nguyen, head of marketing at Infinity Blockchain Labs, expects Vietnam will find applications for agriculture, the internet of things, and financial technology.
“We think that these are the three areas where blockchain can thrive in the next few years,” she said.
For now, mobile banks will continue to roam the cities of Vietnam, searching for customers.