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Digital banks attract significant numbers of customers

The number of new customers of commercial banks has increased dramatically in recent years thanks to their digital applications.

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After only six months of launching MyVIB 2.0 digital banking application – which uses multi-cloud computing technology to process 60-70 per cent of the input data to help banks realise ideas, bring products and services to the market faster and respond sooner to customer requests, VIB has doubled the number of customers compared to the previous year and reach the target of 4 million customers nearly a year earlier than expected.

Not only VIB, the wave of “cloudisation” of digital banking applications to expand modes and storage capacity, and increase integrated processing and user data security capacity has been invested in and implemented by many commercial banks.

Currently, VietABank, PVcomBank, VietinBank, Techcombank, SeABank, ABBank and OCB have all integrated cloud computing technologies to launch new digital banking platforms serving the sales of retail products and services, attracting millions of users.

The business results by the end of 2022 of banks showed a sharp increase in the number of new customers attracted by banks thanks to their digital applications. For example, MB last year added 7 million customers in the wake of developing Biz MBBank and Charity app while Techcombank with E-Banking apps (using AWS cloud computing technology) attracted an additional 1.2 million users in 2022. ACB and TPBank also said they recorded an annual growth of 30 per cent in the number of customers using digital applications in the 2019-22 period.

Along with the increase in the number of customers, the investment in new technologies and digitalisation of business activities have helped many banks attain significant achievements. For VIB and ACB, the proportion of revenue from retail activities was around 90 per cent in 2022. Retail activities at other banks such as MB, Techcombank and Sacombank currently account for more than 50 per cent of their business portfolio.

Recent research by Gimigo Vietnam showed 2023 will continue to witness fierce competition between banks in developing retail digital banking applications to gain market share.

According to Gimigo, the group of large State-owned banks such as Vietcombank, BIDV, Agribank, VietinBank and MB was leading in the retail segment thanks to being trusted by users and having a widespread network by the end of 2022. However, the group of private banks such as Techcombank, Sacombank, ACB, VPBank and TPBank have significantly improved their awareness level and attracted a large number of users in recent months.

Gimigo’s survey in Ha Noi, HCM City and some other big cities showed the digital applications of Techcombank, ACB and Sacombank are currently competing strongly with large-sized State-owned banks. Other private banks such as TPBank and VPBank also have high net promoter scores (NPS). Thus, the group of banks has many opportunities to expand the customer base thanks to the existing group of loyal customers and the new customers.

According to experts, developing the networks of branches, transaction offices, POS and ATMs is no longer the banks’ top priority. Instead, they focus on digitisation of products and services. To maintain the number of customers, banks need to pay more attention to transaction costs, quality of products and services, staff attitude, customer service, and continuous improvement of online procedures.

Regarding the development trend of digital application generations this year, Gimigo said besides investment in cloud computing technologies and applying Artificial Intelligence (AI) and Machine Learning to develop applications to support retail sales of products and services, banks will tend to pour in an integrated open banking ecosystem.

Some banks, which have so far invested in purely digital banking models such as Cake, Timo, Tnex, Octo and Ubank, have attracted users. For example, VPBank’s Cake app currently has 1 million users.

Experts forecast banks will invest more in developing completely new digital banking brands in the near future. In which, micro products and services will be integrated into personal financial management tools to attract customers to use banks’ retail products and services. 

Source: Việt Nam News

Source: https://e.nhipcaudautu.vn/tech/digital-banks-attract-significant-numbers-of-customers-3351467/

Sci-tech-environment

Vietnam’s mobile money trial program to be extended till 2024

Mobile phone accounts can now be used to pay for low-value goods and services until the end of next year.

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Authorities told the State Bank of Vietnam to review and report to higher ups before May 2024 the release of legal papers related to Mobile Money services. 

They were to work with the Ministry of Information and Communications, the Ministry of Public Security, the Ministry of Justice, and other relevant agencies.

To make the government work better, Deputy Prime Minister Le Minh Khai asked these ministries and other related groups to take steps to make sure that the pilot use of the service follows the rules that are already in place.

The head of the Vietnamese government had earlier said that the Mobile Money service could be tested across the whole country for two years, starting on March 9, 2021.

Customers of this service can use their cell phone accounts to do a variety of things, like pay for low-value goods and services, send money, top up their phones, withdraw money, and more, all without a bank account, a smartphone, or an Internet link.

According to statistics from the Ministry of Information and Communications, more than 3.9 million people used Mobile Money in the first five months of the year. This is three times as many as used the service during the same time last year.

Source: https://e.nhipcaudautu.vn/tech/vietnams-mobile-money-trial-program-to-be-extended-till-2024-3356336/

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Chinese low-cost e-commerce battle lands in Vietnam

Global online shopping activity is being disrupted by the massive “discharge” of items from Chinese factories onto e-commerce platforms.

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The “online Silk Road” in China has the same high-quality goods that these Southeast Asian countries can buy, but the prices are much lower and the shipping costs are surprisingly low.

THE DOMINATION OF THE ONLINE SILK ROAD 

Within a week, the four phone cases that Kieu Nam (Phu Nhuan district, Ho Chi Minh City) had ordered on Shopee as cross-border goods finally arrived. Including the shipping fee, the total value of the order is VND110,000, calculating that each case costs 25,000 VND, nearly half less than if purchased at the store.
 
Quynh Nhu (District 2, Ho Chi Minh City) said that in the past 2 years, cross-border stores have begun to be popular on Shopee and Lazada, but most are still low-value products.

For higher-value products, such as fashion, Quynh Nhu said she would order directly through Taobao in China. The recipient of the order will be a Vietnamese living near the border gates.

Even though they charge a fee for picking up the goods, taking them across China to the border gate, and then taking them to where the order is placed, as in the case of Quynh Nhu in Ho Chi Minh City, the total cost is still less than the price of the product.

Same fabric quality, about 30% design in Vietnam. One bad thing about cross-border goods is that they take 7–10 days to deliver. “That’s not a big obstacle. I will schedule a reservation,” Ms. Quynh Nhu said.
 
In the future, Chinese sellers will cooperate more with e-commerce platforms in their home country. There is an incentive for Chinese traders to step up such cooperation.

Mckinsey’s research predicts that 80% of GMV will be imported from outside Southeast Asia by 2021, with China playing a significant role. Momentum Works predicts e-commerce development in Southeast Asia to reach $232 billion in 2028, with Temu, Alibaba, and TikTok contributing to the worst scenario at $175 billion.

 

Chinese traders plan to expand into regional markets like Vietnam to maximize profits. Directly shipping from Chinese platforms to Vietnam yields a 10% profit, but combining with popular Vietnamese e-commerce platforms can increase it by 5%. The key to this strategy lies in low delivery costs, as domestic packages in China cost less than VND10,000, despite longer transportation distances.

The Chinese government made this plan 10 years ago. Economic Information Daily says that China’s logistics costs made up 18% of its GDP in 2013, which is more than twice as much as other OECD countries.

Experts point out that the cost of transporting goods in urban areas accounts for 30% of the total logistics costs of the entire industry. This has been a consequence since 1991, when China’s average logistics cost growth rate was 14.8% while GDP increased only 10.7%.

Urban expansion in Shanghai leads to increased transportation demand, but the lack of public supply and demand information-sharing platforms hinders truck operators’ capacity. Empty trucks accounted for 37% of the city’s total trucks in 2011, three times higher than in Europe and America. High logistics costs include tolls and fines.

The Chinese government implemented policies to reduce transportation costs, standardize logistics facilities, and reduce tax rates for the logistics industry. These included standardizing pallets, replacing business tax with value-added tax, compensating road tolls, and encouraging land use. The Ministry of Trade also promoted information technology applications in the industry.

 

In 2016, logistics costs per GDP decreased by nearly 4 percentage points, largely due to NDRC policies reducing taxes and fees for companies, enabling easier capital access.

China aims to reduce the logistics cost/GDP ratio to 12% by 2025, saving industries over 900 billion yuan ($135 billion) annually.

China is optimizing domestic logistics costs and promoting cross-border sales in Southeast Asia. Vietnam’s Ministry of Industry and Trade plans 53 warehouses in six provinces by 2025 to 2035, covering over 1.2 million m2. With a global factory position and 2/3 of popular e-commerce platforms, China’s goods are increasing, making it easier to penetrate regional countries.

The country has long been a global exporter of many consumer products and is now expanding this influence faster and more widely through its e-commerce platforms, even shaking up shopping activities. online globally.
 
“CLEARING GOODS” AT THE LOWEST PRICES

Chinese manufacturers are reducing prices and attempting to penetrate foreign markets due to weak domestic demand. Local governments are subsidizing overseas trips and urging banks to lend to companies expanding in countries participating in China’s “Belt and Road” initiative.

Indonesia’s government has banned e-commerce transactions on social media platforms and regulated foreign goods to have a minimum price of $100, aiming to protect domestic businesses from cross-border goods and ensure fair competition while protecting user data.

With the largest e-commerce market size in Southeast Asia (more than $50 billion in 2022, according to Momentum Works), Indonesia’s actions are intended to prevent new e-commerce platforms such as TikTok, according to comments.

According to market research company BMI, there is an opportunity for growth in this country. The competition between GoTo, a “homegrown” e-commerce platform formed from the merger between two other domestic businesses, Tokopedia and Gojek, with Shopee and Alibaba is more than enough in the current context.

The Indonesian Government proposes a domestic ban to safeguard 64 million micro, small, and medium-sized enterprises, despite mixed reactions from small businesses, aiming to protect them.

TikTok business owners are profiting but need to cut human resources. Traditional traders are improving but not reaching the same level. E-commerce platforms like Tokopedia and Shopee disrupt traditional market activities due to transparent prices. 

Meanwhile, others are concerned that importing goods at competitive prices from world factories will affect the domestic manufacturing sector, which is supporting many working families. The growth in the commercial sector is there, but its consequences for the production sector are immeasurable.
 
A McKinsey report suggests that trade agreements like the Regional Comprehensive Economic Partnership Agreement will boost production and supply chains, particularly in the garment, consumer electronics, and food sectors.

CHANGE IN RESPONSE

Southeast Asia’s e-commerce growth and lower labor costs are attracting foreign investors, prompting the Indonesian Government to create protective barriers against cross-border e-commerce. This can teach other countries, including Vietnam, to optimize operations and adapt to new business paces, as returning to pre-e-commerce times is impossible.

The low-cost e-commerce market, characterized by stagnant incomes and economic instability, is causing concern for Vietnamese businesses and small businesses, as low-cost platforms struggle to develop strongly.

Competitive prices and easy ordering are benefits that cross-border goods bring to Vietnamese consumers but put great pressure on domestic businesses. “The fashion industry is changing profoundly,” said Mr. Dao The Vinh, founder of 8-year-old fashion brand Midori.

E-commerce and cross-border goods have significantly impacted domestic fashion brands’ production capabilities and cost optimization. Midori must adapt to new trends by focusing on design teams, optimizing materials, and changing production processes to meet small but continuous orders. This allows customers to place orders on e-commerce platforms within 2 hours. 

Midori, a Vietnamese company, has reduced its retail chain size by 2/3, reducing revenue contribution from over 20 stores. The fast-changing fashion industry has put pressure on costs and efficiency. Julyhouse, a natural essential oil business, continues to optimize costs in a competitive context, despite not yet having a strong domestic customer base.

Julyhouse, a Vietnamese FMCG startup, is aiming to maintain competitive raw material costs by partnering with farm-based suppliers and supplying product bottles themselves.

The company is distributing goods through retail channels and e-commerce platforms. Julyhouse is also investing in brand retention and social commerce technology to make it easier for consumers to forget brands. The company’s revenue ratio is approaching 70% online and 30% offline.

Regardless, shoppers like Kieu Nam and Quynh Nhu are still benefiting from hunting for cheap items from anywhere. Consumption habits associated with cheap goods and the current macro environment are paving the way for a price race, which will create notable changes for shoppers as well as e-commerce platforms. representative of a Vietnamese e-commerce platform comments.

Source: https://e.nhipcaudautu.vn/tech/chinese-low-cost-e-commerce-battle-lands-in-vietnam-3356348/

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Winning at e-commerce, TikTok enters the delivery market

It wouldn’t be surprising when TikTok entered the e-commerce delivery space.

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Ms. Ngoc Phuong placed an electronic order from TikTok Shop in Ho Chi Minh City, expecting a delivery time of 4 days. However, she switched to another e-commerce platform and received the product two days later.

Mandatory delivery is always a problem for e-commerce platforms with a large number of orders, especially TikTok Shop (part of the short video social network TikTok), which has surpassed Lazada to become the e-commerce platform with the largest market share in Vietnam in the second quarter of 2023, according to Metric.

Looking at the region, according to Momentum Works, TikTok Shop could account for 13.2% of the Southeast Asia market share by the end of this year, closely following Tokopedia (forecast to account for 13.9% market share), not too far away from Lazada (estimated to be 13.9% market share). accounting for 17.7%), even though it has only been in the market for 1 year.

It can be seen that most of TikTok Shop’s competitors have invested in affiliated delivery companies such as Shopee with Shopee Express and Lazada with Lazada Logistics. Even the competitor ranked at the bottom of Vietnam’s e-commerce rankings in terms of market share, Tiki, has its delivery team, TikiNOW. Meanwhile, TikTok Shop currently only uses J&T Express as its sole delivery partner, handling up to 90% of TikTok Shop’s orders in Southeast Asia.

There are many reasons why e-commerce platforms are forced to own delivery companies because, in addition to optimizing costs, they also reduce order cancellation rates by improving service quality.

Statista reported on the reasons affecting the ability to “close orders” in Vietnam in 2021: delivery service price and delivery service quality, accounting for 40% and 30% of survey respondents’ reasons, respectively. The report also shows that the return rate as a percentage of online orders in Vietnam in 2023 will be 6.4%, down nearly 2 percentage points compared to 2021 and more than 3 percentage points compared to the peak of this year.

Note that this survey was taken from units that account for the majority of Vietnam’s e-commerce market share, and most of them have delivery units. The refund rate of the livestream group, the branch where TikTok Shop is leading the market, does not yet have specific statistics because it is too new and the number may not be accurate due to the influence of price subsidy policies that change buying habits. customer shopping.

But in the end, the ability to close an order still depends on delivery time and service. Therefore, investing in delivery units to improve is a predictable step for TikTok, especially when rapid growth in China and Southeast Asia is putting pressure on the company’s shipping process. Responding to Tech In Asia, Mr. Roshan Raj, partner at Redseer Strategy Consultants, said: “Any serious e-commerce effort needs in-house logistics capabilities.”

Douyin, the Chinese version of TikTok, has invested in Jisuda since 2020 to offer delivery within and outside the city in two days. This move is due to the company’s logistics services being far behind those of JD.com and Alibaba. The rapid growth rate in a short period is a strength but also a weakness for TikTok Shop, as the time to invest in large delivery units is limited. Strategic investments could provide an advantage.

TikTok’s parent company, ByteDance, has invested $40 million in iMile Delivery in 2021 to serve the Middle East delivery market. Rumors suggest TikTok may invest in a struggling food delivery unit in the Vietnamese market. The Chinese market is concentrated with clear potential and pressure, with Douyin’s food delivery revenue reaching 13.8 billion USD in the first six months of 2023. However, this is less than half that of Meituan, which owns 6.4 million food delivery people and 9.3 million sellers on its platform as of April 2023.

Meituan is expanding into livestream sales to compete with Douyin and protect its market share in the Chinese market. To compete with Southeast Asian competitors like Lazada and Shopee, TikTok needs a regional-scale commercial delivery unit to compete with companies serving the fragmented food delivery market, which is less attractive than China.

Looking back over the past 3 years, the Southeast Asian market has witnessed delivery companies that always aim to expand into the region, such as Best, Ninja Van, and J&T Express. 

In 2021, J&T Express acquired Best’s operations in China to expand its influence in this market. In addition, among them, only J&T Express has expanded its services to the US market since the end of last year. 

Citing Reuters, TikTok also started a sales program for Chinese merchants in the US market a few months ago. Therefore, it is not surprising if one day TikTok announces its entry into the delivery market. But a representative from TikTok Vietnam refused to say anything about this.

Source: https://e.nhipcaudautu.vn/tech/winning-at-e-commerce-tiktok-enters-the-delivery-market-3356085/

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