Expanded access to financial services

Vietnam has made great strides in promoting financial inclusion, Ms. Nguyen Thuy Duong - Chairwoman of EY Vietnam, assessed at the financial inclusion conference at the end of November. According to the 2024 Global Financial Inclusion Index ranking by Principal Financial Group, Vietnam ranked 3rd in the ASEAN region (after Singapore and Thailand), and 14th in the world.

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Cake Digital Bank offers a full range of financial products online to individual customers. Photo: CN

About 87% of adults have a payment account, up from 31% in 2015-2017. This figure has exceeded the target of 80% under the National Financial Inclusion Strategy 2025 with a vision to 2030 approved by the Prime Minister in 2020.

Smartphones and technological developments are believed to be the reasons for the expansion of the circle of financial inclusion in terms of user size, number of services, and the increasingly active participation of financial service delivery models.

A decade ago, it was the rise of consumer finance companies catering to the “subprime” customer base of traditional banks. Later, the game changed completely with the emergence of fintech models to digital banking.

Digital banking is the newest model, but it has shown impressive initial results in expanding the circle of access to financial services. For example, in the case of Cake, the number of users quickly reached 3 million in the first 2 years of its operation, then increased to 4.1 million in 2023 and nearly 5 million in 2024. The total number of credit applications averaged 400,000 per month, a significant number considering the purely digital banking model in Vietnam.

One of the reasons for its rapid growth is that this digital bank focuses on meeting the needs of its target customer group with a wide range of easily accessible financial products and services, with an ecosystem of many other services (ride-hailing apps, telecommunications, entertainment, etc.). Without the need for a physical branch, Cake operates 100% online and provides many services completely free of charge. Customers only need a smartphone with internet connection and a citizen identification card to access a comprehensive range of products from opening a payment account, to savings, to credit cards, consumer loans, buy now, pay later, etc. and even fund certificate investment links. Cake users also use the application repeatedly, with a regular customer rate of up to 95% for basic financial services (financial basis).

Digital banking helps speed up progress

Despite the great strides made in recent times, there is still a significant gap in access to adequate and appropriate financial services. For example, a survey by EY Vietnam found that among the “unbanked” group, 42% of respondents said they had used informal services such as borrowing from acquaintances, hot loans, and playing savings and loan association games in the past year.

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Cake's customer base is young, modern and lives in all 63 provinces and cities nationwide. Photo: Cake

The burden on financial service providers is the high cost of small-scale transactions. Meeting the large number of transactions also requires the quality of the technology system, ensuring smooth, safe and fast transactions.

The opportunity to accelerate access to comprehensive finance therefore comes entirely from the digital banking model, with its advantages in terms of cost, speed and flexibility. Not only does it fully meet the financial needs of subprime customers, this model also contributes significantly to popularizing smart consumer finance and promoting economic growth through other financial services.

These advantages come from technology, which is the strength of the digital banking model. For example, Cake is currently strong in mastering many different technologies, such as eKYC (electronic identification), open banking (open banking service - helps integrate additional financial services from other parties), core-card on the cloud (helps speed up card payment, optimize costs, flexibly customize, quickly meet customer needs); to AI application in the entire operation process (from registration, approval to service implementation ...).

Pure digital banking is still very new not only in Vietnam but also in the world. In Vietnam, Cake is a rare unit in the top 5% of effective digital banks globally. Cake's average revenue per user in 2024 will be 3 times higher than in 2023.

The circle of comprehensive finance is therefore expected to expand faster with the presence of pioneering, effective models that meet the actual needs of the market.

Dinh Son