Global financial playground: Great pressure on...

Opportunities to reach out and challenges to compete with the big guys

The policy of establishing an International Financial Center (IFC) in Vietnam is considered a strategic and timely step. Many international experts warn that if delayed, Vietnam may lose a valuable opportunity to affirm its position on the global financial map.

However, how to effectively take advantage of the opportunities that international financial markets bring is still a big problem for domestic financial institutions and enterprises.

According to Ms. Truong Thi Thu Ba - Deputy Director of Financial Institutions Department, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), participating in the international financial market opens up many opportunities for the domestic banking system: from expanding the market, upgrading the financial service ecosystem, to accessing global standards, thereby improving credit rating and competitiveness.

She emphasized: “Current banking services do not stop at payment or money transfer, but must develop into a comprehensive ecosystem. Participating in the international financial market means that Vietnamese banks need to apply the most advanced technologies such as open banking, cloud computing, artificial intelligence (AI), green finance... while improving management capacity to meet strict requirements according to international practices such as financial reporting according to international standards, implementing advanced Basel II, etc. "

Although BIDV is currently the bank with the largest total assets in Vietnam, its scale is still very modest compared to large global financial institutions. Once entering the common competitive space and having to comply with the international legal framework, domestic banks will face considerable pressure.

Ms. Thu Ba frankly admitted: without careful preparation, Vietnamese banks will find it difficult to compete in the international financial market, and may even fail right at home.

In addition to the issue of scale, Vietnamese banks are also facing major challenges in data infrastructure, technology platforms and digital integration capabilities.

Although there have been many efforts in recent times to accelerate digital transformation and data collection, compared to international financial institutions, the Vietnamese banking technology system is still in its infancy – especially in the field of cross-border payments and digital banking services.

In other words, Vietnamese banks are under pressure to "internationalize pressure" while the ability to "internationalize competitive capacity" is still limited.

However, according to Mr. Nguyen Duc Lenh - Deputy Director of the State Bank of Vietnam, Ho Chi Minh City Branch, these pressures are the driving force for development.

He believes that building a system of financial institutions including commercial banks, finance companies, financial leasing companies... in the space of the international financial market will help improve operational efficiency, create a healthy competitive environment, and at the same time be an important driving force to develop the domestic banking system safely, sustainably and in line with international standards.

Experts agree that, to become part of the international financial market, domestic credit institutions need to proactively "upgrade", not only to meet the conditions for participation, but also to be competitive with global giants.

Once these barriers are overcome, Vietnamese banks will open the door to strong development, contributing to affirming the country's position on the regional and world financial map.

When joining the global "game", Vietnamese banks must compete fairly with international financial institutions, comply with laws and common standards.

Banks need to expand their products to stay competitive.

Many large banks are currently actively preparing to participate in the international financial and monetary market (TTTC). Ms. Truong Thi Thu Ba commented that Vietnam possesses a high-quality workforce and a large team of programmers.

Therefore, banks need to take advantage of this advantage to provide financial services to the international financial market, such as payment infrastructure, digital identification, or credit assessment through artificial intelligence (AI). At the same time, the banking industry needs to clearly define the roadmap and specific goals for each stage of development.

On BIDV’s side, Ms. Thu Ba said that the bank determined that in the initial stage of participating in the international financial market, they will not only provide traditional banking services but also high-tech digital services. In particular, BIDV will also provide outsourcing services. Currently, BIDV has a team of 1,000 technology employees and plans to increase this number to 1,400 people this year.

Mr. Nguyen Manh Khoi, Head of Capital Trading Department of VietinBank, admitted that the current Vietnamese financial market still mainly provides basic products, while structured and derivative products are developing slowly and have not yet met the risk hedging needs of investors.

In fact, some FDI enterprises operating in Vietnam have to use derivative products from Singapore to protect investment capital flows. Mr. Khoi suggested that it is necessary to encourage and support the development of new financial products, derivative instruments, as well as innovative investment products to increase flexibility and depth for the market.

In addition, according to a representative of VietinBank, when building an international financial market, Vietnam should test and gradually put into operation new markets such as commodity markets, foreign currencies, and digital assets to get closer to the models of international financial markets.

Specifically, the construction of a commodity exchange will focus on products in which Vietnam has advantages, such as agricultural products. "VietinBank will pioneer in providing commodity price derivatives services to the Vietnamese market," Mr. Khoi affirmed.

Source: https://baodaknong.vn/san-choi-tai-chinh-toan-cau-suc-ep-lon-doi-voi-ngan-hang-viet-250009.html