Banking Industry FBA 2024
ANALYSIS AND STRATEGIC
RECOMMENDATIONS
-------------------
Ripple Effects of Global
Economic Downturn on
the Banking Industry in
Vietnam
TEAM: KTAN
Banking Industry Executive Summary Introduction Overview Analysis Recommendations
Industry Outlook Vietnam’s banking sector is seeing growth in credit and deposits.
Digital transformation and sustainability expected to shape future development.
Key Trends
Digital Banking Growth: Rise of mobile payments and digital platforms
Artificial Intelligence: AI adoption in customer service and operations
Sustainability: ESG standards influencing operations
Global instability
Challenges
Regulatory changes
Cybersecurity risks
Short-term: Launch mobile payment features, enhance fraud
Recommendations detection, promote short-term loans.
Long-term: Invest in AI, transition to digital-only models, issue
green bonds, partner with fintechs.
Banking Industry Executive Summary Introduction Overview Analysis Recommendations
BANKING INDUSTRY
Context Objective Methodology Goal
Economic context: The Examines the Frameworks: such To provide strategies
Vietnamese banking ramifications of frameworks as for banks to manage
industry faces striking external volatility and PESTLE, Porter’s Five contemporary
obstacles due to internal alterations Forces. uncertainties and
worldwide economic (FiinGroup, 2024) on Data sources: improve resilience.
upheaval (Vietnam’s the sector by Financial statements,
Financial Market in a emphasizing on industry reports or
Global Context, 2023). current challenges. macroeconomic
Challenges: Impacted sources.
by macroeconomic
pressures, regulatory
changes, and
technological
disruptions (IMF, 2023).
Banking Industry Executive Summary Introduction Overview Analysis Recommendations
State Bank of Vietnam
State-owned Private joint-stock Foreign Non-bank credit Microfinance People’s credit
banks banks banks institutions institutions funds
Leading banks based on Year on year credit growth rate of
total assets in Vietnam the banking sector in Vietnam
Joint-stock
commercial banks had
the highest return on
equity and assets
(Statista, 2024)
The banking industry,
represents 33% of
market capitalization
(Nguyen, 2024)
(Source: Statista)
Banking Industry Executive Summary Introduction Overview Analysis Recommendations
POLITICAL ECONOMIC SOCIAL
P STABILITY ROBUST ECONOMIC GROWTH Young and tech-savvy population
Adjust regulatory with a focus on Banking product demand increases Change consumer preferences
E enhancing financial inclusion and
integrating digital banking
Rising income levels leads to
greater consumer spending
into mobile banking and
personalized financial products
solutions Fluctuations in inflation and
S interest rates
GDP growth of 6.47%
T
TECHNOLOGICAL LEGAL ENVIRONMENTAL
L Widespread adoption of digital
technologies reshapes financial
Anti-money laundering (AML)
regulations
Growing emphasis on sustainability
encourages banks to adopt eco-
E
services Consumer protection laws ensure friendly practices and invest in
The rise of fintech startups fair practices and dispute resolution green project
Challenges in cybersecurity mechanisms
Banking Industry Executive Summary Introduction Overview Analysis Recommendations
PORTER’S FIVE FORCES
Force Level Description
High regulatory barriers and capital
requirements limit new entrants,
Threat of new entrants Low
notwithstanding challenges posed by fintech
and digital banks.
High-interest rates or inflation raise banks' cost
Bargaining power of suppliers Moderate to high of capital to attract funds from depositors and
investors, increasing their power.
Customers easily switch banks or use services
Bargaining power of buyers High offered by multiple banks, accentuating their
power and increasing competition.
Alternatives like fintech services, digital wallets,
Threat of substitutes Moderate and cryptocurrencies pose a moderate threat in
providing competing financial services.
Intense competition among different types of
Industry rivalry High banks in a dynamic market tends to drive high
chances of industry rivalry.
Banking Industry Executive Summary Introduction Overview Analysis Recommendations
Three main trends
Credit and debit cards, mobile payments
CASHLESS PAYMENT Digital wallets, bank transfers, peer-to-peer payments
Buy Now, Pay Later (BNPL), and cryptocurrency.
ESG in Banking industry
Encouraging banks to integrate sustainable Fund environmentally friendly projects
practices (issue green bonds...) (investments into renewable energy projects...)
Executive Summary Introduction Overview Analysis Recommendations
Banking Industry
Three main trends
Artificial intelligence
(AI)
How banks should approach AI Benefits of AI in banking Challenges to AI in banking
Define the AI
Enhanced More Legal Difficulties in
governance Embrace a
Prioritize use cybersecurity Enhanced intelligent uncertainty controlling
and risk hybrid cloud Cybersecurity
cases and fraud APIs customer related to outcome
profile of the architecture
detection tools operations accuracy
bank
Banking Industry Executive Summary Introduction Overview Analysis Recommendations
Alternative Lending and BNPL in Vietnam:
Market Growth and Transformation
Vietnam's alternative financing market to
grow at CAGR of 19.3% from US$304.7
million (2022) to US$818.7 million (2027).
SMEs turning to alternative lenders due
to difficulties in obtaining traditional
credit.
Peer-to-peer (P2P) platforms, digital
lending services, and non-bank
financial institutions offer flexible, quick
financing options.
Transaction value of alternative lending in Vietnam from 2018 to 2028 (Source: Statista)
Banking Industry Executive Summary Introduction Overview Analysis Recommendations
12 USD 11.3 billion BNPL Market Growth
10 and Future Trends
BNPL adoption in Vietnam expected to grow
8
at CAGR of 27.6% (2024-2029).
Gross merchandise value expected to grow
6 from US$2.34 billion (2023) to US$11.27 billion
(2029).
MoMo's strategic relationship with Grab will
4
USD 3.3 billion drive further expansion of BNPL solutions.
Growth factors include low credit card
2 penetration and increased consumption.
0
2024 2029
Vietnam's Buy Now Pay Later Market
Banking Industry Executive Summary Introduction Overview Analysis Recommendations
The industry-wide valuation level
__ Average P/B on 5y
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Banking Industry Executive Summary Introduction Overview Analysis Recommendations
REFERENCES
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