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Banks concerned about legal risks from digital transformation
By Vu Dung
Friday,  Nov 2, 2018,18:57 (GMT+7)

Banks concerned about legal risks from digital transformation

By Vu Dung

Vietnam Prosperity Joint Stock Commercial Bank is one of the pioneers in digital transformation in Vietnam with the launch of its Timo digital banking service - PHOTO: THANH HOA

HANOI - Most local banks have strongly invested in digital transformation, and legal risks are their greatest concern for this process, said Pham Tien Dung, director of State Bank of Vietnam’s Payment Department, at a seminar on banking digitalization on November 1.

At the seminar, titled “Banking digitalization: breakthrough opportunities,” Dung stated that up to 94% of local banks have drawn up their digital transformation strategies.

Digital technologies have gradually changed the business model of banks, remarked SBV Deputy Governor Nguyen Kim Anh, adding that the development of near field communication and biometric technologies has helped banks develop new products and services, such as internet banking, mobile banking and QR code payment, thus raising their revenues and profits as well as reducing their dependence on credit services.

Pioneers in digital transformation in the banking system are Tien Phong Commercial Bank, Vietnam Prosperity Joint Stock Commercial Bank, Orient Commercial Bank, Bank for Foreign Trade of Vietnam, Vietnam Bank for Industry and Trade, Military Bank and the National Payment Corporation of Vietnam, Anh noted.

Dung cited a study by Bank for Investment and Development of Vietnam, saying that banks can cut their expenditures by 60%-70% by embracing digital transformation, while customers can access more banking services.

The central bank’s statistics also showed that the mobile banking service grew annually by 144% over the past two years, well above the 30% seen for other payment services.

However, banks have also encountered risks of cyber attacks and swindling. In addition, it is costly and time-consuming for banks to transform into digital ones.

Banks have applied the chatbot tool on their websites to automatically interact with their customers. However, there are no regulations in place to ensure someone bears legal responsibility if the information provided by the chatbot is inaccurate, causing serious risks for customers.

Banks also use Big Data to analyze their customers’ creditworthiness to decide on issuing loans of less than VND50 million. This task does not require the participation of human beings, posing a high legal risk.

The SBV deputy governor said the central bank attaches great importance to the improvement of the legal framework to ensure the safety of the banking system. SBV also supports the establishment and development of financial technology companies.

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