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August 08, 2023

The need for digitalization creates a push for financial investment in Vietnam

The fast-growing population using the internet creates a new demand for faster, more efficient services. Vast financial investment in Vietnam to advance digital technology has been largely seen in banking solutions and retail. Companies such as Masan Group are also in the digital transformation race.

Internet usage in Vietnam exceeds 70%

According to the Ministry of Information and Communications statistics estimates in 1997, there were just over 200,000 Internet users in Vietnam. By 2002, the number of Internet users in Vietnam had risen to 3 million, accounting for around 4% of the population. By 2007, the figure had risen to 20 million, accounting for 24% of the country's population.

The Ministry of Information and Communications reported that the number of Internet users in Vietnam will have reached over 70 million in 2022, accounting for almost 70% of the country's population. Vietnamese Internet users spend an average of 7 hours everyday engaging in Internet-related activities. In Vietnam, the rate of everyday Internet users has risen to 94%. The vast coverage of internet usage creates a golden opportunity for businesses to invest in the digitalization of services.

A surge of financial investment in Vietnam to head for digital transformation

Digital transformation in banking

Digitalization in banking is becoming more pivotal, making financial services much more accessible to millions of people. According to a study by Meta and Bain & Company, almost 60% of digital consumers have used fintech solutions such as money transferring applications, online banking, e-wallets, and digital banking.

As a huge number of clients with consumer financing demands have resorted to cashless applications, prominent financial organizations are focusing on digitalization financial investment in Vietnam to compete and extend their market shares. In addition, aside from the improvement in convenience and cost control, investing in fintech allows banks to hold and preserve data. These data sources are crucial in enabling banks to expand their financial reach, gain better access to customers, and create more effective customization of products and services.

Hence, building networks of branches, transaction offices, POS, and ATMs is no longer the sole focus for banks. Instead, they are concentrating on the digitalization of products and services. Major banks such as Techcombank, VIB, TPBank, VietinBank,... have been investing heavily in the integration of digital banking platforms alongside their traditional banking services. This move has shown to be beneficial to many banks where they have attracted millions of customers to subscribe to their digital solutions as shown in their 2022 business report. Some banks, such as Cake, Timo, Tnex, Octo, and Ubank, have attracted consumers by investing only in digital banking strategies.

As a result of these intensive investments, reported by the State Bank of Vietnam (SVB), non-cash payment transactions climbed by 89.05% in volume and 32% in value compared to 2021. Internet transactions climbed by 98.54% in volume and 50.24% in value; mobile phone transactions increased by 139.32% in volume and 106.54% in value, and QR code transactions increased by 225.36% in volume and 243.92% in value.

Digital transformation in retail

Along with the digitalization of financial services, digitalization in retail is also growing at an impressive rate. According to the Vietnam E-commerce Association, retail e-commerce transaction size will account for around 8.5% of total retail sales of consumer products and services in 2022. At the moment, the biggest e-commerce platforms are still Shopee and Lazada. However, recently in mid-2022, Tiktok Shop has risen to become the third largest e-commerce platform in Vietnam. Apart from e-commerce platforms, social media platforms have almost doubled in popularity for business activities from 39% in 2019 to 65% in 2022, as reported by the Vietnam E-commerce Association (VECOM) in a 2023 report.

Masan hướng đến mục tiêu có từ 3.300 - 3.600 cửa hàng WinMart+ trước cuối năm 2022.jpg

Moreover, digitalization in traditional retail is also urged by experts through giving salespeople the relevant tools, such as mobile devices, wearables, and task management software,... so they can spend more time on value-added duties, such as customer service and support, rather than regular chores like inventory checks,... In addition, the integration of digital channels for product information as well as cashless payment solutions to traditional retail would allow a more efficient shopping experience for customers.

Maximizing digital transformation for a seamless shopping experience

Understanding the potential of digitalization in financial services and e-commerce, local players such as Masan have leveraged this opportunity to adapt technologies into its consumer-retail business model. Masan invested $105 million in Trust IQ in February to create artificial intelligence solutions for its clients in retail and consumer finance. 

In addition to extending its network of supermarkets and convenience stores, Masan Group is focusing on the advancement of technology for the Point-of-Life strategy to accelerate consumer digitalization beginning in 2023. To keep up with the digital economy trend, the WIN AI application has been integrated into the store's "Smart POS" system. The artificial intelligence and machine learning technologies in this application will assist Masan in better understanding and serving its customers. Cashiers may assist clients enjoy a better shopping experience beyond simply processing payments by using data-driven recommendations from the system. 

Logistic technology is also a crucial investment from Masan. Supra is created to enhance the supply chain of its retailer. Supra uses AI and ML techniques to place orders for select products and is steadily growing rather than relying solely on humans. Machine learning technology detects the retailers with the largest product consumption through the database, from which to generate shipping orders and determine the ideal delivery route to assist cutting shipping costs as much as feasible.

Supra is responsible for 45% of WinCommerce's (“WCM”) dry products, which contributed to a 13% decrease in WCM's supply costs per product in the first year of operation, lowering retail prices to customers. Supra successfully plans supply, avoiding shortages or large inventories, thanks to the use of artificial intelligence technologies.

Moreover, Masan has also collaborated with Techcombank to develop the WINLife ecosystem to capitalize on the personal financial needs of Masan's retail and consumer services consumers. Masan Group also hopes to reach 1 million unbanked clients through the WIN Membership platform and become the gateway to mass retail banking. The company hopes to address the financial needs of our WIN Members while also issuing 500,000 credit cards digitally by merging WIN AI with Trusting Social's credit assessment technology. 

Customers who register a new Techcombank account at WinCommerce will earn a 50% bonus, up to 100,000 VND, on their first order value when paying using a one-touch payment or scanning the QR code in-store. Alternatively, purchasing using Techcombank Mobile will result in double incentives. Following the development trend of technology, digital transformation is increasingly prioritized for strong development because of great benefits for businesses as well as users in the financial, retail industry, helping to save time and effort, cost and secure data.

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