To improve the competitiveness of retail banking services of Vietnamese commercial banks in the context of economic integration

Abstract

Vietnam has recently joined international organizations and free trade agreements, which have opened up the great deal of opportunities and challenges for the economy as well as the financial and banking sector. This increases the foreign capital flows to Vietnam economy, but also creates enormous pressures for the domestic commercial banks, with small capital size, lack of long-term capital and competence. Vietnam economy posted strong performance after 2008 financial crisis, commercial banks have suffered from modest credit growth despite a significant decline in lending rates and high ratio of non-performing loans. More banks are switching to a retail and consumer-oriented strategy to increase growth. However, Vietnamese commercial banks had focused on corporate credit for a long time so they face difficulties in changing banking infrastructure and technology to meet retail banking requirements. This paper was used theoretical analysis method, data collected from multiple sources such as papers, scientific reports to come up with a conclusion about the potential development of retail banking services in Vietnam, as well as solutions to improve the competition capacity of Vietnamese commercial banks in the context of economic integration. The result shows that Vietnamese commercial banks need to raise their capitals to improve competitiveness. There are solutions recommended to Vietnamese commercial banks such as merger, consolidation or attracting foreign investment, developing business and branding strategy, applying customer centric digital, improving security system, developing human resource, banking products and services...This paper thus provides information for bank managers about the potential development of retail banking services in Vietnam and suggests solutions to improve the competitiveness of Vietnamese commercial banks.