E-commerce changes people's cash habits

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Dr. Nguyen Tri Hieu

How do you assess the opportunities for the development of digital banking and online payment services during this Covid-19 pandemic?

Online payment and non-cash payment is a policy that has been promoted by the Government and the State Bank for many years. However, the habit of using cash and the limitation of non-cash payment points are major obstacles of this policy. Therefore, regulators are taking a lot of actions to be able to solve, bringing the rate of non-cash payment up and using online banking to achieve the goals.

With the complex situation of the Covid-19 pandemic, which can spread from person to person, paper money is a potentially risky environment. Therefore, this is also an opportunity to change people's cash use habits. Moreover, with the policy of isolation, limiting exposure, limiting unnecessary activities, e-commerce and online trading are more in focus, this is also one of the opportunities for payment. Online has an additional opportunity to be used. It is possible that after the epidemic ends, the more "e-commerce" will increase, which will create opportunities for Vietnam's economy to become a "cashless" economy. This is a trend not only in Vietnam but also in many other countries.

In recent times, many banks have been actively reducing online transaction fees, in your opinion, how will this promote online banking activities?

First, we must appreciate efforts to reduce fees for online transactions and offer promotions to promote digital banking as well as regulators and intermediaries. Because this is a very difficult period when income of banks is much reduced due to reduced demand for banking services, especially credit income. Therefore, cutting many types of online transaction fees is an effort of the banking industry to attract and encourage people to use online services.

However, in the long run, reducing fees is not an important solution to encourage people to use online banking services more. Because these fees are normal as prescribed, there is an increase or decrease based on market competition, so not many people "complain" about paying service fees. Therefore, to attract more people to use the service, it is important for banks to provide adequate facilities and technology at payment locations, making it easier for people to use them.

Because the reality shows payment without cash is still mostly in hotels, supermarkets, shops in cities and generally in big cities. While in suburban areas, small shops are not provided, making it difficult for people to go cashless. Therefore, banks must find ways to expand these locations, providing more equipment and technology to these locations. This shows that, to promote digital banking, non-cash payments need a combination of three sides: banks - customers - intermediaries.

The pandemic situation has been and will greatly affect the business profits of banks in 2020, how will this affect the investment and development plans of digital banks?

The economy in general and the banking industry in particular are being strongly affected by the pandemic, causing the business situation to decline, and banks' profits will certainly be affected. Not only reducing profits, banks also face increasing bad debt situation, when credit demand is high but customers' ability to repay is difficult. Therefore, in this situation, all long-term investment plans will be forced to be set aside, banks will have to find ways to ensure immediate profit this year, helping ensure the financial balance. It is precisely when banks are struggling to reduce lending interest rates to support those who suffer from diseases, reduce online banking fees and handle bad debts. Therefore, long-term investment problems in terms of technology and digital banks will temporarily leave after the epidemic ends, and the business situation will recover.