In the trend of strong globalisation with the recently signed CPTPP and EVFTA, meeting international standards by enterprises, especially in the banking sector is essential. These international standards help to affirm banks' position, development potential and brand reputation, therefore creating trust for customers.
Adhering to international standards
The Basel Convention is an international standard in banking operations and is being applied by the State Bank of Vietnam (SBV) to ensure operational safety through the application of high standards in risk management, thereby helping make banking activities safer.
Commercial banks will have favourable conditions when expanding their operations to foreign markets and this is also a positive factor for international rating agencies to upgrade their credit ratings, creating conditions for banks to access capital at a reasonable cost from international markets.
In order to concretise this standard, the central bank has issued Circular 41/2016/TT-NHNN regulating capital adequacy ratios for the entire banking industry and by January 1, 2021, all domestic banks must complete three pillars of Basel II.
Along with Basel II, domestic banks also actively participated in the credit rating of international agencies such as Moody's, Fitch, S&P, in which Moody's is the most familiar name in the market. Having a high credit rating by reputable agencies is a necessary criterion for seeing a bank's capacity, financial health and development prospects.
There is also the race for technology investment amongst banks which are investing heavily in the core banking software system – to connect operation systems of a bank. This is the most important platform connecting all operations, processing transactions in the whole system, developing banking products and services, especially digital banking services such as internet banking, mobile app, OMNI, ensuring safety and security, as well as improving the customer service experience. Core software trusted by Vietnamese banks include T24 – Temenos, SIBS, TCBS, Sylbol System, Sunshine.
In addition to equipping synchronous technology infrastructure, it is also very important to meet the banks' information safety and security. One of the most common is ISO/IEC 27001 – an international standard related to the Information Security Management System, allowing banks to assess risks and perform audits to preserve confidentiality, integrity and availability of assets and information systems.
For the banks' card system, it is required to comply with PCI DSS security standards to help ensure the security of payment card data when processed and stored at banks and electronic payment enterprises. PCI DSS helps to set standards for card information security and is applied globally. In addition, the EMV standard security chip technology is also used by banks to ensure safety and confidentiality for domestic and international cardholders.
In the field of service quality management, most Vietnamese commercial banks have implemented the quality management system according to ISO 9001:2008 standards at different levels through the establishment of a specialised quality management department, maintaining periodic or irregular assessments as well as continuously updating the quality management system to ensure the highest quality and bring best experiences to customers at the banks.
Approaching new business opportunities
Thus, it can be seen that many Vietnamese banks have actively upgraded and equipped technology in accordance with international practices to “fill the gap" with foreign banks. The most outstanding example is the Southeast Asia Commercial Joint Stock Bank (SeABank) – one of the pioneering domestic banks in meeting international standards in recent years.
First of all, SeABank is one of six Vietnamese banks that completed all three pillars of Basel II before the deadline of January 1, 2021. This bank has also received a B1 rating by Moody's in 2019 and 2020 consecutively – equivalent to the assessment of stable development prospects. In addition, in terms of technology, SeABank meets the PCI-DSS security standard from 2016 and ISO/IEC 27001: 2013 from 2014. SeABank is also one of the pioneering banks in Viet Nam to use the world-leading EMV chip-based security technology for ATM cards since 2012.
Not only that, SeABank is one of the few banks that has been applying T24 Temenos banking core management software with a multi-million dollar investment since 2006, simultaneously upgrading core banking and is the first bank in Viet Nam upgraded to the latest R18 version in the world by the end of 2019.
The early application of core banking as well as the construction of a data centre according to TIE III international standards and synchronous technology infrastructure helped SeABank ensure stable and smooth operations to serve the needs of nearly 1.3 million customers, and at the same time constantly diversify products and services, develop digital banking services and being ranked in the top 5 leading banks in Viet Nam in information technology (IT) application according to the 2011 ICT Index.
Ms. Le Thu Thuy, SeABank General Director, said: “Constantly improving to meet international standards is one of SeABank's priorities with the goal of always ensuring compliance with the highest standards. These standards have helped SeABank manage and run its business proactively, transparently, safely and sustainably."
"The results of continuous growth, customer satisfaction, especially the technology foundation are the best evidence for this strategy. This is also an important basis for SeABank to assert its position, potentiality and reputation with customers, partners, especially foreign investors as well as credit rating agencies."
Not stopping there, according to the General Director, the bank is gradually approaching more comprehensive international practices, including Basel II IRB, Basel III, IFRS 9 financial reporting standards and initially achieved certain results, paving the way for the next stage of development.
Catching up with business opportunities, sustainable development is the goal that any business entering the market is aiming for. In order to accomplish that, especially in the current trend of international economic integration, the constant innovation and access to new standards is a prerequisite factor. Therefore, the preparation of each business in general and banks in particular is really necessary and urgent. This is an important element to help capture development opportunities and increase competitiveness when integrating internationally./.
