Retail banking in Vietnam over recent years has developed strongly but from a low base. The number of debit cards in 2014 was 70 million compared to 51 million in 2012 and were about 22-times higher than in 2006. Personal banking accounts have doubled in number since 2010. The number of points of sale has increased five-fold over the last five years, to reach more than 160,000.

Vietnam’s retail banking market has huge potential, with the country’s population of around 92 million people including two-thirds who are under the age of 35. The country also adds 2 million more people to its middle class every year, while GDP growth in 2014 exceeded 6 per cent; the highest level since 2011. Moreover, according to ANZ, in its latest report in April, GDP growth will reach 6.5 per cent both this year and next.

The urbanization rate in Vietnam is also increasing significantly, by 3.4 per cent each year. The country’s consumer confidence index is among the world’s Top 10, according to Nielsen’s quarterly report for Q4 2014. Research on consumer confidence produced by ANZ-Roy Morgan in the first quarter of 2015 showed that industrialization growth is at its strongest point for the last three years, resulting in higher productivity, stable employment, and greater customer confidence, with households having more to spend and an expectation that incomes will continue to rise.

Vietnam is also among the leading nations in growth in the “New Wealth Builder” index, which measures those with assets between VND2 billion and VND42 billion ($100,000 and $2 million). The potential for the development of the retail banking market is also huge because only 20 per cent of the population uses bank services. The number of credit cards in Vietnam is 3 million, compared with 18 million cards in Thailand, whose population is 67 million.

All of these figures indicate that there is a clear opportunity to develop retail banking. Other figures relating to the economy, society, population structure, and the level of involvement of banks in the segment all confirm the potential the market holds.

The biggest threat to the segment’s development, however, is that much investment is needed in human resources and infrastructure, while the principle of retail banking tends to be to earn a little a bit of money here and a little there. Retail banking therefore requires long-term vision and commitment, and banks must develop gradually over time. Developing too quickly may lead to credit risks and operational risks, but if banks don’t develop to an efficient level within a reasonable period of time then overall development will be hard to achieve in the segment.
ANZ has been in Vietnam for over 20 years and retail banking is one of the most important segments for us. Over the past four years the size of our retail activities has increased four-fold and it now accounts for one-third of our revenue.