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Mobile banking poised to take off in Vietnam’s rural areas

Vietnam’s rural population is still struggling with access to basic financial services. With the high mobile penetration rate, can mobile phones be a platform to address their needs? Yap Far Loon, Business Development Director, Telecommunications at Spire Research and Consulting, shared his insights on the untapped potential for mobile financial services to serve Vietnam’s rural population in The Saigon Times Daily.

According to a Spire report, an astounding 60 million people in Vietnam do not have access to basic financial services. Only 22% of the population – predominantly those residing in urban areas – have access to financial services.
Why are the rural areas being left out? Yap opined that high costs are the main reason. For instance, the cost of installation, maintenance, operation and location rental for Automated Teller Machines (ATMs) alone exceeds VND300 million annually. Moreover, as rural transaction volumes are low, economies of scale are limited, making it even more expensive for the financial service provider.

But Vietnam’s high mobile penetration rate has created the possibility of another platform – mobile devices – for accessing financial services. According to the Ministry of Information and Communications Statistics for December 2013, Vietnam has approximately 150 million telephone subscribers – of which 93% of them are mobile phone users. This implies a mobile penetration rate of over 100%. The 3G network in the country covers up to 20 million subscribers.
Hence, it is high time for service providers to tap into this market. In May 2014, online mobile service company mService joined hands with Vietcombank and VinaPhone to launch a mobile money transaction service known as MoMo. The account number for this service is the same as the customer’s mobile phone number, making the application user-friendly.

If initiatives like this succeed, we can expect mobile e-banking, e-payments and e-commerce to take off among Vietnam’s huge rural population. But to make that happen requires a high level of co-operation amongst financial institutions, mobile network operators and mobile payment processors.


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