Vietnam’s Payment System and Bank Modernization Project
By Marco Azzaro
Apr. 27 – Vietnam’s banking reforms, started in the late 1980s, have provided great positive consequences since 2004 to where the banking sector now resembles that of other newly industrialized economies.
The old system, with its main faults like ineffectiveness to settle a transaction and outdated information for risk management, has been replaced and today SBV (the central bank) and several others have adopted a modern interbank payment system reducing the risks and costs.
The Second Payment System and Bank Modernization Project (PSBM2) has significantly improved the speed and reliability of interbank payments in Vietnam with incredible growth in financial transactions nationwide. The participating banks settled customer fund transfers within minutes and moreover centralized funds and customer management strengthened project entities’ risk management capacity. Several banks can also now offer eBanking services to customers.
The PSBM2 has brought about several economic benefits in its development of a modern financial sector infrastructure, access to finance and improved banking operations. PSBM2 has developed predictability of cash flows in the economy and financial management by businesspersons or households since payments are now made on real time or within the day. It has also made timely information available for the SBV to monitor market liquidity and offer services such as eBanking, one-stop customer service, and 24/7 call center support.
These benefits were achieved thanks to improvements in payments system connectivity and more than 100 percent per annum increase in bank operational system connectivity. Besides more than 1.5 times per annum growth of transactions processed by the payments system and exponential growth of transaction volumes at the banks.
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