The EVFTA and Increasing the Operational Efficiency of the Banking Industry

The article aims to understand the impact of The Vietnam –EUfree trade agreement (EVFTA) on the operations of the Vietnamese banking industry. Through the collection of agreement-related documents related to the banking sector and the actual operations of Vietnamese banks, the article employs a qualitative research methodology to identify opportunities and challenges. To assess the banking industry’s ability to access and take advantage of the agreement, the study surveyed 152 leaders from thirty-six Vietnamese commercial banks. The results show that when the agreement takes effect, Vietnamese commercial banks have the opportunity to attract investors from Europe, improve risk management capacity, diversify services, promote digital transformation, bancassurance, and diversify bank income. Besides, this agreement also brings many challenges to banks such as increased costs, competition, risks, conflict of interest, requires high quality human resources. The findings also highlight barriers to the agreement’s commitments in the areas of core banking, administrative capacity, and infrastructure system network. The article then offers strategies Vietnamese commercial banks can use to improve the effectiveness of their operations.