Digital banking model for promoting retail banking services at Vietnamese commercial banks

The Fourth Industrial Revolution is inducing rapid transformations globally, notably in the banking industry's digitalisation surge.This transformation is vital for the "survival" and growth of Vietnamese commercial banks.In recent years, commercial banks have recognised the importance of digital transformation strategies.Consequently, they have heavily invested in digital technology and conducted extensive research on its application in banking operations, particularly in the retail banking sector.However, this transition faces multiple obstacles such as limited technological capacity, rising security issues, and limitations in R&D and human resources.Using data collected from ten commercial banks in Vietnam, representing 50% of the State-owned commercial banks and 56% of the top sixteen banks with the largest total assets, and their 200 individual customers, this study analyses the difficulties those banks are encountering, the factors impacting their customers' satisfaction and loyalty, and provides a roadmap for Vietnamese commercial banks to successfully transition towards digital banking models.The empirical results indicate that: (i) a successful approach towards digital banking necessitates prioritising customers in all initiatives; (ii) security concerns are a fundamental factor undermining customer trust in retail products on digital banking platforms; (iii) effective communication by bank staff enhances customer experience with digital banking; (iv) the outdated legal framework, intense competition from fintech.In response to these challenges, the study proposes a three-phase roadmap for the development of digital banking in Vietnam, as well as suggesting recommendations for the Government, the State Bank of Vietnam, and other relevant ministries.