Earning trillions of billions VND from payment services, why do Vietnam giant banks apply zero-fee policy? How will this affect the banking industry in 2022?







The entry of Vietnam state-owned giant banks into the “zero-fee” group

“Zero fee” – free of charge – has been implemented by many banks several years ago. Vietnam Technological and Commercial Joint-stock Bank (Techcombank) is a “pioneer” leading this trend when started applying this policy in 2016. After that, a few other private banks also applied the “zero-fee” such as MB, TPBank, VPBank, MSB, etc. Most of the remaining banks on the market also have a free money-transfer policy, but still, require registration of an account package with conditions of balance and associated transactions.


In mid-May 2021, Vietnam Bank for Agriculture and Rural Development(Agribank), one of the giant banks in the industry, has opened the race to enter the “zero-fee” group when announcing free online money transfer for all customers using digital banking channels without requiring attached conditions. Following Agribank, the remaining banks in the BIG 4 group, including Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Bank for Investment and Development of Vietnam (BIDV) và Vietnam Joint Stock Commercial Bank For Industry And Trade (Vietinbank) have just stopped charging fees for both online money transfer services and maintaining digital banking services from the beginning of 2022. Particularly, Vietinbank, under that competitive pressure, also waives the account maintenance fee from the beginning of 2022, even though waived all transfer fees previously.


Thus, from the beginning of 2022, all four state-owned banking giants will stop charging online money transfer fees for all individual customers. The entry of the state-owned BIG 4 group, which holds the largest market share, will make the competition level in the banking industry more intense. Especially with the case of Vietcombank (VCB) – a pioneer and loyal bank with a long-standing fee-charging strategy, which has attracted the attention of the public and industry experts.


Specifically, VCB’s new policy will be completely free for money transfer transactions on VCB Digibank digital banking channel, free to maintain VCB Digibank service and to manage one default account registered with VCB Digibank from January 1, 2022.




This is a new and surprising move of VCB when revenue from payment services always accounts for 60-70% of VCB’s total service income. According to the  VCB’s financial statements, in the period 2016-2020, revenue from payment services (with the main contribution of transfer fees) has increased by more than 2.2 times from 2,744 billion VND in 2016 to 6,155 billion VND in 2020. In the first 9 months of 2021, VCB did not disclose details of revenue from payment activities. However, with a contribution proportion ranging from 45 – 55% of net profit from service activities, the estimated VCB’s net profit was about 2,000 – 2,500 billion VND from this service by the end of Q3/2021.

The reason for Vietnam giant banks to apply the “zero-fee” policy


Fees charged from payment transactions contribute a significant part to the profit of VCB in particular and banks that are not in the “zero-fee” group in general. So why does the entire BIG 4 group have to participate in the transaction-free race?


Applying the “zero-fee” policy is considered a way to help banks achieve the goal of increasing customer size as well as increasing demand for deposits (CASA) – a type of deposit with low-interest rates, which is usually only 0.1%/year. The higher the CASA ratio, the more cheap capital the bank can mobilize, which improves the net interest income (NIM) ratio. On the other hand, CASA ratio also indirectly reflects the effectiveness of product and service development policies in attracting and creating customer base.


In the case of VCB, low-cost deposit structure usually accounts for nearly 50% of total capital mobilization. With that advantage, Vietcombank is currently one of the three banks with the highest CASA ratio in the industry, just behind Techcombank and MB. However, this giant bank is gradually being far behind the two banks in front, and at the same time being pressured by the banks behind when it continuously offers free service policies. As of the end of September 2021, VCB’s CASA ratio was just over 31%, much lower than MB (37%) and Techcombank (49%).


Applying the ‘zero fee’ policy not only benefits the banks and customers, in line with the digital transformation trend but also helps reduce the cost of printing and circulating cash in the economy.


What Vietnam banking industry will look like in 2022

Technology is gradually entering the banking industry

The penetration of information technology into financial service provision has fundamentally changed the face of the banking industry. Digital technology is gradually causing banks to change traditional business models globally:


  • Automatic banking (TPB livebank, MB smart bank): customers can open cards, deposit, and withdraw money with their fingerprints without going to the bank.
  • eKYC – Remote identity verification technology: allows banks to identify customers 100% online, simplifying document verification procedures, biometric verification without meeting face-to-face at transaction offices.
  • Automated robots’ simple operations: help banks reduce manual work, provide better compliance, reduce risk, and enhance the overall consumer experience.
  • Open Corebanking Platform – Open API: Banks open application programming interfaces (APIs), allowing third parties to access financial information needed to develop new applications and services, and providing account holders/users with more transparent financial options.




In addition, the emergence of the Fintech “ecosystem” (Financial technology) is also forecasted to be a new trend in 2022. Fintech companies are technology companies specializing in research, implementation, and providing technology products and services for the banking and finance sector. Therefore, banks can choose to use the services of Fintech companies instead of directly investing in human and financial resources to research and apply technology into the system. From there, creating a competitive advantage over financial institutions.


Vietnam banking industry will continue to grow positively

Growth rate: Experts predict that credit demand will remain positive. The credit growth rate of the whole industry will reach 13 – 15% in 2022. The banking group, which has a high CAR and has dynamic activities will continue to be granted a higher credit room than the average.


Net interest margin: NIM can be improved shortly because the CASA ratio is optimized when banks waive transaction fees. However, in the long term, the NIM may start to decline slightly at a later stage. Industry experts make forecasts: 

  • For the private banking group, NIM will decrease by 0.1 – 0.2% in 2022. Banks that improve capital costs and optimize CASA will have even less reduction.
  • Group of 4 state-owned commercial banks will maintain a stable growth rate but can grow strongly in case of stopping the implementation of interest rate support packages.


Non-performing loan and debt restructuring: much depends on the pandemic situation. However, banks with good asset quality will not have to face much pressure on provisioning. Therefore, the profit before tax of the whole banking industry will have positive growth in 2022. However, there will be a clear level of differentiation with the potential of private banks to continue to lower the cost of capital.


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