Solutions for Developing Electronic Banking Services

The Vietnamese State, the State Bank, and at the same time received support from

World Bank.

Since the banking industry launched e-banking services, the industry has received valuable attention as well as close guidance from State leaders and the State Bank in defining a general development strategy for the entire industry, proposing policies and regulations to create favorable conditions for this service to exist and develop. In recent times, after realizing the role and position of e-payment, Vietnam has issued many legal documents to create a favorable legal environment for this industry to develop. Some important legal documents serving the operation of electronic banking include: Joint Circular of the General Department of Posts - Ministry of Home Affairs - Ministry of Culture and Information No. 08/TTLT dated May 24, 1997, Decision No. 308-QD/NH2 dated September 16, 1997, Decision No. 371/1999/QD/NHNN1 dated October 19, 1999, Decision 212/2002/QD/NHNN dated March 20, 2002, Decision 44/QD/TTg dated March 21, 2002, Decision 349/2002/QD/NHNN dated April 17, 2002, etc.

We see that the application of electronic documents, electronic signatures, and information protection for customers in banking activities is inevitable in the process of computerization, aiming to gradually expand modern services. For banks, the top priority is to build a modern electronic payment system to serve the country's economic development, at the same time, prepare necessary services to serve the needs of e-commerce development in Vietnam in the future. On the other hand, the application of electronic documents in accounting and banking payments also creates conditions for Vietnamese banks to participate in economic exchange and cooperation processes with ASEAN countries through technical cooperation programs. The important significance of the above decisions is that banking is the first industry in Vietnam to be allowed by the Prime Minister to use electronic documents and electronic signatures in accounting and payment transactions. In terms of society, the above decisions also have significance in creating a legal environment for the application of information technology in various sectors.

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economy in particular. Thus, the above decisions will bring direct benefits to businesses, socio-economic organizations and to each citizen if they participate in payment activities through payment service providers. Currently, for many reasons, services such as home banking and internet banking in Vietnam have not developed strongly, meeting the requirements of customers in a timely manner. It can be said that the issuance of the above legal documents on electronic banking payments is a correct, timely and inevitable decision for Vietnamese banks to expand and catch up with the development trend of banks in the region and the world.

Another advantage for the operation of e-banking services in Vietnam is the assistance of the World Bank. Fortunately, a number of Vietnamese commercial banks, including the Bank for Foreign Trade of Vietnam, have received support from the World Bank to reform their information technology systems in the bank, and these systems are as modern as those of other banks in the world. At the same time, the World Bank has also disseminated to Vietnam the experiences of other countries in the world in implementing e-banking services. Recently, Vietnam has completed and officially put into operation the clearing system between the State Bank and 6 major commercial banks since May 2001, concluding phase I of the project to Modernize the Interbank Payment System sponsored by the World Bank. In phase II, each bank will carry out sub-projects, including an important component for the implementation of electronic banking services, and will be completed by the end of 2003.

Along with the above advantages, we also clearly see that, currently, information technology is being developed and widely applied in Vietnam. This is really an advantage for the development of electronic banking services in Vietnam because the birth and development of e-banking is associated with the application of information technology in the banking industry.

Through the above analysis, it can be seen that in the future, e-banking services will have a relatively favorable environment to develop and expand in the entire system of Vietnamese commercial banks. Banks need to grasp these advantages, promote all the advantages of their banks to apply information technology to banking operations, specifically to develop banking services in the most effective way.

2. Difficulty

Besides the advantages, in the coming time, the banking industry in general and the Bank for Foreign Trade of Vietnam in particular will also face challenges and difficulties in the process of implementing e-banking services.

One of the difficulties and challenges that have existed and will exist that have a decisive impact on the development of e-banking services is the legal environment of Vietnam. In the above favorable section, we have analyzed the positive aspects of the legal documents that Vietnam has issued very promptly to facilitate the operation of e-banking services. However, in general, the legal system of Vietnam still has many limitations and it will certainly have a significant impact on the operation of e-banking services.

Although e-banking services have been deployed in Vietnam for a relatively long time, since 1994, we have not yet built a complete legal corridor to ensure that e-banking operates effectively. We do not yet have laws on e-commerce, laws on electronic signatures, laws on the use of digital and information technology in the economy in general. This is no different than having a car but no roads, not knowing which way to go. This is relatively understandable, because e-banking is still a new type of service, to perfect the legal environment requires a lot of time. But in the world conditions

has developed strongly, it requires us to have corresponding changes to suit this development.

Along with the obvious benefits, e-commerce in general and e-banking in particular also pose a series of challenges and requirements that need to be met. The requirements of e-banking are a synthesis of dozens of issues such as: technological infrastructure; monetary infrastructure; human resources infrastructure; security, safety; intellectual property protection; consumer protection; legal economic environment... Currently, Vietnam is in the process of completing legal documents for traditional commerce. However, implementing e-banking services is a mandatory situation for Vietnam in the process of international cooperation and integration. Therefore, building a legal framework for it is also a requirement and an urgent issue that needs to be resolved.

Currently, the Government has only issued a number of legal documents regulating the management, establishment and use of the Internet; providing information on the Internet; measures and equipment for inspection and control to ensure national security in Internet activities, but there are no specific legal documents regulating e-commerce. Particularly in the banking sector, the issue of the legal environment for e-banking operations is more urgent than ever. We do not have laws on electronic signatures, electronic documents... to regulate the operation of this new type of service. Currently, although there are a number of legal documents regulating electronic payments, they are still quite simple, and when applied, many things have not been clarified. This has more or less affected the implementation of this service. At the same time, our legal system still lacks stability, consistency and enforcement efficiency, so in the coming time, we must have measures to change to create favorable conditions for not only e-banking but also many new types of services to have a favorable environment in the process of birth and development.

In Vietnam today, the construction of a legal framework for e-commerce in general and e-banking in particular faces the following challenges:

First of all , Vietnam's legal system is still unstable, not strict and not highly effective. For example, the Civil Code and some other documents have quite detailed regulations on copyright protection. However, there are still violations in this field.

Second , we have not yet made a final official choice on the scope of e-commerce. As mentioned, international organizations have given different definitions of e-commerce in both narrow and broad senses. For Vietnam, we are still wondering about the scope of this concept. When there is no official legal definition affirming the scope of e-commerce, we cannot limit the scope of relevant legal documents to make necessary and appropriate amendments, supplements or new regulations.

Third , other legal institutions in Vietnam have not yet developed synchronously. Which agency will have the authority to check and verify the legality of electronic signatures and documents and contracts agreed and signed by electronic means? For transactions conducted on the Internet related to other countries, will the Vietnamese tax authority or foreign tax authority have the right to collect taxes and how much is reasonable? Does the customs authority have the necessary mechanism to inspect the import and export of computer software products? All of these questions have not yet been answered in the legal system in Vietnam.

This is really a problem that Vietnam needs to consider and have immediate solutions to overcome. We know that e-banking services have been strongly developed in countries around the world as well as in some countries in the region, that is because they have a favorable legal environment that makes the operation of this type of service increasingly expanded. Some countries can be cited as examples such as:

In the United States, the government does not have unnecessary restrictions on e-commerce in general and e-banking in particular. If the government needs to get involved, it is only to create a simple and consistent legal environment for it, not to regulate it. And as we know, information technology has been strongly applied in the banking industry, banking services were also born from here and the United States is the country with the most developed type of this service.

Another country is Singapore, to facilitate the operation of electronic banking services, Singapore has issued the most important documents regulating the operation of this service such as: Electronic Transaction Law, Law against computer abuse, privacy law, ...

It can be seen that the world and the region have foreseen the importance and indispensable role of electronic banking in the life and development of the country and have made appropriate adjustments to facilitate the strong development of this service. We need to consider their experiences to build a more favorable legal environment for this service to develop.

The second difficulty that e-banking services face is that Vietnam's information technology development is still weak, although there have been clear improvements in recent times. We still lack a large number of experts in this field, and at the same time our information technology market is still underdeveloped and unevenly developed in localities. The country's information infrastructure is still underdeveloped and not synchronously developed. Our information technology products in the past had to be imported from developed countries in the world.

As we know, in the past time, Vietnam has implemented the National Program on Information Technology. Up to now, almost all agencies, departments, administrative apparatus at all levels, all political-cultural-social organizations, education and training systems and many families have been using computers in their daily activities. With millions of computers operating and

Thousands of internal computer networks and wide area networks are creating a rather attractive market for the country's information technology. Although there have been many advances in application, in general, the Vietnamese information technology market is still exploited and distributed unevenly, most computers exploit few features, and many places are still wasteful. Specialized applications in use are mainly developed on the technology platform of the early 90s. From the perspective of the application users, a large number of people do not want to innovate too quickly, leading to disruption, while another group actively innovates but is powerless: lack of funding, human resources, weak... This will not create motivation for the development of electronic banking services because the development of e-banking is closely linked to the development of national information technology.

In addition to the above difficulties, there are difficulties and challenges from the banking industry itself. That is the problem of restructuring the banking system. To develop e-banking services, we must simultaneously reform the banking system. The biggest difficulty for the Vietnamese banking industry when implementing this business method is to improve management, reform the organizational structure of the bank in parallel and based on technology application, at the same time as building a legal basis. This is not easy for businesses in general and banks in particular. If we do not reform, the new technologies applied will not be effective. In the past, a number of banks, including the Bank for Foreign Trade of Vietnam, have had a number of projects to reform their apparatus to suit the structure of new services.

Finally, the biggest challenge that the Vietnamese banking industry faces when implementing e-banking services is still the issue of human resources serving this service, including: the level of understanding of bank staff about information technology applications in banking operations, the quantity and quality of information technology experts. For bank staff, their understanding of e-banking services is limited, knowledge

Electronic media in general and the internet in particular are often not yet popular, causing many difficulties in the process of implementing this type of service. As for information technology experts, we not only lack in quantity but also in professional capacity, which is a difficult problem to solve.

Through analyzing the advantages and disadvantages of e-banking services in the future, we see that the banking industry will have to face many challenges and difficulties when implementing this type of service, while there are also many favorable conditions that facilitate its development. However, the difficulties are still greater, so Vietnamese commercial banks, including the Bank for Foreign Trade of Vietnam, must know how to overcome difficulties and challenges, take advantage of favorable conditions, promote the strengths of their banks, only then will banks be successful in the process of developing e-banking services.

II. SOLUTIONS TO DEVELOP ELECTRONIC BANKING SERVICES

AT BANK FOR FOREIGN TRADE OF VIETNAM

We all know that any modern service provided by a bank comes with risks for the users of that service. Moreover, the more benefits the service has, the higher the risk level. However, for e-banking service - a service that is still quite new to Vietnam, both banks and customers must work together to find ways to overcome risks and gradually improve the service. If that can be done, then certainly in the near future, e-banking service will be widely used and bring in a significant income for the banking system.

To build a system of effective solutions for the development of e-banking services in the future, we need to clearly understand the viewpoint of expanding and developing this type of service. The viewpoint of developing e-banking services must, in principle, closely follow the viewpoint of socio-economic development in the future.

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