Research purpose: In the current era of digital technological development, the traditional business model of commercial banks is being replaced by a modern one. Especially after the COVID-19 pandemic, the majority of people’s tendency to use digital services has prompted banks to actively engage in the digital transformation process. In Vietnam, despite making progress in applying digital technology to banking operations, digital transformation has confronted numerous challenges. This article aims to explore the strategic challenges that commercial banks have encountered in their digitalization process to enhance operational efficiency and customer satisfaction, achieving sustainable growth in the digital era. By identifying challenges in banking digitalization, this paper also proposes several comprehensive solutions to promote this process, to create a modern, flexible, and sustainable banking system.
Research motivation: In Vietnam, the digitalization of the banking sector is recognized as one of eight priority areas under Prime Minister’s Decision No. 749/QD-TTg (2020), which approves the “National Digital Transformation Program to 2025, with an Orientation to 2030.” In recent years, the banking industry in Vietnam has undergone the most rapid and significant digital transformation. The article examines problems surrounding banking digitalization, providing strategic solutions to help Vietnamese commercial banks alleviate existing barriers and enhance long-term competitiveness.
Research design, approach, and method: This study applied a narrative review approach to examine the challenges and potential solutions to the digital adoption process in the banking sector. The criteria for selecting documents are determined as follows: (1) publications from 2020 onwards to reflect recent trends in digital banking, fintech, and legal regulations; (2) sources focused on the Vietnamese context or similar emerging markets; (3) research documents on aspects of technology application, digital infrastructure, cybersecurity, human resources, customer satisfaction, and legal frameworks.
Main findings: The study emphasized that digital transformation is crucial for enhancing customer satisfaction, keeping pace with state-of-the-art technologies, and promoting sustainable development goals. Recognizing the urgency of this issue, Vietnamese commercial banks are proactively advancing their digital transformation, reaching the second of three levels in banking digitalization. After evaluating the current situation, the article identified several challenges that Vietnamese banks have encountered during their digitalization process. One of the primary challenges is the lack of a comprehensive regulatory framework governing digital banking activities. Cybersecurity is another factor due to an increase in fraud cases, cyberattacks, and data breaches in the banking infrastructure. In addition, a shortage of well-qualified human resources remains a major challenge in the digitalization process of commercial banks, particularly experts in artificial intelligence, cybersecurity, and digital innovation management.
Practical/Managerial implications: The proposed practical implications include establishing a comprehensive legal framework for digital banking, enhancing technology infrastructure and skilled human capital, and strengthening communicative strategies, as well as raising customer awareness regarding digital services and cybersecurity practices. The paper also provided a clear roadmap to accelerate banking digitalization in Vietnam in favour of sustainable development and long-term economic growth.