Tuesday, 19 Dec 2017

The role of commercial banks in the ecosystem of online consumer finance

Updated at Friday, 01 Dec 2017, 10:25
The Hanoitimes - In the ecosystem of consumer finance, both customers and banks hold key roles.
When the number of smartphone users outgrow the population, mobile payment is going to be tremendous. As such, efficiently implementing this service will contribute to the government’s strategy for a cashless economy. 

According to economic expert, mobile payment is opening a global revolution on e-commerce, which brings opportunities for economic components, as well as the driving force in facilitating financial inclusion in countries. At present, new transaction methods such as Near Field Communication (NFC), QR Code, or e-wallet are becoming common in developing and developed countries. With this being said, they have significantly contributed to the 2-digit growth rate of the global cashless payment market. 

Components taking part in providing new transaction services are diversified, from financial institutions to world leading tech - companies such as Apple, Google, Samsung, to e-commerce companies Amazon, Alibaba, as well as Fintech. 

With the current trend of economic development, governments as well as international organizations have been showing interests in the concept of ecosystem. An ecosystem is the necessary environment to foster and enable new business ideas, and mobile payment is also not an exception. 

From economic standpoint, an ecosystem is a economic community. In which, organizations and individuals will form an interacting economy. This economic community will produce goods and services for customers, who is also part of this ecosystem. Members of the ecosystem includes suppliers, producers, competitors and related parties. Along with time, they will develop and follow the lead of key components. 

The leading role of key companies can change in time, but its responsibilities in leading the community will always be highly regarded by all members. Because it allows all members to have a common view which is appropriated with their investment and find the needed supports in the community. 

From the perspective of commercial banks, an ecosystem is seen as a ecosystem of consumer finance, with components being banks, administrative agencies, Fintech, tech-companies, sellers/service providers and customers. In which, customers will be in the center, while banks have key role. 

Banks and customers often have a long-term and sustainable relationship, as banks also provide solutions and payment platform for Fintech, services providers and customers. Banks have experiences in risk & financial management, with sufficient financial data, customer information and providers. As such, they will provide the ecosystem with liquidity, measures to prevent risk and support a smooth and efficient operation of the ecosystem. 

Services of a traditional banks can only meet part of a financial transaction. As such, banks with the role of providing main financial services have to be the focal point to cooperate with third party, in providing comprehensive consumer finance services for customers, such as booking, shopping, traveling, healthcare, education or entertainment. 

Banks sometimes do not require profit in return from third party, as the most important thing is to maintain and expand the customer base. This will bring numerous benefits for all parties involved in the ecosystem – banks will have their customers, services providers can provide modern payment methods, while customers will reap the benefit from high quality services. 
Ngoc Thuy
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