Vietnamese consumers want to save, invest, and protect their families post-pandemic, with demand growing for digital banking products
The banking and financial landscape, like most other industries, has undergone fundamental changes in 2021. The pandemic has transformed how consumers save, shop, and spend; and altered attitudes to personal finance and financial products. It has further accelerated the shift toward online banking and cashless transactions, while also leading people to reassess their long-term finances and future savings and investment plans.
The financial impact of the pandemic
The fourth wave of COVID-19 has had a deep and long-lasting impact on economic activities in Vietnam. Most non-essential companies closed and consumers remained at home for months as the government imposed strict lockdowns, social distancing, and other public health measures. This had an inevitable impact on personal finance, as millions of people saw their livelihoods dip, diminish, or disappear altogether. One-fifth of families saw their incomes fall 20% or more, with around a third seeing a decrease of between 10 and 20%. Meanwhile, almost one-in-ten people lost their jobs in 2021.
This short-term shock had a predictable impact on consumer spending, with almost half of people cutting down on non-essential items in the last six months. However, it has also had a more profound effect on long-term spending plans, with more than 70% of consumers planning to cut back on non-essential spending in the future.
Meanwhile, although around a third of Vietnamese managed to save during the pandemic, a similar proportion had to dip into their savings while one-fifth had to borrow to make ends meet. In other words, the economic impact of the pandemic hit both livelihoods and living standards, leading consumers to become more cautious in both their short and long-term spending plans and financial outlook.
Consumers are now focused on saving, investing, and protecting their families
Therefore, it is no surprise that, throughout 2021, building up a nest egg became more important. Following the pandemic, over two-thirds of Vietnamese plan to save more in 2022. Likewise, more than 60% of consumers agree that insurance is important to them. Meanwhile, investment products offer consumers opportunities to put these savings to work, with 60% of Vietnamese now owning some form of investment product and one-fifth having more than one billion VND in investable assets.
In this sense, Vietnam became more aligned with global financial trends in 2021. The first three waves of COVID-19 left Vietnam almost unscathed compared to the rest of the world, with strict lockdowns minimising the impact on economic activities and household finances. However, the fourth wave brought this to a sudden halt. Therefore, Vietnam’s financial sector is now following in the footsteps of those hit hardest during the earliest outbreaks of the pandemic.
The biggest outcome of this is a growing demand for savings and investment products. In a crisis, consumers become more conservative: Protecting themselves and their families from future financial hardship or unanticipated emergencies becomes their main concern. Our data shows that over 80% of Vietnamese now consider these to be their main financial priorities. That’s in line with global trends, though 10% higher than the average. Meanwhile, 30% are looking to investments to secure their financial future - a similar proportion to elsewhere around the world.
Consumer spending is moving online
While consumers are becoming more conservative in their spending habits, this is not the same as being old-fashioned. Quite the opposite. June to September 2021 saw millions of people spending months in their homes. Even in Vietnam, where cash used to be king, this accelerated a shift towards online banking. The proportion of people who like to use cash to make purchases has fallen 5% since 2020, from 54% to 49% in just 12 months. Just under two-thirds of people now agree that it is safe to manage their finances online, with a similar proportion wanting to use digital financial services, such as mobile banking, wherever possible.
We saw this trend in action during the lockdown. The number of people using cash for online deliveries fell from one-quarter to just 14% as people tried to maintain social distancing and reduce the spread of infection. Instead, cashless options such as online bank transfers became more popular. Meanwhile, the top e-wallets such as Momo and ZaloPay continued to gain traction. This reflects a broader growth in the e-commerce market, with 58% of consumers planning to shop online more in 2022, up from 52% in 2021. It is also interesting to note that traditional banking products like bank transfers and debit cards increased their adoption during the lockdown period.
These trends will not just be a flash in the pan. The shift to digital was building up a head of steam in Vietnam long before the fourth wave of COVID-19 struck, as it was elsewhere in the world. However, the pandemic has accelerated the momentum behind online banking and digital financial services, with Vietnam now catching up with global trends.
Like elsewhere in the world, the pandemic has accelerated the shift from cash to cashless and from traditional retail to e-commerce. Millions of customers became more familiar and comfortable with online banking, cashless transactions, and e-wallets during lockdowns. So much so, that Vietnamese are now more confident managing their finances online than people in China, Hong Kong, Singapore, Indonesia, and the U.S. And more Vietnamese will now use mobile banking than consumers in major European markets like France and Denmark. In short, during 2021, Vietnam has taken its place among countries adopting digital banking solutions.
The lockdowns might now be over. But the use of these new, more convenient methods in Vietnam is a trend that will far outlast the pandemic. Therefore, providing consumers with seamless, intuitive, and innovative digital platforms and products to manage their finances will be essential for banks now that millions have become used to shopping, saving, and spending online.
How banks can make the most of changing consumer attitudes
To capitalize on these emerging consumer trends, banks need to differentiate themselves from other financial brands. In this competitive marketplace, the opportunities that stem from these trends will not remain available for long.
Therefore, it is essential to understand what drives customer acquisition. Just 36% of Vietnamese believe that “all banks are the same”. That gives financial institutions a lot of space to stand out from the crowd and offer products and services that meet these emerging trends.
However, on its own, that is not enough. Bearing that in mind, the two challenges for banks looking to capture market share post-pandemic are reputation management and successful advertising. Building a brand that consumers trust, value, and respect; while also reaching them with targeted campaigns, is essential for banks to unlock the full potential of the post-pandemic financial landscape.
With operations in the UK, North America, Mainland Europe, the Nordics, the Middle East, and Asia Pacific, YouGov BrandIndex draws data from million of interviews across different sectors in the global market.
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