Deciding which bank to open business accounts with is a critical step when setting up a business. Local banks guarantee swift local transactions, whereas international banks ensure efficient international transactions.
Commencing a business in Vietnam requires one of the foremost decisions to be the selection of the appropriate bank for your operation’s accounts. With a whopping 49 banks in operation, both domestic and foreign, the decision can seem daunting. Between a local and international bank – which should you choose? We delve into the pros and cons of both to aid you in making an informed decision.
Local Banks in Vietnam
Local banks in Vietnam are Vietnamese-owned and mainly operate within the country. Consider these as native financial institutions. They aren’t offshoots of foreign banks, rather they are established and headquartered in Vietnam in accordance with Vietnamese regulations.
As these banks are part of the Vietnamese banking system, they have a strong understanding of the process and financials specific to Vietnam, providing highly customized services particularly for local transactions, making these quick and efficient.
What are the pros and cons of Local banks in Vietnam?
Prospects:
- Flexible and quick bank account opening: Local banks generally offer more flexibility in terms of opening corporate bank accounts, requiring minimal documentation and KYC to get started.
- Fast Domestic Transactions: Being part of the native banking system, local banks ensure fast domestic transactions.
- Linking with the online tax system: Unlike international banks, local banks in Vietnam have direct connections to government systems, facilitating quicker tax payments, smoother regulatory processes, and real-time data exchange for better transparency.
Consequences:
- Limited English customer service: Communication with domestic banks can be challenging for foreign investors due to the limited proficiency in English amongst bank staff, especially over hotlines.
- Online Banking Issues: Local banks’ online banking systems are still in the nascent stage and can be prone to errors, including pending transactions and issues with accessing OTP codes.
- Strict International Transfer Procedures: Local banks adhere to stringent procedures for international transfers, which leads to extensive paperwork and prolonged processes.
For instance, Vietcombank (VCB) is the largest domestic bank in Vietnam. VCB excels in speedy local transactions and minimal KYC (Know Your Customer) requirements for account opening without necessitating the account holder to reside in Vietnam or employ a Chief Accountant.
However, VCB’s customer support may face language barriers for foreign clients. At Iris International, our consultants assist our clients with banking procedures, communication, and documentation.
International banks in Vietnam
Many investors go for international banks when doing business in Vietnam, and there are several reasons for that. Well-known banks like HSBC, Standard Chartered, Citibank, UOB, and OCBC are favorites among foreign firms investing in Vietnam. We encourage you to look into the pros and cons of these banking options, as they might match your own experiences.
What are the pros and cons of international banks in Vietnam?
Prospects:
- Exceptional Customer Service: International banks provide superior English customer service, making it easier for foreign clients to communicate and resolve issues.
- Efficient International Transactions: Owing to their advanced banking systems and global networks, international banks facilitate smoother and quicker international transactions.
- Finalized internet banking platform: The online banking system of international banks is their key advantage, adhering to international standards and extensive development, unlike domestic banks, ensuring reliability for customers with minimal service disruptions and errors.
Consequences:
- Stringent Requirements: International banks seek complex and strict information from account holders, requiring the account holder to reside in Vietnam and the company to appoint a Chief Accountant after one year.
- Link with Government System (Tax online system): The international banking system does not connect with domestic government systems due to policies protecting account holders, preventing third-parties from auto-debiting amounts without account holder consent. This can hamper smooth financial transactions between international banks and local governments, potentially leading to delays and complications in fund transfers and regulatory processes.
Local vs. international banks (summary)
| Features | International Banks | Local Banks |
| Customer Service | Excellent English support | Limited English support |
| Account Opening | Stringent requirements Require to have the head of the accountant after 1 year | More flexible verification for bank account opening |
| International Transactions | Efficient and fast | Strict procedures, and lengthy processes |
| Online banking system | International standard, rarely facing errors or service disruption | New and easy facing service disruption |
| Government System Link | No automatic deductions (protects account holders) | Linked to government systems (faster tax payments) |
How do you decide which bank to use?
The choice between a domestic or global bank hinges on the nature of your transactions and business needs.
For businesses predominantly dealing with international clients and conducting several international transactions, a global bank would be more suitable.
However, for businesses with a primary client base in Vietnam, seldom requiring international transactions, a domestic bank would be better suited.
In fact, you could open multiple current/payment accounts in various banks deemed necessary for your business, implying that you could maintain accounts in both domestic and international banks.
However, your business can only have a single capital bank account. This is why selecting the bank in which you wish to open accounts initially is crucial. If you wish to switch, the current account would need to be closed before opening a new one in a different bank.
Read more about the capital and payment bank account
How can Iris International assist in opening your company’s bank accounts in Vietnam?
At Iris International, we offer comprehensive bank account opening services incorporated into our establishment packages.
We have close ties with Vietcombank (VCB), the largest domestic bank in Vietnam, noted for its flexibility in facilitating the opening of accounts for foreign-owned companies. Alongside, we also collaborate with Standard Chartered for setting up global bank accounts. Irrespective of your choice of bank, we can aid in preparing documents, understanding the process, and more.
In addition to our establishment services, we offer standalone bank account opening services and a plethora of secretarial services including, but not limited to, accounting, bookkeeping, compliance reporting, recruitment. Our ultimate aim is to ensure that your business operates efficiently and effectively in Vietnam.
If you’re ready to kick off your business in Vietnam, get in touch with our knowledgeable consultants today and begin on the right foot. Your business deserves the best start, and we’re here every step of the way to help you.
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