The great benefits of open banking are undeniable, and the development trend of open banking in Vietnam is attracting attention and investment. However, for this field to develop sustainably and safely, it is necessary to conduct comprehensive and specific research to have a basis for developing appropriate policies and legal corridors in order to catch the strong digital transformation trend in the future.

Vital trend

VietinBank has developed an open application programing interface sharing platform (Open APIs) called VietinBank iConnect with 148 services of 116 partners provided on VietinBank iConnect application and an average of more than 12 million financial transactions per month are performed through this platform. BIDV has also promoted and completed a payment gateway (BIDV Paygate) connecting nearly 2,000 retail service providers and payment intermediaries. This allows customers to pay bills for electricity, water, television, the internet, telecommunication, buy airline tickets, movie tickets, and pay school fees, hospital fees, taxes and public services.

These are typical examples of the benefits that open banking offers. Open banking is currently evaluated as a new and potential business model. Accordingly, the bank allows third parties to write applications and provide services from its own data. With the application of a programming interface (API) - a technology that allows third parties to access open data, or secure access or closed data of an organization with the consent of the data owner and compliance with relevant laws.

When shared through Open API, data can be used for Fintech companies to create new applications, provide more utilities for customers, and assist customers in controlling information and making better decisions. In this model, the bank will be the one to provide services through Open API and together with its partners build an ecosystem in order to satisfy the requirements of users.

Legal regulations are not clear

Dr. Nguyen Quoc Hung, General Secretary of the Vietnam Banks Association, said that open banking was one of the important milestones in the financial technology transformation process, promoting the digital transformation process and creating new business opportunities for banks. The results are very positive, but there are also risks because of the openness of this model.

According to Deloitte's assessment, currently, Vietnam has no separate and complete regulations and guidelines on open banking; the big challenge in implementing open banking is that there are no guidelines on Open API (what services, what data partners can use...) as well as common standards on information technology systems, information storage, security and connectivity.

Commercial banks in Vietnam mainly rely on Circular 39/2014/TT-NHNN dated December 11, 2014 on guiding payment intermediary services, including terms allowing banks to cooperate with third parties to provide financial services and Government decrees, circulars of ministries and sectors regulating e-banking, non-cash payment, opening and use of payment accounts, technical safety conditions, the confidentiality of customer information.

According to Deloitte Vietnam, a key factor to the success of the open banking ecosystem is the sharing of data that forms the basis for open banking. Open banking intends to securely share data, on the basis of customer consent, with various third parties for desired results.

Besides, compliance with regulations is also an extremely important factor. State regulatory agencies choose different approaches in the development and implementation of open banking. In the open banking ecosystem run by the regulator, financial institutions need to take measures to comply with the guidelines within the stipulated time. This will assist the regulator in considering new innovative proposals for the ecosystem.

According to Deloitte, financial institutions must ensure compliance with applicable regulations on personal data protection, consumer protection, data sharing and cybersecurity (if any). It is also advisable to learn more about leading global practices, related to customer experience, operational processes, and API development.

In particular, data protection plays an important role and greatly affects the trust of customers as well as trust in the market. According to Deloitte Vietnam, organizations are facing an increasing number of phishing scams and attacks. Therefore, strong efforts should be made to apply best cybersecurity practices to have a secure mechanism for data collection, sharing and storage; it is important to ensure that there is an adequate audit trail for each data transfer.

Deputy Governor of the State Bank Pham Tien Dung said that the current legal framework on open banking in Vietnam was available, but incomplete, and was sporadically regulated in a number of articles in the 2015 Civil Code, the Law on Electronic Transactions, the Law on Credit Institutions, the Law on Cyber ​​Information Security, the Law on Protection of Consumer Rights regulating the responsibilities of banks in keeping customer information confidential; Decree 117/2018/ND-CP stipulating that customers have the right to request credit institutions to provide their own information as agreed between the parties and in accordance with the provisions of law; and a number of decrees regulating the handling of violations of personal information. The most important thing is that the Banking Association, in collaboration with the Departments and Bureaus of the State Bank, should comment on the draft of Government Decrees on personal data protection; electronic identification and authentication, so that when issued, it will come to life in a substantive way.