In April, the government issued a decree regulating the controlled pilot mechanism in the banking sector. The move comes as fintech development trends are set to intensify.

Hoang Viet Tien, deputy secretary general, Vietnam Digital Communication Association

It is expected to be an important step in shaping a suitable legal framework for the development of fintech in Vietnam, creating improvements for a successful pilot to be applied and bring efficiency to businesses, attracting foreign investment capital into the Vietnamese market.

This is clearly demonstrated through the growing interest and involvement among technology startups and non-bank organisations with tech strengths in the banking and financial sector, by developing solutions to support banking operations without directly providing services to end-users or directly providing new solutions independently.

Specifically, recent years have witnessed the formation and development of a large number of fintech companies in many different fields, such as payments, peer-to-peer lending, credit scoring, personal financial management, and others.

The market has also attracted many more large domestic tech companies and through direct investment activities to form fintech companies, or indirectly through the establishment of investment funds, creating incubators to support such startups.

The decree is expected to be a driving force for the market to develop further in the future with a number of new changes. Firstly, it regulates standards and principles for the operation of the pilot mechanism, set out principles, processes, procedures, approval criteria, and control measures for piloting innovative fintech solutions.

Next, it utilises results and input information of the pilot mechanism to amend and supplement current regulations, issue new regulations, reform the legal framework of the banking industry towards facilitating related activities.

It also promotes innovation in the banking sector in Vietnam based on the application of fintech solutions, facilitating banking operations and ensuring network security, protecting consumer rights.

Finally, it accelerates universal financial inclusion by applying innovative fintech solutions to meet the needs of people who do not have bank accounts or do not have full access to banking and financial services.

The decree directly creates an enabling legal corridor for domestic and foreign businesses and markets. It has specific laws for enterprises who carry out research and development, supply new banking solutions and services based on tech applications and innovative business models; and allow credit institutions and fintech companies to test pilot solutions that are not specifically guided by current regulations.

The decree also creates transparent, objective, and safer conditions, and opens space for businesses and markets. Organisations participating in the trial are not automatically considered qualified to do business or invest when moving to the official commercial stage.

With the new rules, domestic and foreign enterprises and end users will save on administration time, and it ensures transactions on digital platforms are protected by law.

The maximum pilot period for fintech solutions is two years, depending on the specific solution and field, dating from the time the State Bank of Vietnam issues a certificate of participation in the pilot mechanism. According to the central bank’s report, most basic banking services are now performed on digital channels.

Over the past decade, digital payments have been increasing compared to cash, growing from 34 per cent of e-commerce value in 2014 to 66 per cent in 2024. At points of sale, that figure has grown from an impressive 3 to 38 per cent. Buy now, pay later services in e-commerce have also exploded from $2.3 billion in 2014 to $342 billion in 2024, demonstrating the innovative power of fintech companies.

Meanwhile, E-wallets are dominating the market with a value increase of about 10 times from $1.6 trillion in 2014 to $15.7 trillion in 2024, accounting for more than a third of global spending from consumers to businesses.

The future of payments will be even more disruptive, with around half of consumers willing to use cryptocurrency to pay for digital content. It is predicted that by 2030, digital payments will account for almost 80 per cent of global e-commerce value.

The pilot of fintech solutions is limited to Vietnam, and cross-border pilot is not allowed. This is also a significant pilot phase for state policy management agencies to have time to research and come up with the best new laws to develop the market and perfect the legal corridor.

For fintech businesses, it is an opportunity for them to experiment, pilot, and bring the best solutions to partners, to the market, and to end users before stepping out into a bigger market.