The State Bank of Viet Nam (SBV) is completing a legal framework to boost the development of digital banking and Fintech.

Viet Nam’s Fintech market is estimated to worth US$9 billion in 2020,
making it ASEAN’s fourth-largest market.

SBV Governor Le Minh Hung made that statement at a videoconference on investment opportunities in Viet Nam in the post-COVID-19 period. 

Fintech, or financial technology, means the use of technology to deliver financial services and products to consumers. 

The rapid rise of the Fintech market in Viet Nam is made possible in no small part by the Vietnamese government’s remarkable efforts in tailoring regulations to increase banking penetration from 59% to 70% in 2017, and to shift to a non-cash payment economy with a target cash to total liquidity ratio of less than 10% by 2020. 

Other favorable conditions that are spurring the development of the Fintech market in Viet Nam are its vibrant e-commerce sector, which had 35.4 million users with an average spending of US$62 in 2017, and which is predicted to reach 42 million users with an average e-commerce spending of US$96 by 2021.

According to Pham Xuan Hoe, deputy director of the Banking Strategy Institute, Viet Nam’s Fintech market will be worth US$9 billion in 2020, making it ASEAN’s fourth-largest market.

2019 saw several Fintech developments taking place in Viet Nam with the government showing its commitment to developing a favorable environment and regulatory landscape for the country’s Fintech industry to thrive.

VN still lacks legal framework to regulate operation of Fintech companies 

Speaking at the conference, SBV Governor Le Minh Hung said that the emergence and rapid development of Fintech has brought about various challenges to regulators relating to risks concerning anti-money laundering and terrorism financing (AML/CFT) and information security. 

The current task set out for financial management agencies around the world is to support the innovation in the banking – financial sector and to maintain the stability and safety of the financial markets and at the same time, support economic growth.

Just like other regulators, the SBV and relevant agencies in Viet Nam are also facing new challenges regarding state management with the wake of Fintech companies operating in various areas, including peer-to-peer lending, new payment models, cross-border remittances and user information sharing via open application programming interfaces. 

Currently, as most of these operations have not been properly regulated by an appropriate legal framework, the risks, once arising, will not be fully controlled. 

SBV Governor Hung highlighted the importance of establishing a regulatory sandbox applied to these totally new and unregulated services. 

Currently, the SBV is taking lead in working with relevant ministries to develop a draft Decree on Fintech regulatory sandbox in the banking sector for submission to the Prime Minister, Hung added.