In 2022, although fintech firms globally are struggling to seek fresh funding sources, those in Southeast Asia in particular, and Vietnam in general, have continued to charm financiers.

The recent report about Southeast Asia's (SEA) digital economy conducted by Google, Temasek, and Bain & Company shows that SEA’s online payment market is now witnessing booming development and is anticipated to hit a $2 trillion transaction value by 2030.

This is mainly attributed to the continual emergence of fintech firms and digital banks.

Vietnam now enjoys very auspicious conditions for fintech development, leveraging population-scale advantages, tech-savvy human resources, and ever-increasing online transaction volumes.

Fintech firms are experiencing a booming development across Asia, including Vietnam

Amidst the current market vulnerabilities, fintech growth is expected to bring breakthrough developments.

Vietnam, however, has yet to have a clear legal corridor in place for the development of products, services, and operation models.

Due to the absence of a relevant legal corridor, ill-doers have availed of the loopholes to commit fraud in the guise of fintech firms.

Nguyen Van Hien, vice rector of the University of Finance, believes that although the government has presented policies to aid fintech development through projects and programmes, the current legal framework for the segment's development remains insufficient and unclear.

“The time required to update or revise legal documents has been slower compared to technology's fast development pace. The current legal framework has just partly met the needs regarding payment activities and proves insufficient and lacks synchronization in other fields, particularly regarding peer-to-peer (P2P) lending,” he said.

Echoing the mindset, Pham Nguyen Anh Huy, founder of the FinTech Crypto Hub under RMIT University Vietnam, opined that the fintech market is lacking a suitable legal system and requires joint efforts to spur market development.

“The State Bank proposed the establishment of a relevant legal framework and pilot management mechanism (sandbox) for the fintech field back in 2017, but the plan has not yet come true. An urgent task now is quickly enacting that pilot management mechanism to provide clear guidance for fintech activities in Vietnam,” Huy said.

He added that unless the sandbox mechanism is in place by early 2023, the country will miss out on the opportunity to grow into a leading fintech blockchain hub as the competition is quickly heating up in countries all around the world.

Besides P2P lending, the local fintech market has witnessed many unprecedented models over the past year such as online ventures into digital assets, real estate blockchain, and others, causing a stir among the public.

Tran Viet Vinh, CEO of fintech firm Fiin Credit, stated that the lack of a clear and complete legal framework is causing major difficulties for firms.

“The legal bottlenecks we often mention are restrictions to the growth of businesses and limit cooperation and investment injection opportunities for upscaling,” said Vinh.

Fintech firms are yearning for the sandbox mechanism deployment, allowing for support policies and infrastructure and setting regulations on capital, technology, operation standards, and risk management for firms wishing to join the fintech market.

The new pilot mechanism, once enacted, will help firms expand their cooperation with financial institutions, banks, and investment funds, growing consumer lending and retail loans to feed production and business activities while contributing to the development of Vietnam’s digital economy.