Growing with exponential growth, Vietnamese fintech companies developed fast.Regulators were very active in finalising the experimental legal framework (sandbox) for healthy market development, positively impacting economic growth.
The billion-dollar market, a delicious piece of cake for fintech
Pham Xuan Hoe, deputy director of the Banking Strategy Institute of the State Bank of Vietnam (SBV), estimated that fintech revenues would reach about $9 billion by 2020.
The development of mobile financial transactions in Vietnam was booming, becoming a delicious piece of cake for mining fintech, from payment, lending, money transfer to collection, payment, etc.
SBV Governor’s report to the National Assembly recently showed that the number of financial transactions via mobile phone channels increased by 104.9 percent in the number of transactions and by 155.3 percent in the transaction value. Compared to the same period in 2018, this number doubled the growth rate of the region.
Besides, the population was nearly 97 million people (ranked 15th in the world), in which 51 million people used the phone, and half were smartphones; 50 million people used the Internet regularly. The low percentage of the adult population having bank accounts was ideal opportunities for fintech companies.
That was also the reason why a series of local and foreign fintech companies had recently landed in Vietnam market, especially in terms of electronic wallets. Statistics of SBV showed that, in the past three years, the number of fintech companies had increased nearly four times. Currently the country had more than 150 fintech companies, while three years ago, this number stopped at 40.
However, according to banking experts, the development of fintech in Vietnam was not commensurate with its potential. The fintech still crept in the introduction of products and services.
Duong Dung Trieu, Chair of FPT IS Members’ Council, said that the difficulty for fintech development in Vietnam was not technology. Vietnam’s technology was not inferior to the world. The challenge was that there had not been regulations yet, Trieu said.
Meanwhile, Nguyen Hoa Binh, President of NextTech Group, said that building a sandbox mechanism to test policies for new business models and technology solutions would promote development.
To promote innovation, the policy itself and the mechanism had to be open, and creative, Binh emphasized.
One of the biggest hurdles for fintech then was to enable electronic identifiers (eKYC) and open e-wallets without a bank account.
The first key for banks and fintech companies to provide digital services was to allow customers to identify (eKYC), ie digital customers digitally. However, current regulations still required customers to go directly to the bank to open an account (KYC), and opening a wallet must have a bank account. This made not only fintech companies but also banks were challenging in expanding operations, finding customers, according to the chair of a bank.
Support, but be careful
Fortunately, the opinion of SBV on fintech was quite open. Since 2017, the Governor of SBV has signed a decision to establish a fintech Steering Committee. In 2019, SBV was also the first ministry and sector to submit to the government sandbox about its management field which was a scheme on fintech operation management mechanism.
Nghiem Thanh Son, deputy director of Payment Department (SBV), said, for the sandbox, SBV set the requirements, scope and met specific criteria, the management agency would strictly tighten the monitor of the profile of businesses that applied to control risks, avoided impacts to every user.
In addition to issuing sandbox, SBV was also actively removing some obstacles for fintech. According to the Investment Review, SBV was revising regulations in the direction of allowing the application of eKYC, allowing users of electronic wallets to deposit money from cash into e-wallets with a specific limit.
With international experience, Varun Mittal, vice President of Singapore Fintech Association, director of Fintech Consulting Services of E&Y Company in Southeast Asia said that many countries had been very flexible in bringing devised fintech testing mechanism. For example, from January 2020, Singapore would launch a new payment service. Accordingly, depending on each transaction, depending on the size of e-wallet, the management agency had different management methods.
Varun Mittal said that Vietnamese management agencies should both do and adjust policies. In fact, it took Singapore nearly two years to come up with the current fintech management model after many revisions, with the goal of both promoting the creative economy, protecting customers, and taking precautions risks of money laundering, tax evasion.
