The fintech (financial technology) sector is facing difficulties of capital mobilisation shortage, inadequate legal framework and banks’ hesitance in co-operation, said Le Minh Hung, Governor of State Bank of Vietnam (SBV).
|A customer using QR code payment. The development of fintech is considered a precondition for improving access to financial and banking services for Vietnamese people. |
Hung told the Vietnam fintech forum 2018 held in Hanoi on Wednesday that fintech and banks could contribute to expand financial universalisation, and promoting hunger eradication and poverty reduction while enhancing social equality and sustainable economic development.
“In recent years, SBV has been holding dialogues with businesses in the fintech sector in order to timely resolve their difficulties and help them join the market,” he said.
The central bank has allowed firms to provide payment services on a pilot basis to meet with the market’s demand since 2008. SBV granted licences to 27 organisations specialising in intermediary payment platforms after setting up an appropriate legal framework.
However, the rapid development of fintech has proven a challenge to the banking and financial sector. The necessary legal and management framework has been developed slower than the development of products and services. The issues of human resources, network security, hi-tech crime and information sharing have also been challenges for the fintech sector.
This led to the central bank setting up a steering committee for fintech in March 2017 to complete required ecosystem for vintech companies to develop in Vietnam.
He added that many banks have co-operated with fintech enterprises to provide services, thus diversifying their products and services. The co-operation trend has become more popular in recent years, as it is generally considered a win for both sides.
The relationship helped maintain and develop a modern financial and banking system with creative financial products to meet the increasing demand of customers.
The development of fintech and co-operation with the banking sector are considered preconditions for improving access to financial and banking services for Vietnamese people, he added.
The Governor also pointed out that the steering committee completed a report to assess the fintech ecosystem in Vietnam. They focussed on key issues facing the fintech industry for further consideration, including e-payments, electronic know your customers (e-KYC), peer-to-peer lending (P2P lending), open application programming interfaces (Open APIs) and blockchain technology. These are now important applications in the modern financial and banking system.
The committee also instructed to establish direct dialogue channels with fintech companies to create a closer relationship with State agencies.
Deputy Governor Nguyen Kim Anh, head of the steering committee, said the most important task for SBV in the upcoming time is to continue to study a regulatory sandbox framework for fintech businesses and start-ups to experiment with creative new products and services under supervision of the central bank.
The regulatory sandbox framework would create an environment for fintech firms to have new products and minimize risks for customers and relevant parties.
Dominic Mellor, ADB senior country economist said ADB has always been ready to support SBV to encourage fintech development and complete the necessary legal framework for the industry’s development.
Việt Nam has some unique advantages, especially in the IT sector, which could serve as a foundation for fintech development toward popularisation, he said. Currently, there are around 80 fintech companies operating in Việt Nam.
The forum was jointly held by ADB and the Australian Government through the Mekong Business Initiatives (MBI) in co-operation with SBV to share development trends in the fintech sector in the upcoming time, especially management solutions used in other countries.
Under the event, SBV and ADB also organized the final round of the Vietnam Fintech Challenge 2018.
The competition is the first of its kind in the country and aims to create conditions for 15 fintech companies to work with commercial banks to employ solutions in the future.
According to the research of Solidiance, Vietnam’s fintech market is estimated to increase from US$4.4 billion last year to $7.8 billion by 2020.