The State Bank of Vietnam (SBV), the country’s central bank, is in the process of revising the Law on Credit Institutions, aiming to create a complete legal framework for fintech and support the digitalization process in the banking sector, according to SBV Governor Le Minh Hung.

SBV's Governor Le Minh Hung. Photo: VGP.

The rapid development of fintech is putting state authorities under pressure of anti-money laundering/combating the financing of terrorism (AML/CFT), as well as coping with risks related to data privacy and cyber security, among others, said Mr. Hung said at an online conference on September 7.

Under this circumstance, the state is responsible for not only promoting innovation in the banking sector, but also maintaining stability and safety of the financial market and contributing to economic growth, Mr. Hung suggested.

Like many other countries, Vietnam currently does not have proper legislation to regulate operations of fintech companies such as peer-to-peer lending (P2P lending), new payment methods, cross-border transactions, or user information sharing via open application programming interfaces (Open APIs).

Therefore, Mr. Hung stressed the importance of establishing a regulatory sandbox, which would be applied to new and unregulated services.

The SBV is cooperating with related government agencies in drafting a new decree on fintech regulatory sandbox in the banking sector, stated Mr. Hung.

Overview of the conference. Photo: SBV.

In the meantime, the SBV is expected to revise current legislations to support credit institutions and banks applying new technologies during their operation, including new guidance in cashless payment, the adoption of remote verification process, namely e-KYC (electronic Know-Your Customers), or the revision of the Law on Prevention of Money Laundering, among others.

A report on fintech in ASEAN conducted by United Overseas Bank (UOB), PwC and the Singapore Fintech Association (SFA) revealed Vietnam came second behind Singapore in terms of funding attraction for fintech in ASEAN in 2019, accounting for 36% of the total in the region and up 0.4% in 2018.

With regard to the number of funding deals in 2019, Vietnam ranked third at 8% of total deals, up from 2% in 2018, behind Singapore and Indonesia with 51% and 28%, respectively.

Singapore continues to be the preferred base of fintech firms in ASEAN, which is home to 1,157 or 45% of all fintech in ASEAN , while Vietnam, with 136, is hosting the fewest among ASEAN-6 countries (Singapore, Indonesia, Malaysia, Thailand, the Philippines, Vietnam).