E-wallet MoMo has developed strongly in Vietnam, especially during the pandemic. (Photo courtesy of MoMo) According to the resolution, the Government assigned the State Bank of Vietnam (SBV)to coordinate with ministries and agencies to form a decree that complies withthe provisions of the Law on Promulgation of Legal Documents amended andsupplemented in 2020 to submit to the Government in the fourth quarter of 2021.
As fintech is platform for creative and modern technologiesapplied to the financial and banking sector in payment services, moneytransfer, peer-to-peer lending and asset management, it is considered betterfor the local industry with improved financial transparency, efficiency andconvenience at a lower cost than traditional financial services.
In the country, fintech activities include peer-to-peer lending,new payment models, cross-border money transfers, sharing user data throughapplication programming interfaces and open APIs.
Earlier this year, an SBV leader told local media the centralbank would focus on creating favourable conditions for fintech development thisyear to boost the digital economy.
The country saw strong fintech development in 2020, partlyfuelled by the COVID-19 pandemic which forced people to shift to cashlesspayments.
According to the Vietnam Fintech Report 2020 by Fintech NewsSingapore, the strong development of fintech in Vietnam was driven by the rapidgrowth of e-commerce platforms and Government efforts to accelerate digitaltransformation and cashless payments to cope with the impact of the pandemic.
Electronic payments increased by 76 percent with the totaltransaction value increasing by 124 percent in the first quarter of 2020compared to the same period in 2019, said the report, adding that visits toe-commerce apps reached 12.7 million in the second quarter of 2020 when socialdistancing was imposed, a rise of 43 percent.
The report also pointed out that the number of fintech start-upsin Vietnam increased nearly three times, from 44 in 2017 to 120 in 2020.
About 31 percent of them operated in payments, 17 percent inpeer-to-peer lending and 13 percent in blockchain/crypto, while the rest werein wealth management, comparison, data management, crowdfunding, digitalbanking and SME financing.
The report said that international investors were optimisticabout the potential of Vietnam’s fintech market and had poured millions ofdollars into domestic fintech start-ups. However, the investment was mostlydisbursed in 2019.
Major deals were VNPay raising 300 million USD from Softbank’sVision Fund and Singapore’s GIC fund and MoMo raising 100 million USD in itsSeries funding C round from Warburg Pincus.
Key players in the e-wallet market were MoMo, Payoo, Moca, ZaloPay and Viettel Pay, while three outstanding companies in B3B were VNPay,Trusting Social and Kilimo Finance.
The central bank is focusing on promoting digital transformationin the banking sector and developing the legal framework for fintech, includingregulations about eKYC, mobile money and cross-border money transfers.
According to Nguyen Ba Diep, deputy chairman of e-wallet Momo,the cooperation between banks and fintech companies was of significantimportance to create benefits and value for users, adding that this was also animportant factor for fintech development in 2021.
However, there had been no specific legal regulations toregulate those activities, said SBV adding that the emergence and rapiddevelopment of fintech had caused national regulators many difficulties andchallenges in management and supervision due to many risks including moneylaundering, terrorist financing and risks related to security, informationconfidentiality and unauthorised use of personal information.
Therefore, the central bank said regulator tasks were tosimultaneously ensure the goal of supporting innovation promotion whilemaintaining the stability and safety of financial markets and supportingeconomic growth.
They said the examples of Uber and Grab in the transport marketwere lessons for the banking industry in responding to rapid changes intechnology. Without a timely legal corridor, there could be many uncontrolledsituations when fintech companies expand their scope of activities.
According to the Government, a decree on a sandbox for the fintechecosystem in the country was urgent and necessary for Vietnam to fostertechnology./.
VNA
