Vietnam pushes for a fintech regulatory sandbox

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Vietnam is ready to finalize plans for a regulatory sandbox for fintech banking and cashless payments, according to Asia financial magazine The Asset. The Vietnamese government issued Resolution 01 on January 2, which outlined significant tasks and solutions to bolster the country’s socio-economic development in 2020. The sandbox is expected to support the growing sharing economy in Vietnam as well as numerous local startups.

The State Bank of Vietnam (SBV) has been a supporter of the fintech sector since 2017. In addition to establishing a fintech-focused steering committee, the SBV created the initial proposal for a fintech sandbox in Vietnam. Deputy Director of Payments at the SBV, Ngo Van Duc, said that the Vietnamese government needed to develop new regulations and policies to ensure the continued development of the fintech sector in Vietnam and that the creation of a regulatory sandbox for fintech was an urgent need.

A critical factor in the success of fintech innovation is a corresponding set of policies and regulations. Effective regulations would strike a balance between maintaining market stability and customer protection while providing enough room for companies to develop and innovate. The current lack of a legal framework in Vietnam causes authorities to feel ill-equipped when assessing dossiers for potential, leading to many missed opportunities. However, this is set to change.

Vietnam is taking steps towards furthering the development of its fintech sector. On August 12, 2019, Prime Minister of Vietnam Nguyen Xuan Phuc issued Decision No.999/QD-TTg approving the Project on Promoting Sharing Economic Model. There were three objectives associated with the project; (1) to create an equal business environment in Vietnam according to the sharing economy and traditional economy models; (2) to protect the rights, responsibilities, and benefits of parties that participate in the sharing economic model; (3) to encourage innovation, the application of digital technology and the development of the digital economy.

Additionally, the Development Strategy of Vietnam Banking Sector was approved in August 2018. The strategy was designed to strengthen and increase the transparency of Vietnam’s banking sector. The approach is expected to enforce Basel II standards and require minimum-capital and risk-management threshold stipulations in up to 15 commercial banks.

Experts believe that a regulatory sandbox may seriously benefit financial innovators in Vietnam, by giving them a space to develop and launch new financial products without being required to comply with all regulatory guidelines fully. Financial innovators would also be able to gain real market data on their developing financial products and learn from this data to enhance their products and services.