Sandbox model needed for fintech development: experts

October 16, 2023 - 08:14
There have been calls and opinions for the government to expedite the process of establishing a sandbox model to help reduce risks and promote the development of fintech in Việt Nam. 


Students at the HCM City University of Technology (HUTECH) attend a fintech conference. VNA/VNS Photo

HÀ NỘI - Banks and businesses have long been waiting for a legal framework covering Việt Nam's fintech development, said industry experts and insiders. 

It has been nearly two years since a proposal was made by the State Bank of Vietnam (SBV) for a sandbox model for the country's fintech sector. There have been calls and opinions for the government to expedite this process to help reduce risks and promote the development of fintech in Việt Nam. 

Việt Nam's fintech market has been among the fastest growing in the region, only behind Singapore in Southeast Asia, and is forecast to reach US$18 billion in size by 2024, according to Robocash, an online lending service in Việt Nam. 

The company said fintech and mobile platforms have allowed businesses to introduce a wide range of financial services including payment, lending, money transfer, collection and disbursement.

According to the SBV, non-cash payments in the first seven months of 2023 increased by 51.14 per cent in terms of number, 66.46 per cent through online channels, 63.09 per cent via mobile phones, and 124.15 per cent through QR Code compared to the same period in 2022.

The number of accounts opened online since the end of March 2021 has been steadily on the rise, reaching 27 million through eKYC and 10.8 million cards in circulation. 

According to Phạm Tiến Dũng, SBV deputy governor, non-cash payment has been increasingly popular among consumers in recent years, especially after the COVID-19 pandemic.  

The key to helping more people access financial services, especially residents in far and remote regions of the country, lies with the development of electronic platforms, which has allowed banks and finance companies to find solutions and offer flexible options to more customers. 

In recent months, commercial banks have been offering customers small loans despite the absence of a legal framework.

Nguyễn Thị Kim Oanh, deputy director-general of Vietcombank, said small loans addressed the real needs of both the banks and customers. Banks, however, said they had been holding back due to legal concerns related to contracts. 

Nguyễn Đình Tùng, director-general of Phương Đông Commercial Joint Stock Bank (OCB), said legal issues prevented the banks from rolling out more financial services as they must still maintain services in physical offices to minimise risks. 

Industry experts said banks and fintech companies had been waiting for a sandbox model for online lending for a long time now and the implementation of one such model would help many people gain access to financial services and contribute to the development of the country's finance sector. 

Lawyer Lê Văn An, director of ANLAW Law said consumer lending should be encouraged to boost economic activities and that the fintech industry should be viewed with a more open-minded approach and allowed to experiment. He said while he agreed that fintech companies weren't banks they should be given more room for growth.

Phạm Anh Tuấn, head of the payment department of the SBV, said a sandbox model was being reviewed and studied and expected to arrive as early as the beginning of 2024 in an earlier interview with the press. 

However, he said it was a complicated process that involved various governmental ministries and agencies, all having their own concerns and opinions, and therefore, would take time. In addition, there might be delays as the Government must submit the model to the National Assembly for final approval. VNS